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TMI Blog2020 (2) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment inserted in section 23(5) is applicable w.e.f. 01-04-2018 and is not applicable for the year under consideration and in view of the aforesaid discussion and on the basis of decision of co-ordinate bench of this Tribunal, we are of the view that the AO was no justified in computing the ALV of unsold units and bringing the same under the head Income from house property . In the result, ground 1 of the appeal is allowed. - ITA No. 5321/Mum/2018 (AY: 2015-16) - - - Dated:- 6-1-2020 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER Appellant by None Respondent by Shri Akhtar H Ansari Sr DR ORDER PER PAWAN SINGH, JUDICIAL MEMBER : 1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax {ld. CIT(A)}-53, Mumbai dated 04-06-2018 which arises from assessment order dated 28-09-2017 passed under section (u/s) 143(3) of Income-tax Act, 1961(Act). 2. Brief facts of the case are that the assessee is a builder and developer. While filing return of income for assessment year under consideration, the assessee has declared Nil income. The case was selected for scrutiny. During the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. 5. The ld. DR heavily relied upon the orders of authorities below. The ld DR for the revenue further submits that that the legislature has already brought the amendment in section 23 by inserting sub-section (5) of the Act and that the assessee is allowed one year vacancy period from the end of financial year in which the completion certificate is obtained from the competent authority. 6. On the other hand the assessee in its written submissions has submitted that the assessee is business of real estate. During the relevant period under consideration the assessee has one flat admeasuring 540 Sq Feet, in its opening stock, which remained vacant for part of the year and ultimately sold during the year. It is further contended in the submissions that Hon ble Gujarat High Court in case of CIT Vs Neha Builder (2008 ITR 661) has taken a view that, if the property is used as stock in trade, then said property would become or partake the character of stock and any income derived from such stock would be business income and not income from house property . The assessee has also relied on the following decisions; Housing Developement and Infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 192 SC) that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. Thus, we are accepting the view taken by Hon ble Gujarat High Court in Neha Builder (supra). Sub-section (5) in section 23 was inserted by finance Act 2017 w.e.f. 01.04.2018; therefore, the same is not applicable for the assessment year under consideration. 10. The ld AR for the assessee strongly relied on the decision of Mumbai Tribunal in Runawal Constructions Runawal Builders Pvt Ltd (supra), wherein the coordinate bench of Tribunal held as under; 7. We have heard the rival submissions and perused the orders of the authorities below and the decisions relied upon. It is an undisputed fact that the assessee s are in the business of builders, developers and construction. Both the assessee s have constructed various projects and the projects were treated as stock in trade in the books of account. Flats sold by the assessee s were assessed under the head 'income from business'. There were certain unsold flats in stock in trade which the AO treated as property assessable under the head 'income from house property' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, except for the ground floor, which has been let out by the assessee, all other portions of the property constructed have been sold out. If that be so, the property, right from the beginning was a 'stock-in-trade'. 9. Similarly the Coordinate Bench has considered similar issue as to whether the unsold property which is held as stock in trade by the assessee can be assessed under the head 'income from house property' by notionally computing the annual letting value from such property and the Coordinate Bench considering the decision of the Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd. (supra) which the AO relied upon and the decision of the Hon'ble Supreme Court in the case of Chennai Properties Investments Ltd. vs. CIT reported in 373 ITR 673, held that unsold flats which are in stock in trade should be assessed under the head 'business income' and there is no justification in estimating rental income from those flats and notionally computing annual letting value under Section 23 of the Act. While holding so the Coordinate Bench observed as under: - 3. The ld. AR placed the order of Bombay Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by estimating letting value of the flats u/s.23 of the I.T.Act. 10. In the case on hand before us it is an undisputed fact that both assessee s have treated the unsold flats as stock in trade in the books of account and the flats sold by them were assessed under the head 'income from business'. Thus, respectfully following the above said decisions we hold that the unsold flats which are stock in trade when they were sold they are assessable under the head 'income from business' when they are sold and therefore the AO is not correct in bringing to tax notional annual letting value in respect of those unsold flats under the head 'income from Runwal Constructions Runwal Builders house property'. Thus, we direct the AO to delete the addition made under Section 23of the Act as income from house property. 11. Further, by following the decision of Runawal Constructions Runawal Builders (supra), identical relief was granted in Arihant Estate Pvt Ltd (supra). Coming to the facts of the present case, when the fats are not at variance as the assessee has shown the unsold unit as opening stock. 12. Therefore, respectfully following the decisions of co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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