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TMI Blog2021 (5) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ional FSI on the land and building owned by the assessee is only a wind fall gain by operation of law, and which had not costed the assessee any money. We find that the entire issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of Kailash Jyoti No.2 CHS Ltd [ 2015 (11) TMI 400 - BOMBAY HIGH COURT ] Thus we hold that the sum received by the assessee on sale of additional FSI, is not exigible for long term capital gains and accordingly the same is hereby directed to be excluded under normal provisions of the Act. Taxability of same sum while computing book profit u/s.115JB - We find that assessee had admittedly offered the said receipt of ₹ 4,76,25,000/- had admittedly offered the said receipt to tax while computing book profits u/s.115JB. There is absolutely no dispute that such receipt is indeed a capital receipt and that the same does not form part of operational working results of the assessee company. Even according to the case of the Revenue, the said receipt is only inseparable from land, building and accordingly it only partakes the character of a capital receipt. We hold that merely because a particular receipt , wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. Commissioner (Appeals) erred in confirming the addition made by the A.O. of ₹ 4,76,25,000/-, being the amount received on sale of FSI, as income in computing the income of the Assessee under normal provisions of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, Assessee company submits that the sum of ₹ 4,76,25,000/- received on sale of FSI, is a capital receipt and hence is not income exigible to tax in the hands of the Assessee company under the normal provisions of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Assessee Company submits that the sum of ₹ 4,76,25,000/- received on sale of FSI being a capital receipt and hence not income in the hands of the Assessee company, there is no tax payable by the Assessee company under the normal provisions of the Income Tax Act, 1961 and consequently, the charge under section 115JB of the Act on book profits fails and the Assessee company is hence not liable to tax under Section 115 JB of the Act. 4. The Assessee company may be permitted to add, alter, amend or delete the existing grounds or add further grounds at the time of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot involve verification of any facts as all the facts are already on record and that being a legal issue, we are inclined to admit the said additional ground and take up for the purpose of adjudication alongwith other regular grounds raised by the assessee. 5.1. We find that the assessee company is engaged in the business of manufacturing machine tools, textile machines, air conditioning and refrigeration work, casting and job work for air conditioning and humidification, air control equipment and trading in engineering. The original return of income was filed by the assessee on 26/09/2013 and revised return was filed on 14/05/2014 declaring loss of ₹ 4,65,01,710/- under the normal provisions of the Act and book profit of ₹ 61,77,000/- u/s.115JB of the Act. 5.2. The brief facts of the case are that the assessee company owned a constructed building on a plot of land in the city of Coimbatore. The said land along with the super structure was acquired by the company vide sale deed dated 15.04.1967. During the Financial Year 2012-13 relevant to Asst Year 2013-14, the assessee company proposed to sell the said land along with its super structure and therefore entered into ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government; that any buyer, while purchasing the land will also take over the FSI and that the purchase price is determined by the benefits attached to the land. He further observed that the assessee has neither maintained the land with it and transferred the FSI to a third party nor has transferred the land and FSI to different people. He also observed that FSI is fastened to the land and is not separable there from, except in circumstances where only the FSI is permitted to be sold out by maintaining the title of land with the owner. Accordingly, the AO brought the amount of ₹ 4,76,25,000/- shown under the head transfer of FSI to tax under the head long term capital gain. 5.3. The ld. AO while computing the book profits u/s.115JB of the Act included the sum of ₹ 4,76,25,000/- as part of working results of the assessee company u/s.115JB of the Act, since it was already offered to tax voluntarily by the assessee in the return of income. 5.4. Before the ld. CIT(A), the assessee apart from appraising the aforesaid facts, vehemently pleaded that additional benefit by way of FSI had not costed the company any amount. It was contended that every receipt does not fall wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Cadell Weaving Mill Co. Pvt. Ltd., reported in 273 ITR 1 (SC) c) Decision of Hon ble Supreme Court in the case of CIT vs. Srinivasa Setty (B.C.) reported in 128 ITR 294 (SC). d) Decision of Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax vs. Kailash Jyoti No.2 CHS Ltd., in Income Tax Appeal No.1607 of 2013 ; Commissioner of Income Tax vs. Pushpendra J. Mehta Ors. in Income Tax Appeal No.768 of 2009 ; Commissioner of Income Tax vs. Shankar Mahal Premises CHS Ltd. in Income Tax Appeal No.2176 of 2009 ; Commissioner of Income Tax vs. Maheshwar Prakash 2 CHS Ltd., in Income Tax Appeal No.2346 of 2009 and Commissioner of Income Tax vs. Kailash Jyoti Premises No.1 CHS Ltd., in Income Tax Appeal No.2660 of 2011 dated 24/04/2015. 