IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH “K” MUMBAI
BEFORE MS. SUSHMA CHOWLA (JM) AND MR. B. RAMAKOTAIAH (AM)
ITA No. 5096/M/05 ASSESSMENT YEAR: 2003-04
The ITO, Ward – 19(1) (1)
No. 319, 3rd Floor,
Piramal Chambers, Lalbaug,
Mumbai – 400 0012 … Appellant
M/s. Lotia Court Co-Op. Housing Society Ltd.,
453, 15th Road, Khar (W),
Mumbai – 400 052
PAN / GIR NO. ITO 19(1) (1) … Respondent
Appellant by: Shri Manish Mishra
Respondent by: Mr. Prakash K. Jotwani
O R D E R
PER MS. SUSHMA CHOWLA, JM:
This appeal filed by the Revenue is against the order of CIT (A) - XX, Mumbai dated 02/05/2005 relating to Assessment Year 2003-04 and arises out of the assessment completed under Section 143(3) read with Section 148 of the Income Tax Act, 1961.
2. The only issue raised by the Revenue in its appeal is against the computation of Capital Gains.
3. Mr. Manish Mishra, Departmental Representative appeared for the Revenue and Mr. Prakash K. Jotwani, learned counsel appeal for the assessee and put forward their contentions.
4. The brief facts of the case are that the assessee is a Registered Society consisting of 11 members. The assessee society was entitled to receive certain TDR from the Municipal Corporation of Mumbai, as per which additional floors could be constructed on the existing building. The said right to receive TDR was assigned to a Builder by the members of the society for the purpose of repairing the said building.
5. The assessee entered into an agreement with the developer wherein the terms of settlement vis-à-vis the Member of the society were agreed upon. Separate agreement was entered into by the respective owners of the flats i.e., the Members of the society with the developer for the assignment of the TDR and construction of additional floors in respect of each flat owned by the respective parties.
6. The benefit of the additional TDR was derived and enjoyed by the members of the assessee society and no consideration whatsoever was received by the assessee society for the assignment of the TDRs and for carrying out the repairs of the building and construction of the additional floors. The Assessing Officer treated the consideration received/receivable by the members of the society as income in the hands of the society. The CIT (A) noted that neither any income has been received by the society nor any income had accrued to the society and following the ratio laid down by the Mumbai Bench of Tribunal in Jethalal D. Mehta vs. DCIT in ITA No. 672/Mum/2000 relating to Assessment Year 1996-97, it was held that there is no merit in computing any capital gains on the sale of said TDRs in the hands of assessee society.
7. We have heard the rival submissions and perused the records. In the facts of the present case before us, the assessee society was not the owner of the land. The flats were owned by individual members who had formed the society but the plot of land was not transferred to the society. Certain repairs and redevelopment of the flat had to be undertaken and an agreement was written between the assessee society and the developer for the repairs of the building and for construction of addition floors in the flats of individual flats owned by the members of the society.
8. An agreement was entered into between the assessee society and the developer but no consideration for the transfer of TDRs owned by the flat owners individually was received by the assessee society nor was any area in the constructed portion allocated to the assessee society. The members of the society individually entered into an agreement with the developer for the construction of additional floors or portions annexed to their individual flats and for the repairs of the building.
9. The assignment of the TDR to the developer and in turn the additional floors to be constructed and also repairs / renovation of the building to be carried out, does not entail accruing of any income in the hands of the assessee society, who is not the owner of the plot. Even in the case of flat owners who owned the individual flats in the respective names, it has been held by the Mumbai bench of Tribunal that there is no question of taxability of receipt on account of sale of additional floor space index received by the assessee by virtue of transfer of TDRs under the Development Control Regulation for Greater Mumbai, 1991.
10. The Mumbai bench of Tribunal in Jethalal D. Mehta vs. DCIT (supra) vide order dated 27/1/2005 had held that the receipt on sale of assignment of rights to receive TDRs were not liable to tax.
11. In the facts of the present case before us, the assessee society and not the members of the assessee society have been taxed in respect of receipts arising on account of TDR. Three is no merit in the order of Assessing Officer and we confirm the order of CIT (A) in this respect. The receipts arising on assignment of TDRs are not taxable in the hands of the assessee society. Accordingly, the grounds of appeal raised by the revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed.