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TMI Blog2010 (5) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with M/s. P.R. Investment for development of the said property (bungalow) to construct 7 stories building as per the approved plans. The assessee retained proportionate portion of FSI in the said plot for their own residential accommodation to be constructed by the developer for a consideration of Rs. 21,00,000/-. The balance FSI was utilized by the developer for construction of the building. The developer was authorized to use the TDR as per applicable law for the development of the plot. By this arrangement, the assessee had given development rights to the developer for construction of the property. Transfer of development rights being capital asset, the income arising from the sale thereof results in capital gains. Since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as nominal members of the society. Out of total consideration, the assessee made an investment of Rs. 1 crore in NABARD and SIDBI Capital Gains Bonds and therefore showed the Long Term Capital Gains at Nil in the return of income. The Ld. AR further made detailed submissions in which he has dwelt upon the definition of capital asset and has claimed that development rights in a property is also a property by itself and would be included in the expression "capital asset". The ownership of property is a bundle of rights and it includes ownership over the development potential of the land. The assessee made the following submissions to claim that TDR loaded and subsequent transfer involves transfer of capital asset: "It is respectfully su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee Shri Shivraman submitted that ownership of property is a bundle of rights. FSI/TDR are benefit arising from land consequently must be held as immovable property and relied on the decision of Chheda Housing Development Corpn. vs Bibijan Shaikh Farid and Others 2007 (3) Mh. L.J wherein the Mumbai High Court has held as under: "The agreement under consideration is an agreement for entrusting the work of development to a party with added rights to sell the constructed portion to flat purchasers, who would be forming a Co-operative Hsg. Soc. To which society, the owner of the land, is obliged to convey the constructed portion as also the land beneath construction on account of statutory requirements. The Court observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s immovable property. 8. Therefore the Court held that FSI/TDR being a benefit arising from the land, consequently must be held to be immovable property. Hence development rights is a capital asset and transfer of such rights leads to capital gains. 9. The Ld. Counsel placed before us the decisions of the various Benches of Tribunal wherein it has been held that there is no cost of acquisition for the FSI transfer to the developer and hence there is no taxable capital gains. 10. We have heard both the parties. In the decision of the ITAT Mumbai Bench in the case of New Shailaja Co.Operative Hsg, Soc. Ltd. vs ITO in ITA No.512/M/07, the Tribunal has observed as under: "We have heard the rival submissions and perused the relevant materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our considered opinion, no capital gain can be charged on the transfer of the additional FSI by the assessee for sale consideration of Rs. 48.96 lakhs for the reason that it has no cost of acquisition. Our view is fortified by the above referred order of the Mumbai Bench of the Tribunal in Jethalal D. Mehta vs. Dy. CIT which was also cited before the ld. CIT(A). No material has been brought to our notice to show that the said order has been modified or reversed by the Hon'ble High Court. Further, the ld. D.R. could not point out any contrary decisions. Respectfully following the precedent, we accept this ground of appeal". The Tribunal in the above mentioned case was dealing with transfer of additional FSI. In the instant case the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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