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Money Received by CHS from Additional FSI, TDR Not Taxable

The Bombay High Court (HC), in a recent judgement, has given a major relief for cooperative housing societies (CHSs) which have redeveloped their properties. The HC said that additional floor space index (FSI) or transfer of development rights (TDR), generated by change in development control regulations, is not a case of sale of development rights embedded in the land.

 

In Mumbai, hundreds of CHSs have buildings that have become old and dilapidated. The CHSs lack finance and technical expertise to repair the buildings and, therefore, seek the developer’s help to rebuild at his own cost and pay compensation to the CHS members in the form of corpus, rent and/or a larger area.

 

CHSs and the income-tax department have been locked in controversy regarding the taxability of such receipts. In this case, Sambhaji Nagar Cooperative Housing Society was asked to pay tax on Rs2.23 crore it received from the developer.

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ICICI Prudential Life Insurance Ordered To Settle Claim despite Not Issuing Policy

An insurance policy commences the minute its premium amount is received by the insurance company, the Maharashtra State Consumer Commission has held. The Commission was hearing a case where the purchaser of the policy died before the policy could be issued.

 

Vijay Salvi had availed the Home Assurance Policy from ICICI in 2011 according to which, in the event of his death, ICICI would have to settle the home loan taken by him. But, before the policy could be issued, he passed away leaving his medical examination for the policy pending.

 

However, when Mr Salvi had taken a home loan of Rs26, 43,048 from Dewan Housing Finance Corporation Ltd, a one-time premium amount was paid to ICICI which was equal to the home loan amount. The premium amount was refunded by Dewan Housing after Mr Salvi’s death and ICICI refused to settle the home loan on Mr Salvi’s behalf saying they were not bound by contract as the policy was never issued.

 

“Insurance Act, 1938, provides for commencement of risk immediately after receiving an amount of premium,” Commission president PB Joshi and member Narendra Kawde observed while granting relief to Amit, Mr Salvi’s legal heir. The Commission has asked ICICI Prudential Life Insurance to settle Vijay Salvi’s home loan of Rs26,43,048 and pay his legal heir Rs1.25 lakh as compensation for mental agony and litigation expenses.

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