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…