ACIT 24(1), MUMBAI V. SHAFAA CONSTRCUTION CO., MUMBAI

ITA 4344/MUM/2009

• Counselvise Citation: 434419914 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Assessee Lawyers: DR P DANIEL SHRI M P MAKHIJA
• Keywords: Capital asset; Business income; Fair market value; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.4344/MUM/2009 (ASSESSMENT YEAR: 2006-07) ACIT 24(1), C-13, R. NO.503, PRATYAKSH KAR BHAVAN, MUMBAI ....... APPELLANT VS M/S. SHAFAA CONSTRUCTION CO., SHOP NO.10, MALKANI TOWER, BANDIVILI HILL ROAD, JOGESHWARI (W), MUMBAI -400 102 ..... RESPONDENT PAN : AAUFS 8759 E APPELLANT BY : SHRI B. JAYA KUMAR RESPONDENT BY : DR. P. DANIEL / SHRI M.P. MAKHIJA DATE OF HEARING : 03. 10.2011 DATE OF PRONOUNCEMENT: 28.10.201 1 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-24 MUMBAI DATED 22.05.2009 FOR THE A.Y. 2006-07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN DS:- GROUNDS OF APPEAL 1. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN HOLDING THAT RECEIPTS FROM THE SALE OF FSI/TDR AS BUSINESS RECEIPTS AND NOT CAPITAL RECEIPTS ? M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 2 2. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN HOLDING THE TRANSFER VALUE OF FSI AT ` 2,25,00,000/- AS AGAINST ` 16,18,36,892/- DETERMINED BY THE A.O. AS PER STAMP DUTY RECKONER? 3. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT (A) ERRED IN INTERPRETING THE PROVISIONS OF SECTION 5OC, PARTICULARLY WHEN THE MARKET VALUE OF THE FSI DEPIC TED BY THE STAMP VALUATION AUTHORITY, IS RS.NIL, THE ACTUAL CO NSIDERATION RECEIVED BY THE ASSESSEE IS ` 2.25 CRORES, AND THE FAIR MARKET VALUE OF THE ASSET AS PER STAMP DUTY RECKONER IS ` 16,18,36,892/-.? 2. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS IN THE CONSTRUCTION AND DEVELOPMENT OF PROPERTY. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 20 06-07 DECLARING THE INCOME OF ` 12,31,973/-. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS FINALLY CO MPLETED U/S.143(3) OF THE ACT. 3. SO FAR ISSUE OF SALE OF FSI AND TDR IS CONCERNED , THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. ASHI ANA CHS ON 15.05.2002 TO DEVELOP THE LAND AT CTS NO.426 (PART) 446 (PART) AT GUNDIVALI, ANDHERI (E), AS PER SRA RULES. AS PER T HE SAID AGREEMENT, THE ASSESSEE WAS AUTHORIZED TO UTILIZED FSI WHICH W AS GENERATED FROM CONSTRUCTION OF SRA PROJECT AND FSI TO BE USED FOR CONSTRUCTION OF COMMERCIAL BUILDING. THE ASSESSEE SUBMITTED THE BU ILDING PLAN TO SLUM REHAB. AUTHORITY AND COMMENCEMENT CERTIFICATE WAS ISSUED ON 25.06.2003. THE ASSESSEE CONSTRUCTED THE BUILDING CONSISTING GROUND + 8 FLOORS FOR THE TENANTS AND OCCUPANTS WHO WERE T HE MEMBERS OF M/S. ASHIANA CHS. THE ASSESSEE-FIRM CONSTRUCTED 71 RESIDENTIAL PREMISES IN THE REHABILITATION BUILDING, OUT OF WHI CH IT WAS AGREED TO M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 3 HAND-OVER THE POSSESSION