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5. Learned Authorised Representative more or less reiterating the stand taken before the Departmental Authorities submitted that the learned Commissioner (Appeals) has misconceived the facts and thereby has come to an erroneous conclusion while observing that the members have sold TDRs to the developer. The learned Authorised Representative taking us through different clauses of the agreement submitted, as per the terms of the agreement, after vacation of old building by the members of the society, it was to be demolished and a new building was to be constructed by builders at its own cost as per the building plan approved by the MCGM. The learned Authorised Representative submitted, as provided in the agreement the developer without charging any monitary consideration will construct the building and allow to each existing member a flat in the new building specified in the annexure to the agreement along with free parking space. The learned Authorised Representative submitted, as per clause 10 of the Rajnikant D. Shroff agreement in consideration of the development right granted, the developer shall pay to each member the lump sum amount as per the inter-se arrangement between the societies on the one hand and the developer on the other hand. The amount payable is partly on execution on the agreement and partly on members vacating their residential premises. Learned Authorised Representative submitted, though, the assessee received part of the compensation on signing of the agreement but in spite of the fact that he has vacated the premises, he did not receive the balance amount since many of the members of the society have not vacated the premises as a result of which the dispute arose between the developer and the society. The learned Authorised Representative submitted, as per clause 12 of the agreement, the development work envisaged to be constructed under the agreement shall not exceed 100% of the area of the plot and 100% by purchase of TDR at the cost of the developer and if there is any change in the D.C. regulation or any other applicable law, whereby, there is an increase in the basic FSI or if any construction is possible exceeding 200% of the total area of the said plot in any manner whatsoever the same shall be exclusively for the benefit of the society / existing members and the developer shall have no right, title or claim. He submitted, as per clause 15, the developer after obtaining basic approval to the building plan will load the TDR. He submitted, as Rajnikant D. Shroff per clause 26 of the agreement, the developer shall be liable to pay the purchase price for purchase of TDR for utilisation in the said property. Thus, it was submitted by the learned Authorised Representative that the members of the society did not sell any TDR to the developer, on the contrary the developer was supposed to purchase TDR from outside and load it to the new building to be developed by him. Therefore, the conclusion of the learned Commissioner (Appeals) that the members sold TDR to developer is factually incorrect. The learned Authorised Representative submitted, as there is no sale of TDR by the members to the developer the conclusion of the learned Commissioner (Appeals) that there is transfer of capital asset in terms of section 2(47)(ii) is totally incorrect. Learned Authorised Representative submitted, the amount received by the assessee from the developer is towards inconvenience caused for vacating premises, therefore, such receipt in the nature of compensation for the discomfort caused is capital receipt, hence, cannot be taxed. For such purpose, he relied upon the following decisions:-

7. We have considered the submissions of the parties and perused the material available on record. Undisputedly, the assessee is a member of a society owning a building. The society has entered into an agreement with a developer for development of a new building after demolishing the old building. As per the terms of the agreement, the developer has to provide a flat along with parking space to each of the member without charging any cost. As per the terms of agreement the developer is to construct the building by utilising area not exceeding 100% of the plot. However, as per the agreement, the developer was authorised to construct 100% more after obtaining TDR from third parties and loading the same to new building to be Rajnikant D. Shroff constructed. The agreement further provides for lumpsum payment by developer to each of the members a part of which is to be paid on signing of the agreement and the balance amount on vacation of the premises. It is not disputed that the assessee has received an amount of ` 26,23,238 on signing of the agreement. Even though the assessee vacated the premises, however, admittedly, he has not received the balance amount from the developer due to the reason that all the members of the society have not vacated the premises and as a result dispute has arisen between the society and the developer. The dispute in the present appeal is confined to the amount received by the assessee on signing of the agreement from the developer. While the assessee claimed the amount received in the nature of compensation, hence, a capital receipt, the Department treated it as income. On a perusal of different clauses of the agreement, we have noted that the extra FSI / TDR to be loaded to the new building is the responsibility of the developer and he has to purchase such TDR from third parties and load it to the building to be constructed. Therefore, the conclusion of the learned Commissioner (Appeals) that the members have sold TDR to the developer is not correct. At this stage, we may refer to certain observations of the learned Commissioner (Appeals). As can be seen from Para-6.1 of his order, he has held that the members being the owner of the TDR have transferred the same to the developer, hence, Rajnikant D. Shroff as per section 2(47)(ii), it amounts to extinguishment of rights in a capital asset, thereby liable to capital gain tax under section 45. Thus, prima-facie, it appears that the learned Commissioner (Appeals) accepts that the amount received by the assessee is on account of transfer of a capital asset. We find that this issue has been considered by the Tribunal in Jethalal D. Mehta v/s DCIT, [2005] 2 SOT 422. Following the aforesaid decision, the Tribunal, Mumbai Bench, in ACIT v/s Ishwarlal Manmohandas Kanakia, ITA no.3053/Mum./2010, etc., dated 8th February 2012, though, agreed that the receipts on assignment of FSI, including FSI originating from plot of land which is subject matter of transfer by the assessee, is a capital asset, however, the cost of acquisition in respect of such asset cannot be ascertained, therefore, the receipt towards transfer of said rights cannot be brought to tax as the said receipt will be capital receipt and not capital gain. Relevant observations of the Bench is reproduced below:-

Spartek Properties and Securities Pvt. Ltd. on 25-11-2002 for construction of additional floors on the existing structure of the Rajnikant D. Shroff society building and development of the said property against a consideration of Rs. 280 per sq. ft. which amounted to Rs. 42 lakhs. The question before the Tribunal was taxability of the sum of Rs.42 lacs received by the Society. The Tribunal discussed the DCR for Greater Mumbai Regulations and the right of a receiving plot of land to load TDR over and above permissible normal FSI. The Tribunal held "...by virtue of Regulation 14, the FSI of a receiving plot is automatically allowed to be exceeded by 0.8 as mentioned in the said Regulation. For example, a plot in the suburb of Mumbai had an existing FSI of 1 prior to the year 1991 which had already been exhausted by construction of various flats. However, by virtue of Regulation 14, the society in respect of that building automatically got extension of FSI by 0.8. That means, if the plot of land was 1,000 sq. mtrs. then additional floors could be constructed to the extent of built up area of 800 sq. mtrs. As per the new scheme, either the society could construct additional floors having total area of 800 sq. mtrs. by purchasing TDR from the market or could transfer such right to any other builder or developer who had the TDR or who could arrange the TDR from the market. However, it is made clear that the construction could not be made without loading the TDR on the receiving plot. The above discussion shows that two separate and distinct rights arose as per DCR, 1991 i.e., TDR and the right to construct additional floor. The former has inbuilt cost while the later one arose without any cost. Regulation 14 makes it clear that FSI of receiving plot shall be allowed to be excluded in the prescribed manner. Such right was made available automatically without paying anything either to BMC or to the Government.

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 acquired 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, 1991, 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 assessee‟s flat to avail additional FSI against 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 acquisition of the right obtained by him and therefore, the capital gain could not be computed in view of the Hon‟ble Rajnikant D. Shroff Supreme Court judgment in the case of B.C. Shrinivasa Shetty (supra). The lower authorities did not accept such contention. However, the Tribunal upheld the contention of the assessee by holding that right to construct the additional floors under the Development Control Regulation, 1991 was acquired without incurring any cost and therefore, assessee was not chargeable to tax in respect of such receipts in view of the aforesaid Hon‟ble 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 decision of a co-ordinate Bench in the absence of any decision of High Court or the Supreme Court."