ASSTT.C.I.T-3(2), MUMBAI V. M/S. IGE INDIA LTD., MUMBAI

ITA 6683/MUM/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8681 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 04-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K MEHTA
• Keywords: Capital asset; Depreciation; Cost of acquisition
• Section: 2(14)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI BEFORE SHRI P.M.JAGTAP , AM AND SHRI AMIT SHUKLA , JM ITA NO. 6 683 / MUM/ 20 08 ( ASSESSMENT YEAR : 20 05 - 200 6 ) ASSTT. CIT - 3(2), MUMBAI - 400 020. VS. IGE INDIA LTD., 17 TH FLOOR, NIRMAL, NARIMAN POINT, MUMBAI - 400 021. PAN/GIR NO . : AAAC I 2678 B ( APPELLANT ) .. ( RESPONDENT ) /APPELLANT BY : MR. N.K.MEHTA /RESPONDENT BY : MR. KANCH U N K AUSHAL & MR. DHANESH BAFNA DATE OF HEARING : 4 TH OCT., 2012 D ATE OF PRONOUNCEMENT : 12 TH OCT.,2012 O R D E R PER AMIT SHUKLA , J M : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST IMPUGNED ORDER DATED 21 - 9 - 2008 , PASSED BY THE CIT(A) - III , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 14 3 (3) FOR THE ASSESSMENT YEAR 200 5 - 0 6 ON THE FOLLOWING GROUNDS OF APPEAL : - 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.32,12,510 / - ON ACCOUNT OF FSI RELATED TO FLAT WHICH WAS PART OF BLOCK OF THE ASSETS AND ON WHICH DEPRECIATION IN EARLIER YEAR WAS CLAIMED BY THE ASSESSEE . 2 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.33,23,522/ - BEING THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE S OCIETY ON ACCOUNT OF TRANSFER OF FSI HELD BY THE A.O. AS DIVIDEND INCOME FROM THE SOCIETY. ITA NO.6683/2008 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN RESTRICTING DISALLOWANCE TO RS.2,540/ - AS AGAINST RS.19,61,052/ - DISALLOWED BY THE A .O. 4. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. EARLIER IN THIS CASE, THE ITAT VIDE ITS ORDER DATED 9 TH OCTOBER, 2009 HAD SET ASIDE THE ENTIRE MATTER TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ANITA ENTERPRISES, PASSED IN ITA NO.183/2005 AS THE FULL TEXT OF THE SAID DECISION WAS NOT GIVEN . AG AINST THE SAID ORDER, THE ASSESSEE HAD FILED A MISCELLANEOUS APPLICATION BEFORE THIS TRIBUNAL SUBMITTING THAT THE TRIBUNAL WAS UNDER THE IMPRESSION THAT THE DECISIONS SUBMITTED BY THE ASSESSING OFFICER WERE ONLY THE HEADLINES OF THE DECISION AND NOT THE FU LL DECISION, AND, THEREFORE, REMANDED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THUS, IT WAS PRAYED THAT A MISTAKE APPARENT ON RECORD. AS THE FULL TEXT OF THE DECISION OF THE HONBLE HIGH COURT WAS IN FACT FILED BY THE ASSESSEE AT THE TIME HEARING OF THE APPEAL HENCE, THE TRIBUNAL VIDE ITS ORDER DATED 6 - 1 - 2011 RECALLED THE ORDER FOR FRESH ADJUDICATION. NOW, THIS APPEAL HAS BEEN HEARD AFRESH BY US. 3. FACTS IN BRIEF RELEVANT FOR ADJUDICATION OF THE ISSUES INVOLVED BEFORE US ARE THAT THE ASSESSEE IN THE YEAR 1984 HAD PURCHASED A RESIDENTIAL FLAT IN ASHOKA APARTMENT IN NEELDHARA CO - OPERATIVE HOUSING SOCIETY LTD. UNDER THE D EVELOPMENT CONTROL REGULATIONS, 1991 (IN SHORT DCR), THE SAID SOCIETY BECAME ENTITLE D TO RIGHT TO ALLOW ITA NO.6683/2008 3 THE USAGE OF ADDITIONAL F LOOR SPACE INDEX ( FSI ) OF AN AREA EQUIVALENT TO EXISTING FSI, WHICH WORKED OUT AT 1608.67 SQ.MTR., AND WAS AVAILABLE FOR DEVELOPMENT. LOOKING TO THE DILAPIDATED STATE OF THE BUILDING, IT WAS DECIDED BY THE SOCIETY TO DEMOLISH THE EXISTING BUILDING AND CONS TRUCT TWO NEW BUILDINGS ON THE SAID PROPERTY MAKING USE OF THE ADDITIONAL FSI GRANTED UNDER DCR. ACCORDINGLY, THE DEVELOPMENT OF THE BUILDING WAS UNDERTAKEN UNDER AN AGREEMENT DATED 18 - 11 - 2004 WITH M/S GULMOHER DEVELOPERS AND THE TDR WERE SOLD TO THE BUILD ER FOR A CONSIDERATION OF RS.8.35 CRORES TOWARDS COLLECTIVE SHARES OF THE 24 OCCUPANTS OF THE FLATS OF THE SOCIETY. OUT OF THE SAME, ASSESSEES SHARE, BEING MEMBER OF THE SOCIETY, WAS ALLOCATED AT RS.33,23,522/ - , OUT OF WHICH AN AMOUNT OF RS.16,61,761/ - WAS RECEIVABLE AT THE TIME OF EXECUTION OF AGREEMENT. IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAS RECOGNIZED THE ENTIRE AMOUNT AS THE INCOME FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, HOWEVER, IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED THAT COST ON TR ANSFER OF ADDITIONAL FSI IS NOT CHARGEABLE TO TAX IN ITS HAND IN THE LIGHT OF THE DECISION OF THE MUMBAI BENCH IN THE CASE OF J E THALAL D. MEHTA, REPORTED IN [2005] 2 SOT 422 (MUM) . 