TaxTMI 
TaxTMI 
2011 (2) TMI 96
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....foresaid consideration is still income in the hands of the Society; 3. The learned Commissioner of Income Tax (Appeals) erred in holding that there was any transfer of Capital Asset and in any case consideration received by or accruing to the Society alone could be subjected to tax; 4. The learned Commissioner of Income Tax (Appeals) erred in holding that the sum of Rs. 3,02,16,828/- was liable to tax as Capital Gain, without specifying:- a) Nature of capital asset transferred b) Its date of acquisition c) Cost of improvement, if any and most importantly d) the cost of acquisition 5. He failed to deal with the contention that neither the cost of acquisition nor the cot of improvement is ascertained or was ascertainable, the machinery provisions failed and no charge could be levied; 6. Reasons assigned for sustaining the additions are wrong, insufficient, Self contradictory and contrary to law and facts;" 2. The assessee is a registered Company-operative Housing Society having 51 members and duly elected managing committee. The Society is the owner of the property bearing Plot No.60, and C.T.S. No.440....
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.... its members and the Developer were put in the form of an agreement dated 18/5/1996. By the aforesaid agreement the builder was allowed to carry out the development subject to several terms and conditions. Clause 12 & 13 of the agreement is relevant for the present appeal and it reads as follows: "12. It is agreed between the Society and the Developers that the area of the said property shall be deemed to be 1300 sq. meters and the monetary consideration or compensation payable to the Society and, the members of the society shall be at the rate of Rs. 1,431/- (Rupees One though four hundred thirty one) per sq. ft. of ne proposed builtup area (F.S.I) as would be sanctioned, by B.M.C and on the basis that the Developers shall procure and use T.D.R to the extent of 40% of the net area of the said property. However, in consideration of the society having agreed to allow the Developers to consume 40% of T.D.R as stated above the Developers shall pay to the Society the sum of Rs. 2,51,000/-(Rupees two lacs fifty one thousand) as compensation out of the total consideration of Rs.2,00,16,828/- (Rs. Two crores sixteen thousand eight hundred twenty eight only) payable to the societ....
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..../5/96. The Assessing Officer however, was of the view that the society i.e. the assessee was the owner of the land and by virtue of clause 12 & 13 of the agreement dated 18/5/1996 it was entitled to the entire compensation of Rs. 3,02,16,828/-. He was of the view that the assessee held a capital asset and allowed the developer namely M/s.New India Construction Company to construct the multistoried building on the surplus land belonging to the society and received compensation. The Assessing Officer held that the said receipt of compensation was taxable as per the provisions of section 2(24) of the Act. He also held that the agreement between the developer M/s. New India Construction Company and the individual 51 members of the society was only to facilitate payment by the developer and does not absolve the society from the taxability of the entire proceedings. Thus a sum of Rs. 3,02,16,828/- was added by the Assessing Officer. 8. Before CIT(A) the assessee submitted: (1) That the entire TDR available on the land owned by the society was already exhausted and that the developer M/s.New India Construction Company was allowed to use TDR to be purchased by them from....
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....de by the developer was with the consent of the society. There is no doubt that the whole receipts in the hands of society is a capital in nature as the society has agreed to get its land/rights title etc. transfer to the builder to develop and sell the same. The appellant's contention that no transfer of capital asset has taken place is not acceptable. The appellant has knowingly or unknowingly not taken into account the tax implications in the transaction. Thus this is a fact that transfer of land/rights has taken place; the receipts are in the nature of capital receipts and provisions of I.T. Tax are therefore attracted. The appellant society was therefore under obligation to make the payment of tax and after paying the taxes the net receipts could have been distributed amongst the members. Instead of that the society has allowed the builder to pay each member separately ignoring the tax implications. In this situation neither the society has paid the taxes which was legitimately due from it nor the members have paid the taxes. I therefore, hold that the receipt of Rs. 3,02,16,828/- is a capital receipt in the hands of the society and capital gain tax is exigible in the hands of....