2011 (3) TMI 1723 - AT - Income Tax

Summary

Issues involved:
The appeal involves the deletion of addition of long term capital gain, applicability of capital gains tax on sale of FSI, and interpretation of relevant legal provisions.

Deletion of long term capital gain:
The appeal was filed by the revenue against the deletion of addition of Rs. 1,62,60,756 as long term capital gain by the Assessing Officer. The Tribunal disposed of the case ex-parte as the assessee did not appear despite notice. The issue revolved around the amount received by the Society on sale of FSI and whether it should be taxed under the head 'capital gains'.

Applicability of capital gains tax on sale of FSI:
The Tribunal considered the case in light of a previous decision involving a similar scenario. It was noted that the Society had sold additional FSI to a developer, and the developer had procured TDRs from a third party. The Tribunal referred to a previous case where it was held that the right acquired by the assessee did not fall within the ambit of section 45 of the Act itself. The Tribunal upheld the decision of the First Appellate Authority, stating that since there was no cost of acquisition for the FSI sold, no capital gains would result from the sale.

Interpretation of legal provisions:
The Tribunal relied on previous decisions to support its conclusion that the gain arising on the transfer of FSI/TDR is chargeable to tax under the head 'capital gain'. However, due to the absence of a cost of acquisition for the asset transferred, there would be no liability to capital gains tax. The Tribunal upheld the order of the learned CIT(A) based on consistent views of the Coordinate Bench in similar cases.

The appeal was dismissed, and the order was pronounced on March 30, 2011.