4 . IN THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER , NOT ON LY REQUIRE D THE DETAILS OF THE TRANSACTION REGARDING ACQUISITION OF THE SALE BUT ALSO ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM FOR NOT BEING TAXABLE UNDER THE PROVISION OF CAPITAL GAIN S . IN RESPONSE, ASSESSEE SUBMITTED THAT IT HAD NOT TRANSFERRED ANY BUILD ING OR LAND BUT A RIGHT BY ITA NO.6683/2008 4 VIRTUE OF DCR, 1991, PARTING WITH WHICH DID NOT RESULT INTO A CAPITAL GAIN ON A TRANSFER OF ASSET. MOREOVER, THERE WERE NO COST OF ACQUISITION; HENCE, CAPITAL GAIN CANNOT BE TAXED. THE ASSESSING OFFICER THEREAFTER RAISED VARIOU S OTHER QUERIES AND ASSESSEE FILED ITS REPLIES FROM TIME TO TIME WHICH HA VE BEEN ELABORATELY DISCUSSED FROM PAGES 3 TO 17 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER FINALLY DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND TAXED THE CAPITAL GAIN IN THE FOLLOWING MANNER : - TOTAL CONSIDERATION ON ACCOUNT RS.33,23,622 OF TRANSFER OF TDRS LESS : WDV RS. 1,11,112 RS.32,12,510 AND HELD THAT THE NET AMOUNT OF RS.32,12,510/ - IS CHARGEABLE TO CAPITAL GAINS UNDER SECTION 50 OF THE ACT. THE CONCLUSION OF THE ASSESSING OFFICER WAS THAT THIS IS A CASE OF EXCHANGE OF OLD FLATS AGAINST NEW FLATS AND SURRENDER OF RIGHT TO FSI IS A TRANSFER AND THE RIGHT IN THE EXISTING FLAT AND THE TDR ARE INSEPARABLE, HENCE, THE CONSIDERATION RECEIVED FROM THE DEVELOPERS HAS ARISEN OUT OF THE OWNERSHIP OF THE OLD FLATS AND, THEREFORE, THE SAME IS CHARGEABLE AS SHORT TERM CAPITAL GAINS . WHILE TAXING THE SAME, HE HAS RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARIKA DAS KAPA DIA, REPORTED IN 260 ITR 491 . FURTHER IN THE ALTERNATIVE, THE ASSESSING OFFICER HELD THAT THE SAME AMOUNT IS ALSO TAXABLE AS DIVIDEND RECEIVED BY THE ASSESSEE FROM THE COOPERATIVE HOUSING SOCIETY. IN COMING TO THE CONCLUSION, HE HAS GIVEN A DETAIL REASONIN G AFTER CALLING FOR ASSESSEES ITA NO.6683/2008 5 EXPLANATIO N, WHICH ARE APPEARING FROM PARA 9.2 TO 9.10. SINCE THE AMOUNT OF RS.32,12,510/ - WAS ALREADY TAXED BY HIM UNDER THE HEAD CAPITAL GAINS, THE ADDITION OF DIVIDEND WAS RESTRICTED TO RS.1,11,112/ - . THUS, THE WHOLE AMOUN T WAS BROUGHT TO TAX. 5 . BEFORE THE CIT(A), THE ASSESSEE HEAVILY RELIED UPON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF JE THALAL D. MEHTA (SUPRA) MAHESHWAR PRAKASH COOPERATIVE HOUSING SOCIETY ITA NO.34/MUM/2008 (ORDER DTD. 15 - 5 - 2008) , DEEPAK S. S HAH, IN ITA NO.1483/2001 (ORDER DTD.16 - 6 - 2008) AND ITO VS. LOTIA COURT CO - OP HOUSING SOCIETY, IN ITA NO. 5096/2005( ORDER DTD.6 - 6 - 2008) . LEARNED CIT(A) DULY APPRECIATED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE DECISION S GIVEN BY THE ITAT MUMBAI BENC H ES IN THE ABOVE CASES ARE DIRECTLY ON THIS POINT AND CAPITAL GAIN IS NOT ATTRACTED IN SUCH CASES OF TRANSFER OF TDRS. 6 . WITH REGARD TO THE ALTERNATIVE ADDITION ON ACCOUNT OF DIVIDEND, THE CIT(A) COMPLETELY DISAGREED WITH THE CONCLUSION AND THE FINDING OF THE ASSESSING OFFICER AND DELETED THE SAID ADDITION AFTER OBSERVING AND HOLDING AS UNDER : - 2.7 I HAVE PERUSED THE FACTS OF THE CASE AND ORDER OF ASSESSMENT. AO HAS CATEGORICALLY GIVEN A FINDING THAT AMOUNT RECEIVED FROM THE DEVELOPER ON ACCOUNT OF FSI IS TAXABLE IN THE HANDS OF THE SOCIETY. THIS OBSERVATION HAS BEEN MADE TOWARDS THE END OF PARA NO. 9.2OF THE ASSESSMENT ORDER. I AM IN COMPLETE AGREEMENT WITH THE REPRESENTATIVE OF THE APPELLANT THAT THE SOCIETY IN THE INSTANT CASE IS A MUTUAL SOCIETY. IT WAS FORMED ONLY TO FACILITATE VARIOUS OPERATIONS IN THE SOCIETY FOR THE BENEFIT OF MEMBERS. THERE IS THEREFORE A COMPLETE MUTUALITY AND CONSEQUENTLY RATIO OF DECISIONS OF HON BLE SUPREME COURT IN THE ITA NO.6683/2008 6 CASES RELIED UPON BY APPELLANT ARE APPLICABLE TO THE REC EIPT BY THE MEMBERS. IT IS A DIFFERENT MATTER WHETHER RECEIPT IS TAXABLE IN THE HANDS OF THE