5.7. Per contra, the ld. DR vehemently supported the orders of the lower authorities by stating that the additional FSI is inseparable with land and building and hence, would partake the character of amount received towards land and building only. 5.8. At the outset, we find from the aforesaid narration of facts that the assessee has received total sum of ₹ 11,14,00,000/- from single purchaser on sale of land (₹ 5,72,84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land and building owned by the assessee is only a wind fall gain by operation of law, and which had not costed the assessee any money. In this factual matrix of the case, what is to be seen is whether the sum received by the assessee on sale of additional FSI amounting to ₹ 4,76,25,000/- could be taxed as long term capital gain in the hands of the assessee. We find that the entire issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of Kailash Jyoti No.2 CHS Ltd and others dated 24/04/2015 cited supra , wherein the following substantial questions of law were raised by the Revenue before the Hon ble High Court:- 6.1 Whether on the facts and in the circumstance and in law the Hon'ble ITAT was justified in holding that the assessee had incurred no cost on acquisition of TDR of additional FSI ? 6.2 Whether on the facts and in the circumstance, and in law the Hon'ble ITAT was justified in holding that there was no liability to assessee under the head 'Capital Gains' on transfer of TDR of FSI ? 6.3 Whether on the facts and in the circumstance, and in law the Hon'ble ITAT was justified in holding that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar attempt has been rejected in the case of Nalinikant Ambalal Mody v. S. A. L. Narayan Row, Commissioner of Income-tax ITR 428 SC 432 and the conclusion of the Apex Court in the said judgment was followed which provided 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. In that case, 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., we find that none of the questions proposed by the Appellant raise any substantial question of law. Accordingly, the appeals are dismissed. There will be no order as to costs. 5.10. The ld. AR also pointed out that the Hon ble Supreme Court decision referred in para 5 of the aforesaid judgement of the Hon ble Bombay High Court has been erroneously mentioned and that the reference to the decision made thereon should be that of decision of Hon ble Supreme Court in the case of Union of India vs. Cadell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt Ltd., reported in 349 ITR 336 (Bom). We also find that the Hon ble Calcutta High Court in the case of PCIT vs. Ankit Metal and Power Ltd., reported in 109 Taxmann.com 93 dated 09/07/2019 had specifically held that where the receipt is not in nature of income, it cannot be included in book profits u/s.115JB of the Act. The relevant portion of the said judgment is reproduced hereinabove. 26. Now the second issue which requires adjudication is as to whether the aforesaid incentive subsidies received by the assessee from the Government of West Bengal under the schemes in question are to be included for the purpose of computation of book profit under Section 115 JB of the Income Tax Act, 1961 as contended by the revenue by relying on the decision in the case of Appollo Tyres Ltd. (supra). 27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word total income which would also include loss, whereas the provisions of Section 115JB of the Act uses the expression tax payable on total income . Hence, he vehemently argued that unless there is tax payable by assessee under normal provisions of the Act, the provisions of Section 115 JB of the Act would not come into operation at all. 7.2. Per contra, the ld. DR vehemently relied on the order passed by this Tribunal in assessee s own case referred to supra in respect of this issue. 7.3. We have heard rival submissions and perused the materials available on record. We find that the decision relied upon by the ld AR was rendered in the context of section 143(1A) of the Act. The provisions of Section 115JB of the Act start with a non-obstante clause and is a self contained code by itself. By giving due weightage to the intention behind introduction of provisions of section 115J, 115JA and 115JB of the Act, we are not inclined to agree to the contentions of the ld AR. We find that this issue has already been addressed by this Tribunal elaborately in assessee s own case for the Asst Year 2011-12 referred to supra in para 4.3 thereon. It is reproduced for the sake of convenience:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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