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TMI Blog2019 (2) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... ections, to which it does not operate. No attention has not been drawn by the DR towards any specific provision under Chapter IV-D of the Act which deems rental income on the properties held as stock in trade, waiting for sale and not actually let out, as chargeable to tax under the head “Profit and gains of business or profession”. As the assessee admittedly did not earn any rental income from letting out of these two units, which position has also not been disputed by the AO, taxing any hypothetical income, which is otherwise not sanctioned by any provision under Chapter IV-D, cannot be permitted. Even otherwise, section 5 of the Act clearly stipulates that a person who is a resident can be subjected to tax in respect of income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e building and one showroom. Invoking provisions of section 23(4) of the Income-tax Act, 1961 (hereinafter also called the Act ), the AO opined that the Annual Letting Value of the property was required to be determined and added to the assessee s total income. The assessee s contention that two units in respect of which Income from house property was proposed to be computed, were its stock in trade and hence, no income could be determined thereon under this head, did not find favour. The AO computed deemed rental income u/s.23 of the Act at ₹ 34,35,432/- and added it to the assessee s total income. The ld. CIT(A) countenanced the action of the AO, against which the assesssee is in appeal before the Tribunal. 4. I have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness income. The AO held such income to be chargeable to tax under the head Income from house property . The Hon ble Supreme Court held that the deciding factor for determining as to whether the income is to be charged under the head Income from house property is not the ownership of property but the nature of operations in relation to them. Considering the objects of the company, the Hon ble Supreme Court held that such income was chargeable to tax under the head Profits and gains from business or profession . More recently, the Hon ble Supreme Court in Rayala Corporation Pvt. Ltd. Vs. ACIT (2016) 386 ITR 500 (SC) considered a situation in which the assessee was engaged in the business of renting its properties. The assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention has not been drawn by the ld. DR towards any specific provision under Chapter IV-D of the Act which deems rental income on the properties held as stock in trade, waiting for sale and not actually let out, as chargeable to tax under the head Profit and gains of business or profession . As the assessee admittedly did not earn any rental income from letting out of these two units, which position has also not been disputed by the AO, in my considered opinion, taxing any hypothetical income, which is otherwise not sanctioned by any provision under Chapter IV-D, cannot be permitted. 6. Even otherwise, section 5 of the Act clearly stipulates that a person who is a resident can be subjected to tax in respect of income from whatever sour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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