SOCIETY. THE OBSERVATION OF A.O., TO MY MIND, IS A VALID OBSERVATION. AO HAS RIGHTLY OBSERVED THAT IN TERMS OF THE VARIOUS DOCUMENTS AS WELL AS IN TERMS OF AGREEME NT WITH DEVELOPER, THE OWNERSHIP OF THE ASSETS, THE LAND, THE BUILDING AND DEVELOPMENT RIGHTS WERE WITH THE SOCIETY. CONSEQUENTLY, WHEN THESE DEVELOPMENTS RIGHTS ARE TRANSFERRED THE AMOUNT RECEIVED OUGHT TO HAVE BEEN TAXED IN THE HANDS OF THE SOCIETY. AS F AR AS THE RECEIPT IN THE HANDS OF THE INDIVIDUAL MEMBER IS CONCERNED, IT IS CONSEQUENTLY COVERED BY THE CONCEPT OF MUTUALITY AND CANNOT BE TAXED. THEREFORE, ADDITION MADE BY THE AO IS NOT JUSTIFIED AND IS DELETED. 7 . SHRI KANCH U N KAUSHAL, LEARNED COUNS EL APPEARING ON BEHALF OF THE ASSESSEE , SUBMITTED THAT THE ISSUE IN QUESTION IS NO MORE RES INTEGRA AS THE ITAT MUMBAI BENCH ES HA VE TAKEN A CONSISTENT VIEW THAT EVEN THOUGH THE TRANSFER OF TDRS AMOUNTS TO TRANSFER OF CAPITAL ASSET, HOWEVER, THE SAME CANNOT BE SUBJECTED TO CAPITAL GAIN AS THE MODE OF COMPUTATION FAILED IN SUCH A CASE S AND IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. B.C. SHRINIVASHA SHETTY, REPORTED IN 120 ITR 24(SC) , TRANSFER OF CAPITAL ASSET WHICH DOES NOT HAVE ANY COST OF ACQUISITION, DOES NOT RESULT INTO CAPITAL GAINS CHARGEABLE TO TAX UNDER SECTION 45. DURING THE COURSE OF HEARING, H E HAS PLACED RELIANCE ON SEVERAL DECISION, LI ST OF WHICH ARE REPRODUCED HEREIN BELOW : - I . CIT VS. ANITA ENTERPRISES, ITA NO.183 /05(BOMBAY HIGH COURT) ; II. JETHALAL D. MEHTA VS DCIT, 2 SOT 422 (MUM); III. NEW SHAILAJA CO - OP. HOUSING SOCIETY LTD. VS ITO, 121 TTJ 62 (MUM); IV. ITO VS. LOTIA COURT CO - OP HOUSING SOCIETY LTD., 118 TTJ 199 (MUM); V. DEEPAK S. SHAH VS ITO, 29 SOT 26 ( MUM); ITA NO.6683/2008 7 VI. MAHESHWAR PRAKASH - 2 CO - OP HOUSING SOC.LTD. VS. ITO, 118 ITD 223 (MUM); VII. VASCON ENGINEERS P.LTD. VS. ACIT, 29 ITATI NDIA 320 (MUM); VIII. SHANKAL MAHAL PREMISES VS ITO, 4 ITATINDIA 464 (MUM) ; IX. NEW PURNIMA CHSL VS ITO, 6 ITATINDIA 851 (MU M); X. ITO VS. SHRI RAM KU. MALHOTRA,2010 TIOL 512 ITAT - MUM; XI. ITO VS. CREATIVE ESTATES P.LTD., 2010 - TIOL - 500 - ITAT - MUM; XII. OM SHANTI CO - OPERATIVE SOCIETY LTD. VS. ITO, (ITA NO . 2550/M/2008 ; XIII. ACIT VS. SHRI ISHVERLAL MANMOHANDAS KASNAKIA & VICE - V ERSA, I T A NO. 3053/M/2010 & 2650/M/2010 ; XIV. SAMBHAJI NAGAR CO - OPERATIVE SOC. LTD. VS.ITO, ITA NO. 431/MUM/2012; AND XV. LAND BREEZ CO - OPERATIVE SOC. LTD. VS. ITO, ITA 4130/MUM/2011. RELYING UPON THESE ABOVE DECISIONS, HE SUBMITTED THAT SINCE THERE WAS N O COST ACQUISITION IN THE TRANSFER OF THE TDR TO THE DEVELOPER , THERE IS NO TAXABLE CAPITAL GAIN EITHER IN THE HANDS OF THE SOCIETY OR IN THE HANDS OF THE MEMBERS I.E. THE ASSESSEE. 8 . REGARDING THIRD GROUND OF APPEAL THAT THE SALE CONS I D E R ATION CANNOT B E TAXED AS DIVIDEND IN THE HANDS OF THE ASSESSEE, HE SUBMITTED THAT THE CONSIDERATION HAD NOT FLOWN FROM THE SOCIETY TO THE MEMBERS, WHICH IS EVIDENT FROM THE VARIOUS CLAUSES OF THE AGREEMENT ENTERED INTO BETWEEN THE DEVELOPER, SOCIETY AND THE MEMBERS , AS THE CONSIDERATION WAS PAYABLE BY THE DEVELOPERS TO THE MEMBERS FOR TRANSFER OF THEIR RESPECTIVE ENTITLEMENTS. IN FACT, THE MEMBERS HAVE PAID THE CONSIDERATION THEMSELVES TO THE SOCIETY. ALTERNATIVELY, HE PLEADED THAT THE TRANSACTION BETWEEN THE SOCIETY AND IN ITS MEMBERS CANNOT BE ITA NO.6683/2008 8 BROUGHT WITHIN THE AMBIT OF TAXATION ON THE PRINCIPLE OF MUTUALITY . HE, THUS, STRONGLY RELIED UPON THE FINDINGS GIVEN BY THE CIT(A) . 9 . ON THE OTHER HAND, LEARNED DR RELIED UPON THE FINDINGS AND THE CONCLUSION DRAWN BY THE ASSE SSING OFFICER AND TOOK US TO THE VARIOUS REASONING GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY TAXED THE CAPITAL GAINS . 10 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL PLACED ON RECORD AND ALSO THE FINDINGS GIVEN BY THE CIT(A) AS WELL AS THE ASSESSING OFFICER. