Booking rights of fictional property not to be deemed as transferable capital assets issue

Whether booking of a property which was neither in existence nor its building plan or specifications were approved from the Municipal Corporation would be treated as transferable capital assets?

The tribunal held as under:-

1)   Rights in property could be considered as transferable capital asset. However, for that purpose, there should be a property in existence or there should be a property which is likely and apparently coming into existence, e.g., if the construction of the flat is started and the flat is likely to come in existence. However, when there is no property in existence nor any definite process for its creation has started, no one get a transferable right or interest into such a fictional property which itself cannot be said to be even a “property”.

2)   In the instant case payment was made to the builder when neither the property was in existence nor its building plan or specifications were approved from the Municipal Corporation and neither any construction activity nor commencement of the project had started. Therefore, any gain arising on transfer of booking rights in such fictional property should be taxed under the head ‘income from other sources’ and not as capital gains - S. NARENDRAKUMAR & CO. V. DCIT [2015] 63 taxmann.com 184 (Mumbai - Trib.)