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TMI Blog2019 (11) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the rental income - HELD THAT:- AO and the CIT(A) did not appreciate the fact that the impugned repair and maintenance expenses relate to the unsold flats which were never rented out. Therefore, these repair and maintenance expenses are not disallowable. Further, AR on the above referred facts and arguments, submitted that the said issue may be remanded to the file of the Assessing Officer for fresh adjudication. The said prayer of the assessee appears to be fair and reasonable. Disallowance u/s 14A needs to be restricted to the total exempt income which is earned during the year and formed part of the total income of the assessee. In this regard, ld. Counsel relied on the various judicial decisions in support of the claim. Denying of deduction claimed u/s 80IB(10) - HELD THAT:- Allowability of the pro-rata deduction u/s 80IB(10) is a decided issue in the own case of the assessee in earlier years. Considering the above settled legal nature of this issue, we find the order of the CIT(A) is fair and reasonable and it does not call for any interference. Thus, the ground is allowed. - ITA No.1838/PUN/2014, ITA No.1908/PUN/2014 - - - Dated:- 3-9-2019 - Shri D. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) of the ITA, 1961 to the assessee company. 7. The appellant craves leave to add/modify/alter/delete all/any of the grounds of appeal. 4. Grounds no.1 and 2 of the assessee s appeal relate to the taxation of notional rental income relating to the unsold area of the Mall built by the assessee. The relevant facts include that the assessee built the KPTC Mall and a residential flats called Parmar Garden in the year under consideration. The construction of Parmar Garden is completed and the flats are sold and there is no litigation about it. However, with reference to the KPTC Mall, the assessee constructed total area of 2,43,149 sq.ft.. Out of that, 1,22,048 st.ft. was already sold at the end of the another financial year leaving behind the unsold area of 1,21,101 sq.ft.. Out of that, 88,106 sq.ft. area was leased out and received rent. In the return filed originally u/s 139 of the Act, the assessee offered the same as business income of the assessee. Subsequently, the assessee revised return of income and the said income was shown as income from house property . In the assessment proceedings, the Assessing Officer rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold shops in the KPCT project. The assessee had claimed the said rental income under the head Income from property . However, the Assessing Officer was of the view that the same is assessable as Income from business . The CIT(A) relying on different decisions of the Apex Court and the Special Bench in the case of Atma Ram Properties (supra), held that the same is assessable as Income from property . The Apex Court in Shambhu Investment Pvt. Ltd. Vs. CIT (supra) had laid down the law of land holding that if the primary object of the assessee while exploiting the property was to let out the same, then the same is to be considered as rental income or income from property. However, where the intention was to exploit immovable property by way of complex commercial activity, then in that event it had to be held as business income. Similar proposition was laid down by the Special Bench in the case of Atma Ram Properties (supra). 45. We further find that the Hon ble High Court of Bombay in CIT Vs. Sane Doshi Enterprises (supra) considered the case of developer, wherein the unsold flats or units were given on lease by the said firm, the rental income received from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. From the above, it is evident that the real rental income earned by the assessee out of letting of the unsold flats is taxable under the head income from house property and the same is the ratio laid down by the Jurisdictional High Court in the case of CIT vs. Sane Doshi Enterprises, 377 ITR 165 (Bom) and others. Therefore, considering the above settled legal proposition on this issue, we are of the opinion that the ground no.1 raised by the assessee is should be allowed in favour of the assessee. Thus, the ground no.1 raised by the assessee is allowed. 8. Ground no.2 is raised without prejudice to the ground no.1. The same is allowed in favour of the assessee. Therefore, ground no.2 is dismissed as academic in view of the relief granted to the assessee in ground no.1 above. Thus, the ground no.2 is dismissed. 9. Ground no.3 relates to the disallowance of expenses relating to the material purchase and labour charges . Before us, the ld. Counsel for the assessee submitted that the same are erroneously disallowed by the Assessing Officer without appreciating the facts that the said expenses were already calculated as part of the work-in-progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s own case for the assessment year 2012-13 vide ITA No.2225/PUN/2016 dated 28.03.2019 and the contents of para 13 and 14 of the said order of the Tribunal (supra) are relevant in this regard. 15. On hearing both the sides, we find identical issue came up before the Tribunal in assessee s own case for the assessment year 2012-13 (supra) and the Tribunal decided the issue in favour of the assessee. The contents of para 13 and 14 of the said order of the Tribunal in assessee s own case (supra) are relevant and the same are extracted hereunder :- 13. Ground Nos. 6 and 7 relates to denial of deduction/proportionate deduction claimed u/s.80IB(10) of the Act. The Ld. AR of the assessee submitted that these grounds are covered in favour of the assessee in earlier years as per the Tribunal s order in assessee s own case in ITA No.344/PUN/2010 for the assessment year 2005-06. 14. We have perused the case records and have given considerable thought to the decision placed before us. In ITA No.344/PUN/2010 for the assessment year 2005-06, the assessee has raised this issue before Tribunal in the ground of appeal which is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e building held as stock-in-trade could only be assessed under the head income from house property , as had been shown by the assessee in its return of income, and not under the head profits and gains of business or profession , as had been assessed by the Assessing Officer. 2. The learned Commissioner of Income-tax (Appeals) erred in failing to appreciate that as the facts and circumstances pertaining to the case would clearly show, the intention of the assessee was to let out of the building held as stock-in-trade for the purpose of business as also for its commercial exploitation; and, in the circumstances, the rental income derived by the assessee from the said building was clearly assessable under the head business and not under the head income from house property. 3. For these and such other grounds as may be urged at the time of hearing, the order of the learned CIT (Appeals) may be vacated and that of the Assessing Officer be restored. 4. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 20. The grounds no.1 and 2 relates to the proper head of income for assessing the ren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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