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS A MEMBER OF THE SOCIETY, WHO GOT ITS SHARE OF RS. 33,23,602/ - ON ACCOUNT OF TDR SOLD TO THE BUILDERS FOR A CONS IDERATION OF RS.8.35 CRORES . THE ONLY ISSUE BEFORE US , IS WHETHER SUCH A TRANSFER OF TDR S (BY WAY OF ADDITIONAL FSI) , IS CHARGEABLE TO TAX UNDER THE HEAD CAPITAL GAINS. AS SUBMITTED BY THE LEARNED COUNSEL, WE FIND THAT THERE HAS BEEN CONSISTENT VIEW BY THE ITAT MUMBAI BENCHES THAT SUCH A TRANSFER OF TDR S CANNOT BE SUBJECTED TO CAPITAL GAIN CHARGEABLE TO TAX. FOR THE SAKE OF READY REFERENCE, GIST OF SOME CASE LAWS WHICH HAVE BEEN DISCUSSED IN CASE OF LAND BREEZ CO - OP. SOC. LTD., PASSED IN ITA NO. 4130/ M/2011, VIDE ORDER DATED 14 - 9 - 2012 , ARE REPRODUCED HERE IN BELOW : - THE CONCEPT OF TDRS HAS BEEN EXPLAINED IN SEVERAL DECISIONS OF THE TRIBUNAL. AS CULLED OUT FROM THE DECISION RELIED UPON BY THE ASSESSEE, WHICH HAS BEEN DISCUSSED IN SUCCEEDING PARAGRAPHS, TH E CONCEPT OF TDRS ORIGINATES FROM THE REGULATION OF DEVELOPMENT CONTROL REGULATION OF GREATER MUMBAI I.E., DCR, 1991, WHEREIN IT WAS PROVIDED THAT THE OWNER OR A LESSEE OF A PLOT, ITA NO.6683/2008 9 WHICH WAS RESERVED FOR PUBLIC PURPOSE UNDER THE DEVELOPMENT PLAN OF DCR, WOULD BE ELIGIBLE FOR AWARD OF COMPENSATION BY WAY OF DEVELOPMENT RIGHT CERTIFICATE OF EQUIVALENT FLOOR SPACE INDEX (FSI). IN OTHER WORDS, THE GOVT. DECIDED TO GRANT TRANSFERABLE DEVELOPMENT RIGHTS TO THE LAND OWNERS, WHO AGREED TO SURRENDER THEIR LANDS O N FSI FOR PUBLIC PURPOSES. THESE TDRS CAN BE TRANSFERRED TO OTHER LAND OWNERS OR BUILDING FOR CONSTRUCTING OF THE BUILDING OR ADDITIONAL FLOORS. THE PLOTS ON WHICH THOSE DEVELOPMENT RIGHTS COULD BE USED WERE TERMED AS RECEIVING PLOTS AND ON THESE PLOTS I N ADDITION TO WHATEVER FSI WERE ORIGINALLY AVAILABLE TO THE OWNER OR LESSOR OF SUCH PLOTS, ADDITIONAL FSI CAN BE ALLOWED TO THE OWNER OR LESSOR ON USING THE TRANSFERABLE DEVELOPMENT RIGHTS CONTAINED IN DRCS FOR THE PURPOSE OF CONSTRUCTION OF THE BUILDING. THUS, THE TDR IS AVAILABLE TO THE OWNER / LESSEE OF THE LAND WHICH SURRENDERS TO THE GOVT. AND, THEREFORE, THE ACQUISITION OF SUCH TDRS ARE TO DETRIMENT THE LAND SURRENDERED BY THE OWNER / LESSEE, AND SUCH TDRS CAN BE UTILISED ON ANY PLOT VACANT OR ALREADY DEVELOPED OR BY ERECTION OF ADDITIONAL STOREYS SUBJECT TO THE FSI AVAILABLE IN THE DCR. THE CONTENTIONS AND REASONING OF THE ASSESSING OFFICER TO THE EXTENT THAT THE WORD PROPERTY NOT ONLY INCLUDES TANGIBLE ASSET BUT ALSO INTANGIBLE ASSET AND, THEREFORE , ADDITIONAL FSI AVAILABLE TO THE ASSESSEE IN VIEW OF DCR, 1991, WAS A RIGHT ACQUIRED BY VIRTUE OF BEING OWNER OF THE PLOT IS CORRECT. THUS, SUCH A RIGHT IS DEFINITELY A CAPITAL ASSET HELD BY THE ASSESSEE AND ASSIGNMENT OF SUCH A RIGHT IN FAVOUR OF THE D EVELOPER AMOUNTS TO TRANSFER OF CAPITAL ASSET. IN OUR CONCLUSION, TRANSFER OF TDRS AMOUNTS TO TRANSFER OF A CAPITAL ASSET. 16. HOWEVER, IT HAS TO BE SEEN AS TO WHETHER THERE WAS ANY KIND OF COST IN ACQUIRING THESE RIGHTS. AS STATED EARLIER, THIS RIGHT W AS ACQUIRED AUTOMATICALLY BY VIRTUE OF DCR, 1991, AND WHAT THE ASSESSEE HAS TRANSFERRED IS NOT THE PLOT OR THE BUILDING BUT A RIGHT, PARTING WITH WHICH, DID NOT RESULT IN PARTING WITH LAND OR BUILDING. THEREFORE, SUCH A RIGHT CANNOT BE SAID TO BE EMBEDDED IN THE LAND AS HELD BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), BECAUSE THERE WAS NO DETRIMENT TO COST OF LAND BY GRANTING SUCH RIGHTS. EVEN THOUGH, THERE WAS A TRANSFER OF A CAPITAL ASSET, HOWEVER, THERE WAS NO COST OF ACQUISITION OR ANY COST CAN BE ASCRIBED TO SUCH RIGHT, BECAUSE THE LAND AND THE BUILDING CONTINUED WITH THE POSSESSION OF THE ASSESSEE EVEN WHEN TRANSFER OF TDR WAS MADE TO THE DEVELOPER. THE REASONING AND THE LOGIC GIVEN BY THE ASSESSING OFFICER AND THE LEARNED COMMISS IONER (APPEALS) THAT THESE DEVELOPMENT RIGHTS WERE EMBEDDED WITH THE LAND AND, THEREFORE, THE SUM CHARGEABLE TO COST HAS TO BE ASCRIBED, IN OUR CONSIDERED OPINION, IS NOT TENABLE FOR THE REASON THAT THESE DEVELOPMENT RIGHTS HAVE BEEN AVAILABLE TO THE ASSES SEE AS PER THE DCR, 1991, AND IS SEPARATE AND DISTINCT FROM THE ORIGINAL RIGHT IN LAND AND, HENCE, IT CANNOT BE HELD THAT SUCH A RIGHT WAS EMBEDDED IN THE LAND. THEREFORE, THE CONCLUSION DRAWN BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) ON THIS SCORE GETS FAILED. IN SUCH A SITUATION, COMPUTATIONAL