2019 (6) TMI 1459

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....3. ITA No.6103/M/2017 (Revenue's appeal) 2. The issue raised in ground No.1 of appeal is against the deletion of addition of Ld. CIT(A) as made by the AO on account of capital gain on sale of TDR development rights without appreciating the fact that the assessee's rights have been extinguished by sale of said TDR/FSI and fall within the ambit of capital asset under section 2(14) of the Act. 3. The facts in brief are that during the year, the assessee has sold TDR/FSI development rights for Rs. 6,00,00,000/- which was claimed as exempt from tax. According to the AO the transfer of development rights clearly attracts the capital gain tax as it is a transfer of capital asset. Accordingly, the AO determined the market value of the TDR/....

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....gar Co-op. Hsg. Society Ltd. (2015) 370 ITR 325 (Bom.) wherein it has been specifically held that as there is no cost of acquisition incurred of TDR/FSI as these are generated by the plot itself and therefore any receipt on account of sale of TDR/FSI would not result in capital gain assessable to tax. The Ld. A.R. therefore prayed that the appeal of the Revenue may kindly be dismissed as the Ld. CIT(A) has passed the order after following the order of jurisdictional High Court. The relevant portion of the said order has been reproduced below: "Held, dismissing the appeal, that in the case of the assessee the floor space index/transferable development right was generated by the plot itself. There was no cost of acquisition, which ha....

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....ction 55(2)." 6. The Ld. D.R., on the other hand, relied on the order of AO by submitting that the FSI/TDR falls within the definition of capital asset as defined under section 2(14) of the Act and therefore liable for capital gain under the provisions of section 45 of the Act. 7. After hearing both the parties and perusing the material on record including the decision of the Hon'ble Bombay High Court in the case of CIT vs. Sambhaji Nagar Co-op. Hsg. Society Ltd. (supra), we observe that the Hon'ble Bombay High Court has held that in case of sale of FSI/TDR rights by the assessee to the developers which have accrued in favour of the assessee following promulgation of Development Control Rules for Greater Mumbai, 1991and the said devel....