2009 (8) TMI 1267 - AT - Income Tax

Summary

Issues involved: Taxability of income earned by the society and its members as long term capital gains.

Summary:
1. The appeal was filed by the assessee-society against the Order passed by the CIT (A)-XIX, Mumbai regarding the taxability of income earned by the society and its members as long term capital gains for the assessment year 1999-2000.

2. The assessee-society, a registered Cooperative Housing Society, was approached by a developer to construct additional floors on the existing building in exchange for a lump sum amount. The Assessing Officer considered this as a transfer of right and brought the entire consideration received to tax as long term capital gains.

3. The CIT (A) affirmed the Assessing Officer's decision and enhanced the assessment to bring the total consideration of Rs. 92 lakhs to tax. The society contended that no right was transferred, and the amount received was not taxable as capital gains.

4. The society argued that no right was available to construct additional floors, and the amount received was in exchange for permission granted to the developer without any cost of acquisition. Citing relevant case laws, the society contended that the amount received should not be taxed as capital gains.

5. After hearing both parties, the Tribunal found that no existing right was transferred to the developer, and no cost was incurred prior to granting permission. Therefore, the amount received by the society and its members was not assessable as long term capital gains. The appeal filed by the assessee was allowed.

Judges: D. Manmohan, Vice President and R.K. Panda, Accountant Member