PROVISIONS OF SECTION 48, ALSO GETS FAILED BECAUSE NO COST OF ACQUISITION CAN BE ASCRIBED TO A ITA NO.6683/2008 10 RIGHT WHICH HAS EMANATED FROM DCR, 1991. THIS ISSUE HAS COME UP SEVERAL TIMES AND HAS BEEN DEALT A ND DISCUSSED IN DETAIL BY VARIOUS DECISIONS OF MUMBAI CO ORDINATE BENCH OF THE TRIBUNAL, AS HAVE BEEN REFERRED TO BY THE LEARNED COUNSEL. IN THESE CASES, DEEP ANALYSIS OF APPLICABILITY OF SECTION 48, AND B.C. SRINIVAS SHEETS CASE HAS BEEN DONE. FOR THE SA KE OF BETTER APPRECIATION, GIST OF FEW OF THEM ARE INCORPORATED HEREIN BELOW. (I) THE TRIBUNAL IN JETHALAL D. MEHTA , OBSERVED AND HELD AS FOLLOWS: WE MAY MENTION THAT AS FAR CADELL WVG. MILL CO. (P.) LTD. CASE (SUPRA) IS CONCERNED, THE SPECIAL BENCH DE CISION OF THE TRIBUNAL HAS SINCE BEEN REVERSED BY THE HONBLE BOMBAY HIGH COURT IN THE JUDGMENT REPORTED AS CADELL WVG. MILL CO. (P.) LTD. V. CIT[2001] 249 ITR 2652. SUFFICE TO SAY THAT FOR THIS REASON ALONE REVENUES REJECTION OF ASSESSEES CLAIM, BY RELY ING UPON CADELL WVG. MILL CO. (P.) LTD. S CASE (SUPRA IS NO LONGER SUSTAINABLE IN LAW. WE NEED NOT GO FURTHER INTO THIS ASPECT OF THIS ASPECT OF THE MATTER. THE ONLY OTHER REASON OF REJECTING THE CLAIM THAT THE LAND BREEZ CO. OPERATIVE HOUSING SOCIETY LT D. ASSIGNMENT OF ADDITIONAL FLOOR SPACE INDEX IS THAT, ACCORDING TO THE AUTHORITIES BELOW, THIS RIGHT HAS COST OF ACQUISITION WHICH CONSISTS OF COST OF PURCHASE OF PLOT, COSTS OF GETTING THE DESIGNS APPROVED AND COSTS OF CONSTRUCTING THE BUILDING. IN THIS CONTEXT, HOWEVER, WHAT IS NECESSARY TO APPRECIATE IS THAT THE RIGHTS ASSIGNED TO THE DEVELOPER ARE THE RIGHTS TO RECEIVE AND APPLY THE TRANSFERABLE DEVELOPMENT RIGHTS, AND THAT THESE RIGHTS AROSE TO THE ASSESSEE BY THE VIRTUE OF INTRODUCTION OF DEVELOPMENT CONTROL REGULATION FOR GREATER MUMBAI 1991. UNTIL THE POINT OF TIME THESE DEVELOPMENT REGULATION CAME INTO EXISTENCE, THE ASSESSEE DID NOT HAVE RIGHT TO RECEIVE AND APPLY THE TRANSFERABLE DEVELOPMENT RIGHTS, IT IS THESE RIGHTS ON THE ASSIGNMENT OF WHICH THE ASSESSEE HAS RECEIVED THE IMPUGNED AMOUNT. THEREFORE, THE EXPENDITURE INCURRED ON PURCHASE OF PLOT AND CONSTRUCTION THEREON CANNOT BE SAID TO BE THE COSTS FOR ACQUISITION OF THESE RIGHTS. THE RIGHTS ARE ACQUIRED BY THE VIRTUE OF BEING OWNER OF THE PLOT IN THE SPECIFIED AREA BUT THAT DOES NOT MEAN THAT THE COST INCURRED ON THE PLOT IS THE COST OF ACQUIRING THESE RIGHTS. THE EFFECT OF THE RIGHTS BEING RELATABLE TO THE LEASEHOLD RIGHTS IN THE PLOT COULD AT BEST BE THAT THE AMOUNT RECEIVED BY THE ASSESSEE O N ASSIGNMENT OF RIGHTS TO RECEIVE THE TRANSFERABLE DEVELOPMENT RIGHTS ENDS UP REDUCING EFFECTIVE COST OF ACQUISITION OF THE LAND AND BUILDING IN THE SAID PLOT. THEREFORE, AS AND WHEN THE ASSESSEE TRANSFERS THE SAID PLOT, BUILDING OR ANY PORTION THEREOF AND WHILE DETERMINING CAPITAL GAINS ARISING ON SUCH SALE, THE COST OF ACQUISITION MAY STAND REDUCED BY THE AMOUNT RECEIVED BY THE ASSESSEE ON ASSIGNMENT OF RIGHTS TO RECEIVE THE TDRS. THE CIT(A)S OBSERVATIONS THAT THIS RIGHT CANNOT BE SAID TO BE WITHOUT ANY COST OF ACQUISITION BECAUSE THE TDRS HAVE BEEN RECEIVED ON SURRENDER OF RESERVED PLOT TO THE GOVERNMENT IS EX FACIE INCORRECT INASMUCH AS WHAT WE ARE REALLY CONCERNED WITH IS THE ITA NO.6683/2008 11 RIGHT TO RECEIVE THE TDR ON THE PLOT OWNED BY THE ASSESSEE, AND NOT WITH THE RIGHT TO RECEIVE THE TDR FROM THE GOVERNMENT. THE PERSON GETTING TDRS FROM THE GOVERNMENT HAS TO SURRENDER THE RESERVED PLOT BUT THE PERSON - ON WHOSE PLOT SUCH TDRS CAN BE USED, AS IS THE CASE WE ARE IN SEISIN OF, DOES NOT DO ANYTHING MORE THAN OWNING THE RECEIVING PLOT. THE COSTS INCURRED BY A THIRD PARTY FOR ACQUIRING THE TDR HAS NOTHING TO DO WITH THE RIGHT TO AVAILING THE SAID TDR ON ASSESSEES PLOT. SIMILARLY, THE COSTS OF PLOT AND COSTS OF CONSTRUCTION ARE ALSO NOT THE COST OF ACQUISITION OF THESE R IGHTS. WHAT THE ASSESSEE HAS TRANSFERRED IS NOT THE PLOT OR THE BUILDING, BUT A RIGHT PARTING WITH WHICH DOES NOT RESULT IN PARTING WITH LAND OR BUILDING. THE COSTS OF OBTAINING BMC APPROVAL FOR THE BUILDING PLAN CAN ALSO NOT BE SAID TO BE THE COSTS OF ACQ UISITION OF THESE RIGHTS