Case Law Details
Batliboi Limited Vs DCIT (ITAT Mumbai)
Assessee has received total sum of Rs.11,14,00,000/- from single purchaser on sale of land (Rs.5,72,84,600/-), towards building (Rs.64,90,400/-) and sale of additional FSI (Rs.4,76,25,000/-). We find that the total sale consideration of Rs.11.14 Crores has not been doubted by the Revenue. Admittedly, the aforesaid break-up of consideration has been done by the assessee by relying on independent valuers report which is also not doubted by the Revenue. The said valuer had attributed a sum of Rs.4,76,25,000/- towards sale of additional FSI. Hence, the bifurcation of the total sale consideration into land, building and additional FSI is not in dispute. What is in dispute before us is only whether the said sum of Rs.4,76,25,000/- received by the assessee on sale of additional FSI could be treated as a capital receipt and thereby making it non-exigible to tax both under normal provisions as well as in the computation of book profits u/s.115JB of the Act. Admittedly, the assessee had sold land, building together with the additional FSI by way of single deal to a single purchaser. But what is relevant to be seen is whether the assessee had incurred any cost for obtaining such additional FSI. From the facts narrated above, it could be seen that assessee was able to get the additional FSI only pursuant to the Development Control Regulation Rules in the city of Coimbatore undergoing a change. The land and building of the assessee is situated in the city of Coimbatore. In the instant case, we find that the Development Control Regulations in the city of Coimbatore had undergone a change which had admittedly conferred a benefit or by virtue of which the assessee got vested with additional benefit of 0.8 by way of additional FSI. Hence, the issue now boils down to the fact that when there is no cost incurred by the assessee for obtaining any additional benefit of 0.8 by way of additional FSI, then, whether any sum received by the assessee pursuant to a sale of such additional FSI could be brought to tax under the head „income from capital gains‟. We hold that assessee could not have pre-empted any change in the Development Control Regulation Rules in the city of Coimbatore at the time of purchase or before the sale. Admittedly no cost was incurred by the assessee for getting such benefit by way of additional FSI. Hence, it could be safely concluded that the additional benefit derived by the assessee by way of getting vested with additional 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. 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 Rs.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 assessee transferred TDR for equivalent FSI ?”
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