2015 (11) TMI 400 - HC - Income Tax

Transfer of Development Rights (TDR) - Chargeability to capital gain - whether acquisition of TDR (additional FSI) would amount to capital gains in the case at hand? Held that - Only that which was capable of acquisition at a cost would be included within the provisions pertaining to the head Capital gains as opposed to assets in the acquisition of which there was no cost at all. As in the present case, the situation was that the FSI/TDR was generated by the plot itself. There was no cost of acquisition in any of the appeals before us. Accordingly, following the view taken in Sambhaji Nagar Co-operative Housing Society Ltd. 2014 (12) TMI 1069 - BOMBAY HIGH COURT we find that none of the questions proposed by the Appellant raise any substantial question of law. - Decided in favour of assessee.

Summary

Issues:
1. Whether acquisition of Transferable Development Rights (TDR) would amount to capital gains.

Analysis:
The core issue in the judgment revolved around whether the acquisition of TDR would constitute capital gains. The appellant, a Co-operative Housing Society, entered into an agreement for additional construction with a developer without incurring any cost for the TDR received. The assessing officer assessed the income under the head of capital gains, leading to an appeal by the assessee. The Tribunal upheld the assessing officer's action, citing provisions of the Income Tax Act and Transfer of Property Act. However, the High Court referred to a previous judgment involving a similar scenario where it was established that assets acquired without any cost would not fall under the head of capital gains. Following this precedent, the High Court dismissed the appeals, stating that the questions raised did not present any substantial legal issue.

The judgment also referenced a previous case involving a Co-operative Housing Society where the society received a sum for transfer of development rights, which was added to the total income by the assessing officer as chargeable under "Long Term Capital Gains." The High Court highlighted that the Supreme Court had previously ruled that only assets acquired at a cost would be considered under the head of capital gains. Since there was no cost of acquisition involved in the present case, similar to the previous case, the High Court aligned with the earlier decision and dismissed the appeals, emphasizing that the questions raised did not pose any significant legal concerns.

In conclusion, the High Court, after considering the facts and legal precedents, held that the acquisition of TDR without any cost did not amount to capital gains. The judgment reiterated that assets acquired without any cost would not fall under the purview of capital gains as per established legal principles. Consequently, the appeals were dismissed, and no costs were awarded in the matter.