AS THESE RIGHTS DO NOT ARISE BY THE VIRTUE OF GETTING THESE APPROVALS BUT BY THE VIRTUE OF A LEGAL RIGHT INDEPENDENT THEREOF. THE LAW IS TRITE, AND THERE IS NO DISPUTE ON THE SAID POSITION, THAT WHEN AN ASSET HAS NO COST OF ACQUISI TION, THE GAINS ON SALE OR TRANSFER OF SAME CANNOT BE BROUGHT TO TAX. THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF (SHRI B.C. SRINIVASA SETTY [1981J 128 ITR 294] CLEARLY HOLDS SO. FOR ALL THESE REASONS, WE ARE OF THE CONSIDERED VIEW THAT T HE RECEIPTS ON SALE OF ASSIGNMENT OF RIGHTS TO RECEIVE TDR5 ARE NOT LIABLE TO TAX. THE AUTHORITIES BELOW ERRED IN LAW AND ON FACTS IN HOLDING TO THE CONTRARY. (II) FURTHER, THE TRIBUNAL IN MAHESHWAR PRAKASH 2 CO. OP. HSG.SCT. LTD. (SUPRA), AFTER RELYING UPON THE DECISIONS IN JETHALAL D. MEHTA (SUPRA) AND B .C. SRINIVASA SHETTY (SUPRA), OBSERVED AND HELD AS FOLLOWS: 12. THIS ASPECT OF THE MATTER HAS BEEN EXAMINED BY THE TRIBUNAL IN THE CASE OF JETHALAL D. MEHTA (SUPRA). IN THAT CASE, THE ASSESSEE HAD ACQ UIRED THE LEASEHOLD RIGHTS IN A PLOT OF LAND IN OCTOBER, 1971 ON WHICH THE ASSESSEE HAD CONSTRUCTED TWO STOREYS BUILDING CONTAINING SOME FLATS AND THE FSI AVAILABLE ON THAT WAS FULLY EXHAUSTED. HOWEVER, BY A VIRTUE OF THE DEVELOPMENT CONTROL REGULATIONS, 1 991, THE ASSESSEE BECAME THE OWNER OF THE VALUABLE RIGHT OF AVAILING ADDITIONAL FLOOR SPACE INDEX THROUGH TRANSFER DEVELOPMENT RIGHTS. ACCORDINGLY HE ENTERED INTO AN ARRANGEMENT WITH A DEVELOPER WHO USED TDR ON ASSESSEES FLAT TO AVAIL ADDITIONAL FSI AGAIN ST SUCH CONSIDERATION. THE QUESTION AROSE WHETHER THE ASSESSEE COULD BE CHARGEABLE TO TAX UNDER SECTION 45 OF THE ACT IN RESPECT OF THE CONSIDERATION RECEIVED BY HIM. THE CONTENTION OF THE ASSESSEE BEFORE THE AUTHORITIES WAS THAT THERE WAS NO COST OF ACQUI SITION OF THE RIGHT OBTAINED BY HIM AND THEREFORE, THE CAPITAL GAIN COULD NOT BE COMPUTED IN VIEW OF THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF B.C. SHRINIVASA SHETTY (SUPRA). THE LOWER AUTHORITIES DID NOT ACCEPT SUCH CONTENTION. HOWEVER, THE TRIBUN AL UPHELD THE CONTENTION OF THE ASSESSEE BY HOLDING THAT RIGHT TO CONSTRUCT THE ADDITIONAL FLOORS UNDER THE ITA NO.6683/2008 12 DEVELOPMENT CONTROL REGULATION, 1991 WAS ACQUIRED WITHOUT INCURRING ANY COST AND THEREFORE, ASSESSEE WAS NOT CHARGEABLE TO TAX IN RESPECT OF SUCH RE CEIPTS IN VIEW OF THE AFORESAID HONBLE SUPREME COURT JUDGMENT. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE AFORESAID CASE AND THEREFORE, THE SAID DECISION WOULD SQUARELY APPLY TO THE PRESENT CASE. EVEN AS A RULE OF PRECEDENT, WE ARE BOUND BY THE DECI SION OF A COORDINATE BENCH IN THE ABSENCE OF ANY DECISION OF HIGH COURT OR THE SUPREME COURT. 13. THE CONTENTION OF THE REVENUE THAT THE AFORESAID DECISION OF THE TRIBUNAL IS NOT APPLICABLE AFTER THE AMENDMENT OF SUB - SECTION (2) OF SECTION 55 OF THE ACT IS ALSO WITHOUT FORCE. SECTION 55(2)(A) OF THE ACT WHICH IS RELEVANT WITH REFERENCE TO THE CONTENTION OF THE REVENUE READS AS UNDER : (2) FOR THE PURPOSES OF SECTIONS 48 AND 49, COST OF ACQUISITION, (A) IN RELATION TO A CAPITAL ASSET, BEING GOODWILL OF A BUSINESS [OR A TRADE MARK OR BRAND NAME ASSOCIATED WITH A BUSINESS] [OR A RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THING] [OR RIGHT TO CARRY ON ANY BUSINESS], TENANCY RIGHTS, STAGE CARRIAGE PERMITS OR LOOM HOURS, (I) IN THE CASE OF ACQUISITION OF SUCH ASSET BY THE ASSESSEE BY PURCHASE FROM A PREVIOUS OWNER, MEANS THE AMOUNT OF THE PURCHASE PRICE; AND (II) IN ANY OTHER CASE [NOT BEING A CASE FALLING UNDER SUB - CLAUSES (I) TO (IV) OF SUB - SECTION (1) OF SECTION 49], SHALL BE TAKEN TO BE NIL. CLAUSE, (AA) AND CLAUSE (AB) OF SECTION 55(2) DEAL WITH THE CASE OF SHARES OR SECURITIES AND, THEREFORE, THE SAME ARE NOT RELEVANT FOR DISPOSAL OF THIS APPEAL AND, THEREFORE, THE SAME ARE NOT REPRODUCED HERE. THE PERUSAL OF SECTION 55(2)(A) REVEALS THAT COST OF ACQUISITION IS TO BE TAKEN AT NIL IN THOSE CASES WHERE THE CAPITAL ASSET TRANSFERRED IS EITHER GOODWILL OF BUSINESS OR THE TRADEMARK OR A BRAND NAME ASSOCIATED WITH BUSINESS OR A RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THING