S. 45 : Capital gains-Consideration received for subsequent granting of development as per the commitment letter for granting permission to right for uploading TDR is assessable as long term capital gains and not as income from other sources – Substantial question of law raised first time before the Honourable High in an appeal filed by the assessee is admitted by the Honourable High Court. [S. 56, 260A]
The Asessessee has purchased a land at Khar Mumbai, vide Deed of Conveyance dated August 28, 1956. He constructed a bungalow consisting of ground floor and first floor. Vide agreement dated September 29, 1992 the assessee executed an agreement for redevelopment with Gokul Construction Co . As per the agreement the assessee received an amount of Rs. 1.55 Crores in FY. 1993-94 and offered the same as long term capital gains for tax in AY .1994-95. By exchange of Letter dated September 29, 1992 the Developers has agreed to pay additional amount to the assessee Rs. 1,000 per square foot of TDRs that would be utilized . In the year 2016 & 2017 the Developer has paid 1,00,92,750 for loading TDR in the building . The assessee has offered the said amount as long term capital gains . The Assessing Officer assessed the said receipt as income from other sources . The order of the Assessing Officer was affirmed by the CIT(A) and Tribunal . On appeal to the High Court ,allowing the appeal the Honourable Court held that development agreement and the commitment letter should be read as one agreement and should be considered as payment under the development agreement itself .The stand of the assessee offering the said receipt as long term capital gains is affirmed . The petitioner has also raised additional substantial question law before the Honourable High Court relying on the judgement of CIT v. Sambhaji Nagar Co -operative Society Ltd (2015) 370 ITR 325 ( Bom)(HC) and CIT v. Maheswari Prakash -2 Co -Operative Housing Society Ltd (ITA No 2346 of 2009 dt. 24 -4 -2015 )( Order of Tribunal Maheswari Prakash -2 Co -Operative Housing Society Ltd v. ITO (2009) 118 ITD 223 (Mum)( Trib), which reads as under “Whether on the facts and in the circumstances of the case , as the assessee had not incurred any cost to acquire the additional FSI ,the amount of Rs , 1,00, 17,750 / received from the developer is not taxable ?”.
Revenue contended that the issue raised in the additional substantial question of law was not argued before the Income tax Appellate Tribunal hence the Court should not frame the substantial question of law proposed. Honourable High Court has admitted the substantial question of law. At the time of hearing the petitioner has not pressed the question no 2 which was originally framed and question no 3 which was later framed (ITA No . 259 of 2003 dt 23 -2. 2024 , ITA No. 259 of 2003 dt 19-4- 2024 )(AY. 1997 -98)
Sunil Pran Sikand v. ACIT (Bom.)(HC) www.itatonline.org
[Coram : Hon’ble Shri Justice K.R. Shriram Hon’ble Justice Dr. Neela Kedar Gokhale]