2014 (7) TMI 293

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....for the year under consideration originally on 8-9-2003 declaring total income of Rs. 9,57,170/-. The said return was duly processed by the A.O. u/s 143(1) of the Income Tax Act, 1961. Thereafter, during the course of assessment proceedings for A.Y. 2004-05, it was noticed by the A.O. that the assessee as per the agreement entered into on 19-9-2002 had received an amount of Rs. 22,49,203/- as consideration for sale of additional FSI/TDR in the society namely Kamaleshwar Co-Op. Hsg. Society from M/s Orbit Enterprises, a developer. The capital gain arising from this transaction was offered by the assessee to tax in his return of income filed for A.Y. 2004-05 and the same entirely claimed to be exempt u/s 54EC of the Act as a result of investm....

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....e previous year relevant to A.Y. 2003- 04 and the capital gain accordingly was chargeable to tax in A.Y. 2003-04. The addition of Rs. 22,49,203/- on account of capital gain therefore was made by the A.O. in the assessment completed for A.Y. 2003-04 u/s 143(3) r.w.s. 147 of the Act vide an order dated 3-12-2007. 4. Against the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act, appeal was preferred by the assessee before the ld. CIT(A) disputing the addition made on account of capital gain arising from sale of additional FSI/TDR and after considering the submissions made on behalf of the assessee and material available on record, the ld. CIT(A) deleted the addition made by the A.O. on account of capital gain for the following reaso....

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....oth the sides, the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision rendered by the Tribunal in the case of Late Smt. Jamnabai Anandji Matani, Legal heir of Shri Bhupendra Matani vs. ITO vide its order dated 30-4-2010 passed in ITA No. 1909/Mum/2008. A copy of the said order is also placed on record and the perusal of the same shows that a similar issue involved in the said case has been decided by the Tribunal in favour of the assessee vide para 7 to 10 of its order which are reproduced hereunder:- "7. Having heard the rival contentions and having perused the material on record, we find that the issue of taxability of such a receipt is covered in favour of the assessee by decisio....

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....ed the impugned amount. Therefore, the expenditure incurred on purchase of plot and construction thereon cannot be said to be the costs for acquisition of these rights. The rights are acquired by the virtue of being owner of the plot in the specified area but that does not mean that the cost incurred on the plot is the cost of acquiring these rights. The effect of the rights being relatable to the leasehold rights in the plot could at best be that the amount received by the assessee on assignment of rights to receive the transferable development rights ends up reducing effective cost of acquisition of the land and building in the said plot. Therefore, as and when the assessee transfers the said plot, building or any portion thereof and whil....

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....n asset has no cost of acquisition, the gains on sale or transfer of same cannot be brought to tax. The law laid down by the Hon'ble Supreme Court in the case of CIT vs. B.C Srinivasa Setty (supra) clearly holds so. For all these reasons, we are of the considered view that the receipts on sale of assignment of rights to receive TDRs are not liable to tax. The authorities below erred in law and on facts in holding to the contrary." 8. We have no reasons to take any other view of the matter than the view so taken by the co-ordinate bench. 9. In view of the above discussion, we hold that the authorities below indeed erred in law is taxing the amount of Rs. 12,62,619/- as income of the assessment year before us. We leave it that. 10. F....