Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Amount Received By The Members Of The Society On Transfer Of TDR Is Liable To Income Tax?

QUERY: Our Housing Society is going for redevelopment by purchasing TDR in the name of society. Builder has offered us 1 crore as corpus fund and 1 crore for members fund @ 1 lakh each. We are 105 members I want to know the exact provision of I. T. Act and whether we need to pay Income Tax on such amount please quote any judgments if any?
ANSWER: From the facts, it is clear that Hsg. Soc. is going for redevelopment. For which the society has purchased TDR. The said TDR it wants to give for development. For which the developer/builder gives Rs. 1/- crore to society as corpus fund and Rs. 1/- lakh cash to the members of the society.

According to me, nomenclature in accounts would not affect taxability. In fact, the society would transfer development right to the developer/builder for consideration of Rs. 1 crore, hence, it would be taxable in the hands of the society under section 45 of the Act. The decision of the Mumbai Tribunal in Maheshwar Prakash, 2 Co-op. Hsg. Soc. Ltd. v. ITO [24 SOT 366], on the facts of the case, is not applicable.

The members who receive Rs. 1/- lakh for suffering inconvenience or hardship, because society is going for redevelopment, may claim as not taxable since there is no cost. [See CIT v. B.C. Srinivasa Shetty – 128 ITR 294 (SC)]

Posted in Income-tax

Leave a Reply

Your email address will not be published. Required fields are marked *


Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org