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TMI Blog2012 (6) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... /Mum/2012 - - - Dated:- 30-3-2012 - P M Jagtap, V Durga Rao, JJ. For Appellant: Shri R V Shah For Respondent: Shri B Jaya Kumar (DR) ORDER Per: P M Jagtap: 1. This appeal filed by the assessee is directed against the Order of the learned CIT(A)-29 dated 30-11-2011 whereby he upheld the validity of assessment made by the Assessing Officer under section 143 (3) read with section 147 and also confirmed the addition of ₹ 2,23,25,157/- made by the Assessing Officer to the total income of the assessee under the head long term capital gains . 2. The assessee in the present case is a Cooperative Housing Society which filed its return of income for the year under consideration originally on 22-10-2007 declaring total income of ₹ 39,953/-. A survey under section 133A was carried out in the case of the assessee on 6-11-2008 which revealed that a sum of ₹ 2,23,25,157/- was received by the assessee-society during the year under consideration on account of sale of TDR. Since the profit derived by the assessee from the said sale of TDR was not declared in the return of income originally field on 2210-2007, assessment was reopened by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im, there was a decision of the Tribunal rendered in the case of Shakti Insulated Wires Ltd. vs. JCIT 87 ITD 56 (Mum.) wherein a similar issue was decided against the assessee and the said decision rendered earlier was not taken into consideration by the Coordinate Bench while deciding the case of New Shailaja Cooperative Housing Society Ltd. (supra) in favour of the assessee. The Assessing Officer then proceeded to examie the claim made by the assessee for exemption of capital gain arising from sale of TDR in the factual back-drop of assessee s case and the relevant judicial pronouncements and summarized his conclusion in the assessment order as under : i. Undoubtedly the assessee M/s. Sambhaji Nagar Coop. Hsg. Soc. Is the owner of land admeasuring 3649.69 sq. meters bearing C.S. No. 92 at N.M. Joshi Road, Mumbai - 400 013. Even the Hon ble Bombay High Court has confirmed the rights of society in respect of this land. ii. land is a bundle of rights. In the instant case, when land was purchased (i.e., ownership of land acquired by the society in consequence to the execution of conveyance deed in favour of it), all rights present and future embedded in it are also acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant relies upon the decision of Mumbai ITAT in the case of New Shaileja Co.op. Hsg. Soc. Ltd. 36 SOT 19 (Mum.) 5.1. Learned CIT(A) did not find merit in the above submissions made by the assessee and upheld the action of the Assessing Officer in bringing to tax the long term capital gain of ₹ 2,21,65,044/- from sale of TDR for the following reasons given in his impugned order (1) The TDR/FSI rights available in respect of land cannot be separated from the land. The owner of the land by his ownership gets these which may be varied in future. Property is a bundle of rights and TDR/FSI rights are part of this bundle of rights relating to the land. (2) The arguments that extra FSI could be received because of enactment is also not tenable. The enactment or change in law only confers or varies TDR on those who are already holding the capital asset It cannot be said that the gain is only because of change in law. Several changes in law can bring changes in value to an existing asset. It would not mean that any change in value of the asset will not be taxable. For instance when an agricultural land becomes commercial land because of extension of Municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pation of the building. 6. Aggrieved by the Order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal on the following grounds. 1.1 Appellant submits that the notice issued u/s 148 of the I.T.Act, 1961 dated 14/10/2009 by the Assessing officer was without jurisdiction and bad in law. Hence, the entire proceedings should be quashed. 1.2. Without prejudice to above, appellant submits that there was no reason to believe that income had escaped the assessment. Hence, the notice issued u/s 148 is bad in law and non-est. Therefore, the order u/s 147 read with section 143(3) be quashed. 2.1. Appellant submits that CIT(A) has erred in taxing the entire receipt of ₹ 2,23,25,157 on sale of TDR as capital gain though there was no cost of acquisition specified u/s 55(2). 2.2. Appellant submits that Cost of acquisition of TDR rights are not covered by section 55(2) hence, they do not come within the purview of section 45 of the I.T.Act, 1961. 2.3. CIT (A) has erred in holding that there is a-definite cost of acquisition of TDR and entire receipt of ₹ 2,23,25,157 was wrongly taxed under the head capital gains. Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit arising from sale of TDR had escaped assessment and the reopening of the assessment to bring such income to tax was in accordance with law. We, therefore, find no merit in ground No.1 raised by the assessee and dismiss the same. 8. As regards ground No.2 relating to the claim of the assessee for exemption on account of profit arising from sale of TDR, the learned Counsel appearing on behalf of the assessee has mainly relied on the decision of the Coordinate Bench of this Tribunal in the case of New Shailaja Cooperative Housing Society Ltd. (supra) in respect of assessee s case on that issue. The learned D.R. on the other hand has relied on various judicial pronouncements which have been relied upon by the authorities below in support of the Revenue s case on this issue. 9. We have carefully perused the case laws cited by the learned representatives of both the sides. In our opinion, none of the decisions cited on behalf of the Revenue is directly applicable in the context of issue involved in the present case as the issues involved therein as well as material facts relevant thereto were entirely different from that of the present case. For instance, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of acquisition and exemption under section 54/54E which was upheld by the learned CIT(A). Before the Tribunal, the contention raised by the assessee was that since there was no transfer of land and since builder/developer had brought additional FSI and there was no part of FSI belonging to the assessee had been transferred, he was not liable to pay any capital gain tax. This contention raised by the assessee was not accepted by the Tribunal holding that assessee had transferred land and building to developer through a document and the same having been registered by State Registration Authorities, there was transfer of capital asset which gave rise to a capital gain that was chargeable to Income Tax Act. 11. Before the authorities below as well as before us, reliance has been placed on behalf of the assessee on the decision of Coordinate Bench of this Tribunal in the case of New Shailaja Cooperative Housing Society Ltd. in respect of its claim that sale of TDR does not give rise to any capital gain chargeable to tax. A perusal of the decision rendered by the Tribunal in the said case shows that the facts involved in the case of New Shailaja Cooperative Housing Society Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration accruing as a result of transfer of capital asset as well as the cost of acquisition of the asset along with the cost of any improvement thereto, if any. Section 48 sets out the mode of computation of income under the head 'Capital gains' by providing that the expenditure incurred wholly and exclusively in connection with the transfer of a capital asset along with the cost of acquisition and cost of any improvement, if any, shall be deducted from the full value of the consideration received or accruing as a result of the transfer of capital asset. The Supreme Court in CIT v. B.C. Srinivasa Setty (1981) 128 ITR 294/5 Taxman 1 has held that transfer of capital asset which does not have any cost of acquisition does not result into capital gains chargeable to tax under section 45. The Legislature in its wisdom brought out certain categories of capital assets under section 55(2) as having cost of acquisition at Rs. nil, where such assets have not been purchased by the assessee for a consideration. The effect of this sub-section is that when the assets so specified in sub-section (2) of section 55 are transferred, then the cost of acquisition is taken at Rs. nil, except wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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