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)]
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