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2022 (8) TMI 739 - AT - Income TaxIncome from house property - ALV of the unsold Flats - property forming part of his stock-in-trade - whether or not ALV of the unsold flats held by the assessee as stock-in-trade of his business as that of a builder/developer is liable to be assessed u/s.22 of the Act? - HELD THAT - As the facts and the issue involved in the aforesaid order of the Tribunal in the case of Osho Developers 2020 (11) TMI 218 - ITAT MUMBAI remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, herein conclude that the ALV of the unsold 7 flats held by the assessee as stock-in-trade of his business could not have been assessed u/s.22 of the Act. Accordingly, we herein vacate the addition of Rs.1,91,406/- made by the A.O. Thus, the Grounds of appeal No.(s) 1 to 3 raised by the assessee are allowed.
Issues Involved:
1. Non-issuance of notice under Section 143(2) of the Income-tax Act, 1961. 2. Addition under the head "Income from House Property" for notional rent on unsold flats. 3. Disallowance of deduction under Chapter VI-A (Section 80C). Issue-wise Detailed Analysis: 1. Non-issuance of Notice under Section 143(2): The assessee contended that the assessment order was illegal due to the non-issuance of notice under Section 143(2) of the Income-tax Act, 1961. The CIT(A) did not adjudicate on this ground, which the assessee claimed was a procedural lapse rendering the assessment void ab initio. 2. Addition under the Head "Income from House Property": The core issue was whether the Annual Lettable Value (ALV) of unsold flats held as stock-in-trade by a builder/developer should be assessed under the head "Income from House Property" under Section 22 of the Act. The Assessing Officer (A.O) determined the ALV of these flats and brought it to tax, which was confirmed by the CIT(A). The Tribunal referred to the case of Osho Developers Vs. ACIT, where it was held that the ALV of flats held as stock-in-trade could not be taxed under "Income from House Property." The Tribunal preferred the view of the Gujarat High Court in CIT vs. Neha Builders, which held that rental income from property held as stock-in-trade should be assessed as business income, not as income from house property. Consequently, the Tribunal vacated the addition of Rs. 1,91,406/- made by the A.O. 3. Disallowance of Deduction under Chapter VI-A (Section 80C): The A.O disallowed the deduction claimed under Section 80C, reasoning that since the income was assessed under the head "House Property," the deduction was not allowable. However, since the Tribunal vacated the addition under "Income from House Property," this ground was rendered academic and dismissed as infructuous. Conclusion: The Tribunal allowed the appeal of the assessee, vacating the addition made under the head "Income from House Property" and dismissing the ground related to the disallowance of deduction under Section 80C as academic. The procedural issue of non-issuance of notice under Section 143(2) was not separately adjudicated upon due to the primary relief being granted on substantive grounds.
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