TaxTMI 
TaxTMI 
2010 (1) TMI 829
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....he assessee has claimed receipt on account of sale of TDR as capital receipt. According to the AO, the company purchased a land in 1987 with the expressed intention of developing the property. Hence, the company had the desire to commercially exploit the property in question. The AO further noted that the company entered into joint venture with M/s Star Erectors Pvt Ltd in April 1993. As per the joint venture, the assessee company was enjoying 37.5% of the profit and 0% of loss. The AO further noted that upto AY 2004-05 the company was showing property in the return of income. However, during the year the assessee company has shown that the project has run into loss and the investment made by the assessee amounting to Rs.11.64 lacs has been....
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....rchased any plot but only acquired the development rights vide agreement dated 8.3.1987 with 19 sellers at Dahisar. The assessee company has also entered into joint venture with M/s Star Erectors Pvt Ltd. However, due to delay in the implementation of the project, the assessee suffered loss. 2.3 It was explained that in 1995 the MCGM granted some development rights in lieu of the existing property at Dahisar which is reserved for recreation ground. The development rights of this property were transferred to M/s Star Erectors P Ltd and the assessee received Rs.20 lacs. According to the ld AR, the TDR is still in the name of the original owner of the land i.e. Shri Shyam Sunder Yeshwant Gad and 25 others. Since all the rights have been tra....
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....he conclusion on the basis of agreement dated 8.3.1987 that the assessee has acquired development rights over the entire land including reserved area. According to the AO, the proportionate cost based on the area is cost of reserved plot and since the TDR has been received on the strength of the reserved plot, the same would be the cost of TDR. In this connection, it was submitted that when the assessee acquired the plot of land on 8.3.87, there was no concept of TDR in existence and hence, there is no question of any cost to be paid by the assessee on that date. It was further explained that the rights in the land were acquired on 8.3.1987 whereas the rights for TDR accrued vide Development Control Regulations of 1991 issued by BMC. 4.2....
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.... was incurred. It was further submitted that the decision of the Tribunal in the case of Jethalal D Mhta is squarely applicable on the facts of the present case. Reliance was also placed on various other cases decided on similar facts i.e. New Shailaj Co-op Housing Socieity Ltd in 121 TTJ 62 (Mum); in the case of Deepak S Shah in 29SOT 26 (Mum) and in the case of Om Shanti Coop Society Ltd decided in ITA No.2550/Mum/08 for AY 1999-00 vide order dated 28.8.2009. Copies of these orders were filed. 5. After considering the submissions and perusing the material on record, we find that the ld CIT(A) was justified in allowing the claim of the assessee. It is a matter of fact that the agreement was entered into in the year 1983 when there was n....
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....that case it was held as under: "Further, the rights assigned to the developer were the rights to receive and apply the transferable development rights, and those rights arose to the assessee by virtue of the introduction of DCR. Until the point of time those development regulations came into existence, the assessee did not have right to receive and apply the transferable development rights. It was those rights on the assignment of which the assessee had received the impugned amount. Therefore, the expenditure incurred on purchase of plot and construction thereon could not be said to be the cost for acquisition of those rights. The rights were acquired by the virtue of bring owner of the plot in the specified area but that did not mean t....
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....tion of those rights. What the assessee had transferred was not the plot or the building, but a right parting with which did not result in parting with land or building. The cost of obtaining Municipal Corporation's approval for the building plant could also not be said to be the cost of acquisition of those rights as those rights did not arise by virtue of getting those approvals but by the virtue of a legal right independent three. The law is trite, and there is no dispute on the said position, that when as asset has no cost of acquisition, the gains on sale or transfer of the same cannot be brought to tax. Thus, the receipts on sale of assignment of rights to receive TDRs were not liable to tax. In that view, the AO was to be directed....