OF 64 FLATS TO THE TENANTS AND THE OCCUPANTS AND AS PER THE UNDERSTANDING BETWEEN THE SOCIETY AN D THE ASSESSEE, THEY WERE ENTITLED TO THE BALANCE FLATS (I.E. 7 FLA TS) AND THE ASSESSEE BECAME ELIGIBLE FOR FSI OF 18,827 SQ.FT., WHICH WAS CONSUMED IN THE CONSTRUCTION OF HOTEL. THE ASSESSEE ENTERED INTO D EVELOPMENT AGREEMENT WITH HOTEL SUBA GALAXY DATED 25.05.2005 P ERMITTING THEM TO USE THE FSI OF ABOUT 18,825 SQ.FT. FOR CONSTRUCT ION OF THE HOTEL ON THE PORTION MARKED AS COMMERCIAL BUILDING AREA AND TRANSFERRED THE DEVELOPMENT RIGHTS TO CONSUME THE FSI OF ABOUT 18,8 25 SQ.FT. THE ASSESSEE GOT THE PRICE OF ` 2.25 CRORE. OUT OF THE 2.25 CRORES, THE ASSESSEE RECEIVED ` 2.10 CRORE IN THE FINANCIAL YEAR 2005-06 RELEVANT TO THE A.Y. 2006-07. THE ASSESSEE ALSO GOT THE TDR ADMEASURING 500 SQ. METERS ON THE COMPLETION OF THE SRA SCHEME AND THE ASSESSEE TRANSFERRED THE SAID TDR TO M/S. AVINASH DEVELOPER FOR A TOTAL CONSIDERATION OF ` 29,60,100/- ON 3.05.2005. THE A.O. REFERRED TO TH E DRC UTILIZATION FORM SR. NO.026098 IN WHICH THE ASS ESSEE HAS SHOWN AS A TRANSFEROR THE INCOME OF THE ASSESSEE FIRM, SALE OF FSI OF 18,827 SQ.FT. HAS BEEN ASSESSED IN THE A.Y. 2005-06 ON THE PROTECTIVE BASIS. THE A.O. HAS GIVEN THE GIST OF THE PROTECTIVE ASSES SMENT IN PARA NO.4.1 TO 4.3 OF THE ASSESSMENT ORDER. HOWEVER, THE ASSES SEE OFFERED THE SALE OF FSI FOR THE A.Y. 2007-08 AND HAS ALSO DISPUTED T HE ORDER OF THE TAXABILITY. HENCE, THE ASSESSMENT FOR THE A.Y. 200 5-06 WAS MADE ON THE PROTECTIVE BASIS. THE A.O. FRAMED THE FOLLOWIN G QUESTIONS ON THE ISSUE OF THE TAXABILITY OF THE FSI & TDR SOLD BY TH E ASSESSEE: A. WHETHER THE FSI / TDR SOLD BY THE ASSESSEE IS A CAPITAL ASSET OR A BUSINESS ASSET ? B. WHAT IS THE YEAR OF CHARGEABILITY OF INCOME DERI VED FROM THE SALE OF FSI / TDR ? C. VALUATION I.E. TO SAY WHAT SHOULD BE THE VALUE F OR THE SALE OF FSI / TDR ? D. WHETHER THE SALE OF FSI / TDR BEING CAPITAL ASS ET GIVES RISE TO LTCG OR STCG IN THE ASSESSEE CASE ? M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 4 E. WHAT IS THE QUANTUM OF CAPITAL GAIN ? 4. THE A.O. ALSO RECORDED THE STATEMENTS OF THE PAR TNERS OF ASSESSEE FIRM SHRI ASIF JUSUB HALAI AND SHRI SALIMU DDIN USMAN GANI NAROO, WHICH ARE REPRODUCED IN THE ASSESSMENT ORDER . AFTER DISCUSSING THE ISSUE ELABORATELY, THE A.O. FINALLY CONCLUDED THAT :- (I) FSI / TDR SOLD BY THE ASSESSEE WERE TRANSACTION S GIVING RISE TO CAPITAL GAIN AS THE FSI / TDR WERE CAPITAL ASSET AN D NOT STOCK- IN-TRADE OF THE ASSESSEE. (II) IN RESPECT OF THE YEAR OF CHARGEABILITY OF THE INCOME FROM THE SALE OF FSI / TDR THE A.O. CONCLUDED THAT THE SUBSTANTIA L ASSESSMENT IS TO BE MADE IN THE HANDS OF THE ASSESSEE-FIRM IN THE A.Y. 2006- 07. SO FAR AS SALE OF THE TDR OF 500 SQ. METERS IS CONCERNED, AS TDR WAS SOLD ON 3.05.2005 WHEN THE SAME WAS ASSESSA BLE IN THE A.Y. 2006-07. THE ASSESSEE ALSO DETERMINED THE ISSUE