O R RIGHT TO CARRY ON ANY BUSINESS, TENANCY RIGHTS, STAGE CARRIER PERMITS OR LOOM HOURS. IN THE PRESENT CASE, THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS AND THE RIGHT TO CONSTRUCT ADDITIONAL FLOORS IS NOT COVERED BY ANY OF THE ASSETS MENTIONED IN THE AFOR ESAID SUB - SECTION (2) OF SECTION 55. THEREFORE, THE AMENDED PROVISIONS OF SECTION 55(2) DO NOT APPLY TO THE PRESENT CASE AND THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN TAKING THE COST OF ACQUISITION OF THE CAPITAL ASSET BEING RIGHT TO CONSTRUCT THE ADDITI ONAL FLOORS AS NIL. 14. WE MAY ALSO REFER TO THE CONTENTION OF THE LEARNED DR THAT RIGHT TO CONSTRUCT THE ADDITIONAL FLOORS WAS EMBEDDED IN THE LAND AND, THEREFORE, THE PRESENT CASE WAS AKIN TO THE ISSUE OF BONUS SHARES AND CONSEQUENTLY, IT CANNOT BE SAID THAT THERE IS NO COST OF ACQUISITION IN RESPECT OF SUCH RIGHT. WE ARE UNABLE TO ACCEPT SUCH CONTENTION OF THE LEARNED DR FOR TWO REASONS. ITA NO.6683/2008 13 FIRSTLY, BECAUSE IT IS NOT THE CASE OF THE ASSESSING OFFICER OR THE CIT(A) SINCE THE COST OF ACQUISITION WAS TAKEN BY THEM AS NIL AS PER THE AMENDED PROVISIONS. SECONDLY, BECAUSE THE THEORY OF SPREADING OVER THE COST OF ORIGINAL SHARE OVER THE ORIGINAL SHARES AND BONUS SHARES WAS BASED ON THE FACT THAT BONUS SHARES WERE ISSUED TO THE DETRIMENT OF THE ORIGINAL SHARES AS H ELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. DALMIYA INVESTMENT CO. [1964] 52 ITR 567. IN THAT CASE, IT WAS HELD THAT BY ISSUE OF BONUS SHARES THE PRICE OF ORIGINAL SHARES HAD DECLINED IN THE MARKET AND, THEREFORE, IT COULD NOT BE SAID THAT ACQUI SITION OF BONUS SHARES WAS WITHOUT COST. HOWEVER, IN THE PRESENT CASE, THE RIGHT TO CONSTRUCT ATTACHED WITH THE LAND ON THE DATE OF PURCHASE OF LAND HAD ALREADY BEEN EXHAUSTED BY CONSTRUCTION OF FLATS PRIOR TO 1991 AS PER THE FSI AVAILABLE ACCORDING TO LAW AS IT WAS IN FORCE. THEREFORE, THERE WAS NO FURTHER RIGHT TO CONSTRUCT ANY FLAT ON THAT LAND. IT WAS BECAUSE OF DCR, 1991 THAT ADDITIONAL RIGHT ACCRUED TO THE ASSESSEE WHICH WAS DISTINCT AND SEPARATE FROM THE ORIGINAL RIGHT. THEREFORE, IT CANNOT BE SAID T HAT SUCH RIGHT EMBEDDED IN THE LAND. EVEN ASSUMING, FOR THE SAKE OF ARGUMENT, THAT SUCH RIGHT EMBEDDED IN THE LAND, THERE WAS NO DETRIMENT TO THE COST OF LAND BY GRANTING SUCH RIGHT ON THE ASSESSEE - SOCIETY. ON THE CONTRARY, PRICE OF THE LAND HAD INCREASED BECAUSE OF THE ADDITIONAL RIGHT MADE AVAILABLE TO THE ASSESSEE - SOCIETY. THEREFORE, THE THEORY APPLIED BY THE HONBLE SUPREME COURT IN THE CASE OF BONUS SHARES CANNOT BE APPLIED TO THE PRESENT CASE. (III) IN NEW SHAILAJA CO. OP. HSG. SCT. LTD. (SUPRA) , IT WAS OBSERVED AND HELD AS FOLLOWS: HELD THE ASSESSEE WAS THE OWNER OF THE LAND AND BUILDING AND CONTINUED TO REMAIN THE SAME EVEN AFTER TRANSFER OF THE SAID CAPITAL ASSET. THUS, THE COST OF THE LAND AND BUILDING OF THE EXISTING STRUCTURE COULD NOT BE A TTRIBUTED TO THE ADDITIONAL FSI RECEIVED BY MEANS OF 1991 RULES. IT IS TRUE THAT SUCH RIGHT IS A CAPITAL ASSET AS PER THE PROVISIONS OF S. 2(14) BUT IN ORDER TO COMPUTE CAPITAL GAINS APART FROM THE EXISTENCE OF CAPITAL ASSET, THERE SHOULD BE SALE CONSIDERA TION ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET AS WELL AS THE COST OF ACQUISITION OF THE ASSET ALONG WITH THE COST OF ANY IMPROVEMENT THERETO, IF ANY. SEC. 48 SETS OUT THE MODE OF COMPUTATION OF INCOME UNDER THE HEAD CAPITAL GAINS BY PROVIDING THAT THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF A CAPITAL ASSET ALONG WITH THE COST OF ACQUISITION AND COST OF ANY IMPROVEMENT, IF ANY, SHALL BE DEDUCTED FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RES ULT OF THE TRANSFER OF CAPITAL ASSET. TRANSFER OF CAPITAL ASSET WHICH DOES NOT HAVE ANY COST OF ACQUISITION DOES NOT RESULT INTO CAPITAL GAINS CHARGEABLE TO TAX UNDER S. 45. THE LEGISLATURE IN ITS WISDOM BROUGHT OUT CERTAIN CATEGORIES OF CAPITAL ASSETS UND ER S. 55(2) AS HAVING COST OF ACQUISITION AT RS. NIL, WHERE SUCH ASSETS HAVE NOT BEEN PURCHASED BY THE ASSESSEE FOR CONSIDERATION. THE EFFECT OF THIS ITA NO.6683/2008 14 SUB - SECTION IS THAT WHEN THE ASSETS SO SPECIFIED