AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 1598
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....sed following ground No.1 & 4: - "1. Long Term Capital Gain, Taxability and Year of Taxability- Rs. 84,76,234/-. 1.1 The learned CIT(A) erred in taking a view that transfer of relevant capital asset under Sec.2(47)(v) has taken place during the Financial Year 2001-2002 and not during the Financial Year 2003-2004 as claimed by the appellant and accordingly, the amount of Long Term Capital Gain is chargeable to tax in the Asst. Year 2002-2003 and not in the Asst. Year 2004-2005. 1.2 For the purpose of taking the view referred to in ground no.1.3 above, the learned CIT(A) further erred in taking a view that the date of agreement is the date: of transfer of the relevant capital asset under Sec.2(47)(v) without appreciating the facts of the case of the appellant in proper perspective. 1.2.1. For the purpose of taking the above view, the CIT(A) further erred in recording erroneous findings that "majority of the amount i.e. Rs. 1,18,00,0001'- has been received before 31.03.2002 and only Rs. 44,00,000/- has been received by the appellant after 31.03.2002 but before 15.11.2002" which are contrary to the actual facts. 1.3 While taking th....
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....he written submissions filed from time to time during the course of hearings and totally ignoring the remaining part of such written submissions [copy enclosed - marked as Exhibit -I & II). 3. Consideration relating to permission granted for the use of TOR related FM wrongly treated as taxable Capital Gain - Rs. 1,32,00,000/-. 3.1 The learned CIT(A) erred in impliedly treating the consideration relating to permission granted for the use of TDR related FSI [Rs. 1,32,00,000/-] as taxable. The learned CH (A) ought to have appreciated that considering it's nature, the same is capital receipt having no cost and does not give rise to any taxable capital gain and the same cannot be considered for taxation. 3.2 The learned CIT(A) erred in not dealing with the following ground relating to above issue [being ground No.2.3 raised before him]:- "The learned ACIT further erred in computing taxable Long Term Capital Gain at Rs. 84,46,234 without realizing that out of total consideration stated in the Agreement, part of the amount relates to permission granted for loading TDR which, in any case, does not give rise to any taxable capital gain there being no ....
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....ticulars Area in Sq. ft. Rate per sq. ft. Total (Rs.) 1. For permitting the developer to use already available unconsumed FSI 1,200 2,500 30,00,000 2. For permitting the developer to use TDR FSI on the land belonging to the assessee 8,000 1,650 1,32,00,000 Total 1,62,00,000 These are undisputed facts. 5. As per MoU and development agreement dated 28-09-2010, the developer would pay a sum of Rs. 74 Lacs to the assessee on or before 15-08-2001 vide clause VI of the agreement, failing which assessee is entitled to receive interest @ 14% on the delayed payments. However, the developer paid only a sum of Rs. 30,00,000/- as against Rs. 74,00,000/- payable by the developer on or before 15-08-2001. The assessee then renegotiated the deal and developer agreed to modifying the terms of development agreement/MOU dated 28-10-2001, which is enclosed in assessee's paper book. This development agreement / MOU i.e. supplementary of schedule on the following conditions: - a) For agreement only gives the developer a license to entered into the premises of the assessee; b) The assessee shall have possessory rights over the newly bui....
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....The 75% condition is met in this month 23.10.2003 10,00,000 134,00,000 92.72 03.12.2003 5,00,000 139,00,000 85.8 Rs. 10,00,000 were to be paid by 30th Nov 2003. Later, Rs. 8,00,000 were to be paid by 31st Dec 2003. Subsequently, the remaining Rs. 10,00,000/- were to be paid by 30th Apr 2004. 03.12.2003 5,00,000 144,00,000 88.89 01.01.2004 4,00,000 148,00,000 91.36 01.01.2004 4,00,000 152,00,000 93.83 From the above, it is seen that the condition of payment of 70% of the consideration by the developer was compiled during AY 2004-05 and accordingly, the assessee ceded possessory rights over the building to the developer during AY 2004-05. The assessee during the AY 2004-05 relevant to FY 2003-04 offered capital gains after indexing the cost of acquisition at Rs. 84,76,234/-. The assessee adopted the cost of acquisition based on fair market value as on 01-04-1981 at Rs. 77,23,766/- and applied the same to the consideration of 1.62 crore. The assessee also invested a sum of Rs. 20,00,000/- REC (Railway Electrification Corporation bonds on 09-08-2003 and made the claim in the revised statement of income before the AO d....
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....e appeal before CIT(A) who also confirmed the action of the AO by observing in Para 1.7 of his appellate order as under: - "1.7 I have carefully gone through the assessment order, submissions made on behalf of the appellant and the facts of the case. In this case the date of agreement between the assessee and West Cost International is 28.9.2001 which falls in A.Y.2002-03. Purchase of TDR by West Cost International from Romell Real Estate Pvt. Ltd is 8.10.2001. issue of development rights certificate is 4.6 2001, utilization from Mumbai Corporation of Greater Mumbai is 19.9.2001. Further it is also seen from the agreement that majority of the amount i.e. has been received before 31.3.2002 and only Rs. 44,00000/- has been received by the appellant after 31.3.2002 but before 15.11.2002. All these events clearly show that the transactions have taken place in the financial year relevant to A.Y.2002-03. The AO in his exhaustive assessment order has countered all the arguments of the appellant. I find considerable force in the arguments and conclusions of the A.O. that the long term capital gain of the appellant arising out of grant of development rights and transfer of FSI and ....
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....sed." Aggrieved, now assessee is in appeal before Tribunal. 8. Before us, the learned Counsel for the assessee argued that the transfer of the right to develop utilised TDR and FSI does not given rise to capital gains as there is no cost of acquisition rights. According to him, during the year under consideration i.e. FY 2003-04 relevant to AY 2004-05, the year under consideration the assessee transferred all its right to development and utilizing TDR and FSI to West Coat International and through such transfer to developer has been allowed to carry out construction on top of the existing constructing of building by utilize of TDR which the developers purchase at own cost from other party. The assessee has received the total consideration for transfer amounting to Rs. 1.32 crores 9. Whether in the given facts and circumstances of the case, such right is taxable as capital gains or not? The assessee before us brought the concept of TDR as introduced through the Development Control Regulations,1991 for the first time through Regulation 34 read with Appendix VIII therein. Regulation 34 reads as under:- "34. Transfer of Development Rights- In certain circumst....
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....ital gains tax. 11. We also find that identical issue in the case before the ITAT Mumbai, the facts were identical to the present case. was in Jethalal D. Mehta Vs. DCIT (2005) 2 SOT 422 (Mumbai), held as under: "...the right assigned to the developer were the rights to receive and apply the transferable development rights, and those rig/its arose to the assessee by virtue of the introduction of DCR. Until the point of time those development regulations conic 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. The person getting TDRs from the Government had to surrender the reserved plot but the person oil plot such TORs could be used, i.e., the assessee, did not do anything more than owning the 'receiving plot'. The cost incurred by a third party for acquiring the TDR had nothing to do with the right to avail the said TDR on the assessee plot Similarly, the costs ofp1o: and costs of construction were also not the cost of acquisition of those rights. What the assessee had transferred was not t....