ITO vs. Prem Rattan Gupta (ITAT Mumbai)
S. 50C does not apply to transfer of FSI & TDR
The assessee owned a plot of land admeasuring 2244.18 sq. mts of which 2110 sq. mts was acquired by the Municipality for development purposes. The assessee was entitled to receive TDR/ FSI in lieu of the land acquired. The assessee sold the development rights to the said property for Rs. 20 lakhs and computed capital gains on that basis. However, for purposes of stamp duty, the property was valued at Rs. 1.19 crores. The AO held that the value of the property as adopted by the stamp duty authorities had to be taken as the consideration u/s 50C for purposes of capital gains. This was reversed by the CIT(A). On appeal by the department to the Tribunal, HELD:
S. 50C applies only to the transfer of "land or building" and not to the transfer of all "immovable property". Accordingly, though FSI and TDR is "immovable property" as held in Chedda Housing Development vs. Babijan Shekh Farid 2007 (3) MLJ 402 (Bom), it is not "land or building" and so cannot be the subject matter of s. 50C. The property acquired for development (in lieu of which the FSI/TDR was granted) also cannot be considered even though the property continues to stand in the assessee's name in the property records. The property should be valued by the DVO net of the land transferred to the Developer by the assessee after considering the acquisition made by the Govt & the Municipal Corporation and also excluding the value of TDR or additional FSI included in the consideration shown in the Development Agreement
For more see Treatise on the law of Real Estate Development Contracts
Related Judgements
Irfan Abdul Kader Fazlani vs. ACIT (ITAT Mumbai) S. 50C applies only to the transfer of a "capital asset, being land or building or both", "assessed" by any authority of a State Government for stamp duty purposes. The expression "transfer" has to be a direct transfer as defined u/s 2(47) which does not include the tax planning…
Arif Akhatar Hussain vs. ITO (ITAT Mumbai) The argument that transfer of development rights does not amount to transfer of land or building and therefore s. 50C is not applicable is not acceptable because u/s 2(47)(v) the giving of possession in part performance of a contract as per s. 53A of the Transfer of property Act…
Atul G. Puranik vs. ITO (ITAT Mumbai) S. 50C is a deeming provision which extends only to a capital asset which is "land or building or both". A deeming provision cannot be extended beyond the purpose for which it is enacted. If a capital asset cannot be described as `land or building or both', s. 50C…
S. 50C does not apply to transfer of FSI & TDR
The assessee owned a plot of land admeasuring 2244.18 sq. mts of which 2110 sq. mts was acquired by the Municipality for development purposes. The assessee was entitled to receive TDR/ FSI in lieu of the land acquired. The assessee sold the development rights to the said property for Rs. 20 lakhs and computed capital gains on that basis. However, for purposes of stamp duty, the property was valued at Rs. 1.19 crores. The AO held that the value of the property as adopted by the stamp duty authorities had to be taken as the consideration u/s 50C for purposes of capital gains. This was reversed by the CIT(A). On appeal by the department to the Tribunal, HELD:
S. 50C applies only to the transfer of "land or building" and not to the transfer of all "immovable property". Accordingly, though FSI and TDR is "immovable property" as held in Chedda Housing Development vs. Babijan Shekh Farid 2007 (3) MLJ 402 (Bom), it is not "land or building" and so cannot be the subject matter of s. 50C. The property acquired for development (in lieu of which the FSI/TDR was granted) also cannot be considered even though the property continues to stand in the assessee's name in the property records. The property should be valued by the DVO net of the land transferred to the Developer by the assessee after considering the acquisition made by the Govt & the Municipal Corporation and also excluding the value of TDR or additional FSI included in the consideration shown in the Development Agreement
For more see Treatise on the law of Real Estate Development Contracts
Related Judgements
Irfan Abdul Kader Fazlani vs. ACIT (ITAT Mumbai) S. 50C applies only to the transfer of a "capital asset, being land or building or both", "assessed" by any authority of a State Government for stamp duty purposes. The expression "transfer" has to be a direct transfer as defined u/s 2(47) which does not include the tax planning…
Arif Akhatar Hussain vs. ITO (ITAT Mumbai) The argument that transfer of development rights does not amount to transfer of land or building and therefore s. 50C is not applicable is not acceptable because u/s 2(47)(v) the giving of possession in part performance of a contract as per s. 53A of the Transfer of property Act…
Atul G. Puranik vs. ITO (ITAT Mumbai) S. 50C is a deeming provision which extends only to a capital asset which is "land or building or both". A deeming provision cannot be extended beyond the purpose for which it is enacted. If a capital asset cannot be described as `land or building or both', s. 50C…
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