OF THE VALUE OF THE FSI / TDR SOLD. THE A.O. ALSO REFERRE D TO THE ASSESSMENT OF THE ASSESSEE FOR THE A.Y. 2005-06. T HE A.O. DEPUTED THE INSPECTOR OF THE SUB-REGISTRAR OF ASSUR ANCES AND ENQUIRED ON THE RATES OF THE COMMERCIAL PREMISES IN THAT AREA AND HELD THAT THE FAIR MARKET VALUE OF FSI SOLD BY THE ASSESSEE TO HOTEL SUBA GALAXY ` 11,47,69,342/- AS AGAINST ` 2.25 CRORE DECLARED BY THE ASSESSEE. THE A.O. ALSO HELD THAT THE ASSESSEE HAS UNDER STATED THE FAIR MARKET VALUE TO THE EXTEN T OF ` 9,22,69,392/-. THE A.O. ALSO SHOWED APPLICABILITY OF SEC.55A IN RESPECT OF THE REFERENCE TO THE VALUATION OFFICER. THE A.O. ALSO CONCLUDED THAT THE FSI IS A IMMOVABLE PROPERTY AND THERE WAS TRANSFER WITHIN THE MEANING OF SEC.2(47). THE A.O. ALSO QUESTIONED THE SALE OF FSI / TDR GIVE RISE TO LONG- TERM-CAPITAL- GAIN OR SHORT-TERM-CAPITAL-GAIN IN THE ASSESSEES C ASE. THE A.O. ALSO REFERRED TO THE REPORT AND GAVE DEFINITION OF SHORT-TERM- CAPITAL-GAIN AND LONG-TERM-CAPITAL-GAIN GIVEN IN SE C.2(42) AND 2(29) OF THE I.T. ACT. THE A.O. ALSO EXAMINED THE CLAUSES OF ACQUISITION OF FSI / TDR WHICH WERE ACQUIRED BY THE ASSESSEE IN M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 5 PURSUANCE TO THE SRA PROJECT. THE A.O. REJECTED TH E CONTENTION OF THE ASSESSEE THAT THE SALE OF FSI AND SALE OF TDR I S A BUSINESS RECEIPT AND NOT A CAPITAL ASSET EVEN THOUGH THE ASS ESSEE HAS DECLARED THE SALE OF FSI AND SALE OF TDR IN THE SUB SEQUENT ASSESSMENT YEAR I.E. A.Y. 2007-08. THE A.O. FINALL Y CONCLUDED THAT TDR AND FSI ARE THE CAPITAL ASSET GIVING RISE TO THE CAPITAL GAINS AND HE, THEREFORE, WORKED OUT THE SHORT-TERM- CAPITAL-GAIN OF ` 13,83,01,726/-. THE ASSESSEE CHALLENGED THE O RDER OF THE A.O. RAISING SERIOUS GRIEVANCE AGAINST THE FINDINGS AND CONCLUSION OF THE A.O. THE LD. CIT (A) DEALT WITH ALL THE ISSUES AND HELD AS UNDER:- (I) THE FSI & TDR RECEIVED BY THE ASSESSEE WERE OF THE NATURE OF THE TRADING ASSETS IN ITS HANDS. (II) THE ESTIMATION OF THE FAIR MARKET VALUE MADE BY THE A.O. IN RESPECT OF THE SALE CONSIDERATION WITH THE FSI & TDR WERE UNLAWFUL AND .ESTIMATE (III) THE CIT (A) DIRECTED THE A.O. TO ASSESSEE ENTIRE IN COME OF THE PROJECT IN THE A.Y. 2005-06 AND HE ALSO DIRECTE D THE A.O. TO TAKE THE ACTUAL SALE PROCEED OF THE FSI & T DR AND ALSO SOLD FLATS AS TRADING RECEIPT. HE ALSO DIRECT ED TO DEDUCT THEREFROM CAPITAL COST INCURRED BY THE ASSES SEE ON THE DEVELOPMENT OF THE SRA PROJECT TILL 31.03.2006. HE ALSO DIRECTED THE A.O. RESULTANT FIGURE SHOULD BE T REATED AS BUSINESS INCOME FROM THE PROJECT FOR THE A.Y. 20 06-07. THE REASONS GIVEN BY THE LD. CIT (A) ARE AS UNDER:- 4.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF ID AUTHORIZED ,Z REPRESENTATIVES CAREFULLY. FOLL OWING THREE ISSUES ARE REQUIRED TO BE ADJUDICATED: I. WHETHER THE FSI WAS A TRADING ASSET OR CAPITAL R ECEIPT. II. EVEN IF THE FSI IS ASSUMED TO BE A CAPITAL ASS ET, WHETHER THE AC WAS JUSTIFIED IN REJECTING THE CONSIDERATION M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 6 RECEIVED ON ITS SALE AND IN ADOPTING THE FMV OF COMMERCIAL BUILDING FOR THE COMPUTATION OF CAPITAL GAIN. III. THE ASSESSMENT YEAR IN WHICH THE INCOME FROM THE REHABILITATION PROJECT INCLUDING SALE OF FSI AND TD R SHOULD BE TAXABLE. 4.2 FIRST I TAKE UP THE ISSUE MENTIONED IN CLAUSE ( I) ABOVE. THERE IS NO DISPUTE ON THE FACT THAT THE APPELLANT WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF BUI LDINGS. IN THE COURSE OF SUCH BUSINESS IT HAD UNDERTAKEN THE SRA P ROJECT. IN NORMAL CASES A BUILDER BUILDS A PROJECT AND SELLS T HEM FOR CASH CONSIDERATION. IN SRA PROJECT, THE BUILDER DOES NOT GET ANY CASH CONSIDERATION AGAINST THE BUILDING CONSTRUCTED BY I T FOR REHABILITATION OF SLUM DWELLERS. IN LIEU THEREOF T GETS CERTAIN FSI AND TDR. SO THE FSI AND TDR ARE DEFINITELY THE CONS IDERATION OF THE PROJECT RECEIVED IN KIND. IHE BUILDER CAN UTILI ZE THEM IN ITS OWN CONSTRUCTION OR IT CAN SELL THEM FOR A VALUABLE CONSIDERATION. IN THIS CASE THERE IS NO DISPUTE ON THE FACT THAT T HE APPELLANT DEVELOPED TUE SRA PROJECT FOR EARNING FSI AND TDR W ITH AN INTENTION TO UTILIZE THEM IN CONSTRUCTION OF COMMER CIAL BUILDINGS. THIS INTENTION OF THE APPELLANT IS CORROBORATED BY THE AFORESAID STATEMENTS OF ITS PARTNERS RECORDED BY THE AC. THEY HAD STATED IN CLEAR WORDS THAT THE APPELLANT INTENDED TO ACQUI RE THE FSI AND TDR FOR USING THEM IN ITS OWN CONSTRUCTION OF COMME RCIAL BUILDINGS. SO THE FSI AND TOR WERE DEFINITELY OF TH E NATURE OF TRADING ASSETS IN THE BANDS OF THE APPELLANT. THEIR UATURC CAN BE COMPARED WITH PURCHASE OF AND BY A BUILDER FOR CONS TRUCTION OF A PROJECT THEREON. IF FOR ANY REASON THE BUILDER DOES NOT DEVELOP THE PROJET AND SELLS THE LAND, SUCH LEND WILL NOT DAS E TO BE A TRADIRIGASSET AND THE PROFIT THEREON CANNOT BE ASSE SSED AS CAPITAL GAIN. THE FSI AND TDR IN THIS CASE ARE ALSO COMPARABLE WITH THE RAW MATERIALS PURCHASED BY A MANUFACTURER FOR USING THEM IN THE MANUFACTURING PROCESS, IF THE MANUFACTU RER FOR ANY REASON DOES NOT CONSUME THE RAW MATERIALS IN THE MA NUFACTURING PROCESS BUT SELLS THEM, SUCH RAW MATERIALS WILL NOT CEASE TO BE TRADING ASSETS AND THE PROFIT THEREON CANNOT BE ASS ESSED AS CAPITAL GAIN. IN ALL THESE CASES THE PROFIT HAS TO BE ASSESSED AS M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 7 BUSINESS INCOME ONLY AS THE ASSETS SOLD WERE TRADIN G ASSETS. ONCE AN ASSET IS ACQUIRED AS A TRADING ASSET, THE P ROFIT ON ITS SALE HAS TO BE ASSESSED AS BUSINESS INCOME IN THIS CASE ALL THE MATERIALS ON RECORD SHOW THAT THE FSI AND TDR WERE ACQUIRED BY THE APPELLANT AS TRADING ASSETS. THE A.O. HEAVILY R ELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT V/S RAMNARAIN & SONS LTD (31 ITR 17). IN THAT CASE THE ASSESSEE WAS DEALING IN SHARES AND WAS ALSO ENGAGED IN BUSIN ESS