Case Law Details
Adi D Vachha Vs ITO (ITAT Mumbai)
Assessee has got a right in TDR in lieu of acquisition of immovable property by the Municipal Corporation of Pune. Although, there was no Transferable Development Rights (TDR) was in existence, when the MOU dated 17/08/1996 was entered into by the assesee with third party for transfer of right in TDR, but surplus derived from transfer of TDR rights has been assessed under the head capital gains. During the year under consideration, the assessee has cancelled MOU entered on 17/08/1996 for transfer of TDR, because the purchaser was not willing to wait any more, because of delay in allotment of TDRs by the competent authority. However, the assessee has got a new buyer for right in TDR and accordingly, one more MOU agreement dated 17/08/1996 was entered into and transferred right in TDR to third party for a consideration of Rs. 50 Lac. The fact that there was no TDR in hand, when original MOU was entered into in the year 1996 and also in the year 2004 was not disputed by both the parties. The Ld. AO has assessed surplus from sale of right in TDR under the head Short Term Capital Gain, for the reason that the period of holding of the asset is less than 36 months, because the assesse has sold right in TDR in the year 1996 and bought back, the same during the financial year 2004-05, therefore, he opined that the period of holding of the asset is less than 36 months and hence, the same is assessable under the head Short Term Capital Gain. The Ld. CIT(A) has altogether taken a different view and assessed surplus under the head speculative profits by taking note of provisions of section 43(5), for the reasons that the assessee is involved in repetitive transactions of buying and selling of TDR. Except this, the lower authorities had never disputed the fact that the assessee has transferred right in TDR to third party. In this factual back ground, if you examine, whether right in TDR is a capital asset and surplus from sale of such capital assets is assessable under the head capital gain, there is no doubt of whatsoever, with regard to the fact that TDR is a capital asset, because it is inextricably linked with immovable property and also flows from transfer of immovable property. When, TDR is considered to be an immovable property/assets within the meaning of section 2(14) of the I.T.Act, then any right in such TDR is also needs to be considered as a asset within the meaning of section 2(14) of the I.T.Act, 1961. Therefore, we are of the considered view that the Ld. CIT(A) was erred in considering surplus from transfer of TDR under the head speculative business profits.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax Appeals–12, Mumbai, dated 09/03/2009 and it pertains to the Assessment Year 2005-06. The assessee has raised the following grounds of appeal:-
1. The learned Commissioner of Income Tax (Appeals) erred in holding that the gains of Rs.25,00,000/- were assessable as speculation gains and In doing so he amongst others failed to appreciate that
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