Capital gains & its chargability

Amount received on sale of additional floor space index(FSI)

Assessee sold land, building together with the additional FSI by way of single deal to a single purchaser

It was able to get the additional FSI only pursuant to the Development Control Regulation Rules in the city undergoing a change by virtue of which the assessee got vested with additional benefit of 0.8 by way of additional FSI

Admittedly, no cost was incurred by the assessee for getting such benefit by way of additional FSI

Hence, the additional benefit derived by the assessee by way of getting vested with additional FSI on the land and building owned by the assessee is only a windfall gain by operation of law, which had not costed the assessee any money

Therefore, the sum received by the assessee on sale of additional FSI, is not exigible for long term capital gains and accordingly the same is to be excluded under normal provisions of the Act

CIT vs. Kailash Jyoti No. 2 CHS Ltd., in ITA No. 1607 of 2013 followed

Another issue was with regard to the Book profit in the hands of the company under s. 115JB

Amount received on sale of additional FSL

Such receipt is indeed a capital receipt and the same does not form part of operational working results of the assessee-company

Even according to the case of the Revenue, the said receipt is inseparable from land and building

Accordingly it partakes the character of a capital receipt—Merely because a particular receipt, which is in the capital field, has been offered to tax by the assessee voluntarily in the return of income while computing book profits under s. 115JB, it cannot be brought to tax merely on that ground

It is very well settled that there is no estoppel against the statute

Therefore, the impugned sum being a capital receipt from its inception, is to be excluded while computing book profits under s. 115JB and also on the ground that it does not form part of operational working results of the company

Decision in assessee’s own case in ITA No. 5428/Mum/2015, dt. 17th Feb., 2021 followed

Provisions of s. 115JB are applicable to the assessee-company even though there was no tax payable by the assessee under normal provisions of the Act in view of loss thereon incurred it

Decision in assessee’s own case in ITA No. 5428/Mum/2015, dt. 17th Feb., 2021 followed