OF ACQUIRING MANAGING AGENCIES. IT PURCHASED CERTAIN S HARES FOR TAKING OVER THE MANAGING AGENCY OF A COMPANY AND IN CURRED SOME LOSS ON SALE OF SUCH SHARES, HONBLE HIGH COUR T HELD THAT SUCH SHARES WERE NOT PURCHASED IN THE BUSINESS OF T RADING IN SHARES AND WERE CAPITAL ASSETS. RI THIS CASE THE FS I AND TDR WERE ACQUIRED DURING THE COURSE OF BUSINESS OF DEVE LOPMENT OF PROJECT AND FOR THE PURPOSE OF UTILIZING THEM IN CO NSTRUCTION OF COMMERCIAL BUILDING. SO THIS JUDGMENT CANNOT BE APP LIED TO THE FACTS OF THE PRESENT CASE AT ALL. SIMILARLY OTHER J UDGMENTS RELIED UPON BY THE AC ARE OUT OF CONTEXT AND NOT APPLICABL E TO THE PRESENT CASE. ON THE OTHER HAND SOME OF THE JUDGMEN TS RELIED UPON BY LD ARS OF THE APPELLANT ARE RELEVANT TO THE FACTS OF THE PRESENT CASE. IN VIEW OF ALL THESE DISCUSSIONS, HOL D THAT THE FSI AND TOR RECEIVED BY THE APPELLANT WERE OF THE NATUR E OF TRADING ASSETS IN ITS HANDS. NOTWITHSTANDING THE FACT THA T THE AC DID NOT HAVE ANY LEGAL AUTHORITY TO MAKE SUCH FR4 SUBST ITUTION, EVEN THE VALUE ADOPTED BY HIM WAS ARBITRARY. HE ADOPTED THE STAMP DUTY VALUATION OF A COMMERCIAL BUILDING WHEREAS THE APPELLANT HAD SOLD ONLY THE FSL. A COMMERCIAL BUILDING CANNOT BE COMPARED WITH FSL. EXPENDITURE ON FSI IS ONLY A PAR T OF THE TOTAL EXPENDITURE INCURRED ON THE CONSTRUCTION A COMMERCI AL BUILDING. IT CANNOT BE TREATED AT PAR THEREWITH. IN VIEW OF T HESE CLEAR PROVISIONS OF LAW AND THE FACTS STATED ABOVE, THE E STIMATE MADE BY THE AC HAS NEITHER THE SANCTION OF LAW NOR WAS R EASONABLE AND PROPER. I THEREFORE, REJECT THE UNLAWFUL AND AR BITRARY ESTIMATE MADE BY THE AO. M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 8 4.4 NOW I TAKE UP THE ISSUE MENTIONED IN CLAUSE (II I) ABOVE I.E. THE ASSESSMENT YEAR IN WHICH THE INCOME FROM THE RE HABILITATION PROJECT INCLUDING SALE OF FSI AND TDR SHOULD BE TAX ABLE. THE CONSTRUCTION OF THE PROJECT WAS COMPLETED IN THE PR EVIOUS YEAR_RELEVANT TO THE AY. 2006-07. A BUILDER GETS TH E OCCUPATION CERTIFICATE ONLY AFTER THE CONSTRUCTION OF THE PROJ ECT IS COMPLETED. THE APPELLANT GOT THE OCCUPATION CERTIFICATE VIDE L ETTER DATED 23/06/2005. THE FSI WAS SOLD VIDE AGREEMENT DATED 25/05/2005 & SUBSTANTIAL PORTION OF SALE PROCEEDS I .E. 210 LAKHS OUT OF TOTAL CONSIDERATION OF 225 IAKHS WAS R ECEIVED BY 31/03/2006. THE TDR WAS ALSO SOLD ON 03/0512005. SO THERE WAS NO PROPER REASON FOR NOT OFFERING THE INCOME FR OM THE COMPLETED PROJECT IN THE A,Y. 2006-07. ONLY BECAUSE THE APPELLANT INCURRED SOME SMALL EXPENSES AFTER COMPLE TION OF THE PROJECT IN THE A.Y. 2007-08, THE TAXATION OF PROFIT FROM THE COMPLETED PROJECT CANNOT BE DEFERRED. THE AC RIGHTL Y HELD THAT THE INCOME FROM THE SALE OF FSI AND TDR WAS TAXABLE IN THE AX. 2006- 07, HE S DIRECTED TO ASSESS THE INCOME FROM T HE ENTIRE PROJECT IN THE A.Y.2006-OZ. FOR COMPUTING SUCH INCO ME FROM THE PROJECT ASSESSABLE IN THE A.Y.2006-07 