IN SUB - S. (2) OF S. 55 ARE TRANSFERRED, THEN THE COST OF ACQUISITION HAS BEEN TAKEN AT RS. NIL EXCEPT WHERE THE ASSESSEE HAD ACQUIRED SUCH ASSETS BY MEANS OF PURCHASING FROM THE PREVIOUS OWNER, AND THE COMPUTATION OF THE CAPITAL GAIN WOULD BE DONE ACCORDINGLY. THERE IS A DIFFERENCE IN THE SITUATION WHEN COST OF ACQUISITION IS RS. NIL AND WHERE THE COST OF ACQUISITION CANNOT BE ASCERTAINED OR NO COST OF ACQUISITION HAS BEEN INCURRED. THE ITEMS OF CAPITAL ASSETS SPECIFIED IN S. 55(2) ARE THOSE FOR WHICH THE COST OF ACQUISITION SHALL BE TAKEN AT RS. NIL FOR COMPUTIN G CAPITAL GAINS. HOWEVER IF THE ASSESSEE HAD NOT INCURRED ANY COST OF ACQUISITION ON A CAPITAL ASSET AND SUCH CAPITAL ASSET DOES NOT FALL IN THE CATEGORY OF THE CAPITAL ASSETS SPECIFIED IN S. 55(2) THEN NO CAPITAL GAIN WOULD BE CHARGED. IT IS ABUNDANTLY CL EAR THAT THE ASSESSEE HAD NOT INCURRED ANY COST OF ACQUISITION IN RESPECT OF THE RIGHT WHICH EMANATED FROM THE 1991 RULES MAKING THE ASSESSEE ELIGIBLE TO ADDITIONAL FSI. THE LAND AND BUILDING EARLIER IN THE POSSESSION OF THE ASSESSEE CONTINUED TO REMAIN WI TH IT AS SUCH EVEN AFTER THE TRANSFER OF THE RIGHT TO ADDITIONAL FSI FOR RS. 48.96 LAKHS. THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY PARTICULAR ASSET AS SPECIFIED IN SUB - S. (2) OF S. 55, WHICH WOULD INCLUDE THE RIGHT TO ADDITIONAL FSI. NO CAPI TAL GAINS COULD BE CHARGED ON THE TRANSFER OF THE ADDITIONAL FSI BY THE ASSESSEE FOR SALE CONSIDERATION OF RS. 48.96 LAKHS FOR THE REASON THAT IT HAS NO COST OF ACQUISITION. JETHALAL D. MEHTA VS. DY. CIT (ITA NO. 672/MUM/2000) FOLLOWED; CIT VS. B.C. SRINIV ASA SETTY (1981) 21 CTR (SC) 138 : (1981) 128 ITR 294 (SC) APPLIED. 17. IN OTHER DECISIONS ALSO, SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL. THUS, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE AFORESAID DECISIONS AND ALSO AS PER OUR FINDINGS AND OBS ERVATIONS GIVEN ABOVE, WE HOLD THAT EVEN THOUGH THE TRANSFER OF TDR AMOUNTS TO TRANSFER OF A CAPITAL ASSET, HOWEVER, THE SAME CANNOT BE SUBJECTED TO TAX UNDER THE HEAD CAPITAL GAIN FOR THE REASON THAT THERE IS NO COST OF ACQUISITION IN ACQUIRING THE RIGH T WHICH HAS BEEN TRANSFERRED AND COMPUTATIONAL MODE GIVEN IN SECTION 48, THUS FAILS IN THIS CASE. THEREFORE, TAXING OF THE RECEIPT FROM TRANSFER OF TDRS UNDER THE HEAD CAPITAL GAIN BY THE ASSESSING OFFICER FOR A SUM OF RS. 10,70,46,274, CANNOT BE SUSTAINED. ACCORDINGLY, THE SAME IS DIRECTED TO BE DELETED AND ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS THUS REVERSED. 1 1 . THUS, IN VIEW OF THE CONSISTENT STAND TAKEN BY THE TRIBUNAL IN ALL THE CASES RELIED UPON BY THE LEARNED COUNSEL, WE HOLD THAT EVEN THO UGH THE TRANSFER OF TDR AMOUNTS TO TRANSFER OF CAPITAL ASSET, HOWEVER, THE SAME CANNOT BE SUBJECTED TO TAX UNDER THE HEAD CAPITAL GAIN FOR THE ITA NO.6683/2008 15 REASON THAT THERE IS NO COST OF ACQUISITION IN ACQUIRING THE FLAT WHICH HAS BEEN TRANSFERRED AND COMPUTATION MODE GIVEN UNDER SECTION 48, THUS, FAILS IN SUCH CASES. ACCORDINGLY, THE FINDING AND THE VIEW TAKEN BY THE CIT(A) IS UPHELD. 1 2 . REGARDING GROUND NO.3 AS RAISED BY THE DEPARTMENT, WE DO NOT FIND ANY MERIT IN SUCH A CONTENTION RAISED BY THE DEPARTMENT , FIRSTLY , THE MONEY HAS NOT BEEN RECEIVED BY THE ASSESSEE FROM SOCIETY UNDER THE AGREEMENT ENTERED INTO BETWEEN THE DEVELOPER, SOCIETY AND THE MEMBERS AS THE CONSIDERATION WAS PAYABLE TO THE MEMBERS BY THE DEVELOPERS FOR TRANSFER OF RESPECTIVE ENTITLEMENTS OF THE MEMBERS AND SECONDLY, PRINCIPLE OF MUTUALITY ALSO APPLIES IN THIS CASE BETWEEN THE SOCIETY AND ITS MEMBERS AND, THEREFORE, THE SAME CANNOT BE TAXED EVEN AS DIVIDEND IN THE HANDS OF THE ASSESSEE. THUS, THE CONCLUSION AND FINDING GIVEN BY THE CIT(A) ON THI S ISSUE IS AFFIRMED. ACCORDINGLY, THIS GROUND ALSO FAILS AND IS DISMISSED. 1 3 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED ON THIS 12 TH DAY OF OCTOBER , 2012. 12 TH OCTOBER, 2012 SD/ - SD/ - ( ) ( P.M.JAGTAP ) ( ) ( AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 TH OCTOBER , 2012. P KM , PS ITA NO.6683/2008 16 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI