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Is sale of TDR in munc limits is busi. income or LTCG / STCG

S S Dahale ( Agri and business) (439 Points)

09 May 2016

Now days TDR transferrable development rights)- as Fungible FSI instaed of monetory compensation, is issued by state authorities / Municipal Authorities, so sale of TDR certificate as part or in whole is a business income or STCG or LTCG

dahaless @ gmail.com

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S S Dahale ( Agri and business) (439 Points)
Replied 10 May 2016

There are two types of commrecial transactions that are happening( in particular in Maharashtra and karanataka), in matter related to land reservation-acquisition -comepnsation ( as authorities do not have funds , hence issuance of TDR) TDR is Transferrable developments rights as Fungible FSI, such that, if is land is reserved for a municipal purpose, then instead of payment of monetory compensation to land holder, Authorities issue a TRANSFERABLE CERTIFICATE of utisation of rights -FSI to develope-cosntruct as equivalent area that can be LOADED on other buidable private plot in the same city.as this is a transaction of nature of conveyance.

so some people ( Mr.ABC) tend, to sale only basic rights to some BUILDER( MR.LMN) , who can get basic rights of that affected-designated-reserved plot / land in his favour , Do all formalities inclding fisrt buying those rights by aconveyance deed-power of attaorney and then doing a regd.conveyance of the same favoring municipal authorities , and muncipal authorities issue that TDR certificate favoring later perosn i.e.Mr.LMN ; that is called SALE of RAW TDR , let us call this as case A-1

in some cases people whose land so affected -reseved-designated ( MR.ABC) completes all formalities , including specific conveyance deedwith municipal authorites , and take that TDR certifiacte in his own name i.e.Mr.ABC it is termed as ready to use /load TDR let us call this case as B-2

in later case this TDR( being a matured-ready to use /load) is being sold -loaded at diffrent dates ( AY) to different persons again by a various convaynce deeds.

so querry is this as affected-reserved land is relinquished in both cases , whether alienation of rights favoring MR.LMN by Mr.ABC by fisrt deed of conyance is sateg I, with Mr.LMN ( facilitator / buider) relinquishing that land by Mr.LMN to municipal authority for geneartion of TDR again by conveyance deed called as stage II, f

query is this in case A-1, whether relinquishing right -POA by MR.ABC favoring MR.LMN is business income or STCG or LTCG for Mr.ABC ; and second part of query is in case of MR.LMN , further loading for himself and resaling TDR to Mr.XYZ, Mr.PQR of that TDR/ part of TDR is it a Business income or STCG ( being done within few months........ a year)

and in case B-2 though affected -reserved land is relinquished by MR.ABC favoring Municipal authotity and TDR certificate is also favoring Mr.ABC ( original owner) then its further sale / loading by MR.ABC to MR.LMN , Mr.PQR. Mr XYZ at different dates ..AY for couple of years .

query is this those multiple transactions of sale of TDR - fungible FSI ( which can be sold / conveyed / loaded -technically ...in parts also) is a business income -STCG or LTCG ( as land belonged to him for more than 3 years)