HE SHOU!D TAK E THE ACTUAL SALE PROCEEDS OF THE FSI, TDR & SOLD FLATS OUT OF T HE 4 FIATS AVAILABLE TO THE APPELLANT FOR FREE SALE AS TRADING RECEIPTS. HE SHOULD ADD THERETO THE COST OF CONSTRUCTION OF UNSO LD FIATS OUT OF SUCH FOUR FLATS AS CLOSING STOCK. HE SHOULD DEDUCT THERE FROM THE ACTUAL COST INCURRED BY THE APPELLANT ON DEVELOPMEN T OF THE SRA PROJECT TILL 31/03/2006. THE AO IS ACCORDINGLY DIRE CTED TO ASSESS THE RESULTANT FIGURE AS BUSINESS INCOME FROM THE P ROJECT IN THE A.Y. 2006-07. 5. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. WE HAVE ANXIOUSLY GONE THROUGH THE RE ASONS RECORDED BY BOTH THE AUTHORITIES BELOW ON THE ISSUE BEFORE US. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL THAT BEING THE ASSESSEE IS A BUILDER HENCE, FSI AND TDR ARE PART OF HIS STOCK-IN-TRADE A ND IT CANNOT BE M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 9 TREATED AS CAPITAL ASSET. SO FAR AS VALUATION MADE BY THE A.O. IS CONCERNED, IN OUR OPINION, AS RIGHTLY HELD BY LD. C IT (A) THERE IS NO SANCTITY OF LAW THE WAY THE ESTIMATION IS MADE BY T HE A.O. IN RESPECT OF THE SALE CONSIDERATION OF FSI AND TDR. SECTION 5 0C PROVIDES FOR THE TRANSFER OF THE IMMOVABLE PROPERTY LIKE BUILDING OR LAND. FSI IS A RIGHT TO CARRY ON A CONSTRUCTION ON THE LAND AS REGULATED BY THE DEVELOPMENT REGULATIONS BUT THE SAME CANNOT BE TREA TED AS LAND ITSELF. SO FAR AS FSI AS WELL AS TDR ACQUIRED BY THE ASSESS EE ARE CONCERNED, THE SAME WERE ALLOTTED BY THE SLUM DEVELOPMENT AUTH ORITY (SDA). WE FIND THAT ONLY THERE ARE TWO CORE CONTROVERSIES I.E . (I) NATURE OF THE RECEIPT FROM THE SALE OF THE FSI OR TDR AND (II) VA LUATION OF THE FSI AND TDR SOLD BY THE ASSESSEE. WE HAVE GONE THROUGH BY THE FINDINGS AND REASONING GIVEN BY THE LD. CIT (A) AND WE FIND THAT SAME ARE IN CONFORMITY WITH THE LAW. SO FAR AS ASSESSABILITY I S CONCERNED, THE LD. CIT (A) HELD THAT IT HAS TO BE TAXED IN THE A.Y. 20 06-07. AFTER GIVING OUR ANXIOUS CONSIDERATION TO THE ENTIRETY OF THE FA CTS AND REASONING OF THE LD. CIT (A) ON THE ISSUE BEFORE US, WE DO NOT F IND ANY REASON TO TAKE OUT A DIFFERENT VIEW, AS CONCLUSION ARRIVED AT BY THE A.O. ON THE ISSUES WHICH IS NOT ON ANY LEGAL FOOTINGS. WE DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) ACCO RDINGLY THE SAME IS CONFIRMED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8TH OCTOBER 2011. SD/- SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATED : 28TH OCTOBER 2011 M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 10 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -XXIV, MUMBAI. 4) THE CIT-24, MUMBAI. 5) THE D.R. E BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN M/S. SHAFAA CONSTRUCTION CO. ITA 4344/M/2009 11 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.10.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 24.10.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER