2015 (11) TMI 303 - HC - Income Tax

Receipt arising on assignment of TDR - whether not taxable in the hands of the assessee society? - whether the appellant society is the legal and beneficial owner of the land and the FSI is available to the society and therefore, the right to construct additional built up area on the land belonged to the appellant society and not with its members ? - Held that - the issues arising herein stand concluded in favour of the respondent-assessee and against the revenue by the decisions of this Court in CIT Vs. Sambhaji Nagar Coop. Hsg.Society Ltd 2014 (12) TMI 1069 - BOMBAY HIGH COURT

Summary

Issues:
1. Taxability of receipt arising from the assignment of Transfer of Development Rights (TDR) in the hands of the assessee society.
2. Cost of acquisition of TDR and its implications on capital gain tax.

Analysis:

1. The appeal under Section 260A of the Income Tax Act, 1961 challenges the Tribunal's order related to the Assessment Year 2004-05. The substantial questions of law raised include whether the receipt arising from the assignment of TDR is taxable in the hands of the assessee society, considering the legal and beneficial ownership of the land and the availability of Floor Space Index (FSI) to the society. The Tribunal held that the receipt from TDR assignment is not taxable in the hands of the assessee society. The High Court noted that similar issues were decided in favor of the assessee in previous cases, and the Tribunal's decision followed those precedents. Consequently, the question regarding the taxability of TDR receipt was answered in favor of the respondent-assessee and against the Revenue.

2. Regarding the cost of acquisition of TDR and its impact on capital gain tax, the Assessing Officer and CIT (Appeals) considered the respondent-assessee as the legal and beneficial owner of the land, leading to the taxation of the consideration received from TDR sale in the society's hands. The respondent-assessee disputed this, arguing that the sale consideration was received by individual members. However, the Tribunal upheld the view that the society alone should be taxed. Given the decision in favor of the respondent on the first issue, the High Court deemed it unnecessary to address the second question. Consequently, the appeal was disposed of based on the findings related to the taxability of TDR receipts.

In conclusion, the High Court upheld the Tribunal's decision on the taxability of TDR receipts in favor of the respondent-assessee based on established legal principles and precedents. The judgment clarified the ownership and taxation aspects concerning TDR assignments, providing a comprehensive analysis of the issues raised in the appeal.