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TMI Blog2021 (4) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... as that of a builder and developer As such, finding no infirmity in the view taken by the CIT(A) we herein concur with him that the A.O was in error in assessing the notional lettable value of the flats held by the assessee as stock-in-trade of its business as that of a real estate developer. Appeal filed by the revenue is dismissed. - ITA No.4369/MUM/2019 (Assessment Year: 2013-14) - - - Dated:- 23-3-2021 - SHRI M. BALAGANESH (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by: Dr. K.Shivaram, Sr. Advocate Revenue by: Shri Tharian Oommen, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-9, Mumbai, dated 12.04.2019 which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short Act ), dated 29.03.2016. The revenue has assailed the impugned order on the following grounds of appeal before us: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of ₹ 2,44,04,876/- made by the Assessing Officer on account of notional rent u/s 23 even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee under the head house property at ₹ 2,44,04,876/-. After inter alia making the addition towards ALV of the aforesaid property held by the assessee as stock-in-trade of its business of a real estate developer, the A.O vide his order passed under Sec.143(3) dated 29.03.2016 assessed the loss of the assessee at Rs.(-) 8,08,04,176/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). It was observed by the CIT(A) that the A.O had made the addition towards ALV of the flats held by the assessee as its stock-in-trade by relying on the judgment of the Hon ble High Court of Delhi in the case of CIT Vs. Ansal Housing Finance Leasing Company Limited Ltd. (2013) 354 ITR 180 (Del). On the other hand, it was noticed by the CIT(A) that the assessee had drawn support from the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Neha Builders (P) Ltd. (2008) 296 ITR 661 (Guj) and also certain orders of the coordinate benches of the Tribunal. After deliberating on the facts of the case, it was observed by the CIT(A) that as per judicial proprietary in a case where there were conflicting decisions of two non-jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been pressed into service by them in support of their respective contentions. It is a matter of fact borne from the records that the property in question was held by the assessee as stock-in-trade of its business of construction and development of real estate properties. As observed by us hereinabove, the solitary issue involved in the present appeal is as to whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22 of the Act. As stated by the ld. A.R, and rightly so, the issue herein involved is squarely covered by the order of the ITAT C bench, Mumbai, in the case of M/s Osho Developers Vs. ACIT-32, Mumbai, ITA No. 2372 and 1860/Mum/2019, dated 03.11.2020, for AYs. 2014-15 and 2015-16. After deliberating at length on the issue under consideration the Tribunal had in its aforesaid order observed as under: 7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements that have been pressed into service by them for drivin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were liable to be assessed. Finding favour with the claim of the assessee, it was observed by the High Court that the rental income received from letting out of the unsold portion of the property constructed by the real estate developer was assessable to tax as its income from house property. Beyond any scope of doubt, the issue before the Hon ble High Court was as to under which head of income the rental receipts were to be taxed i.e as business income or income from house property . Unlike the facts involved in the case before the High Court, in the case before us, the flats held by the assessee as stock-in-trade of its business of a builder and developer, having not been let out, had thus not yielded any rental income. As the Hon ble High Court of Bombay in the case of Gundecha Builders (supra) was seized of the issue as to under which head of income the rental income received from the unsold portion of the property constructed by a real estate developer was to be assessed, which is not the issue involved in the present appeal before us, therefore, the same in our considered view being distinguishable on facts would not assist the case of the revenue before us. 9. We shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), the view which is in favour of the assessee has to be preferred as against that taken against him. Accordingly, following the judgment of the Hon ble Jurisdictional High Court in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), we respectfully follow the view taken by the Hon ble High Court of Gujarat in the case of CIT vs. Neha Builders (2008) 296 ITR 661 (Guj). In fact, we find that the issue as to whether the ALV of a property held by an assessee as stock-in-trade of its business as that of a real estate developer had earlier came up before a SMC bench of the ITAT, Mumbai in the case of Shri. Rajendra Godshalwar Vs. ITO-21(3)(1), Mumbai [ITA No. 7470/Mum/2017, dated 31.01.2019]. The Tribunal after considering the judgment of the Hon ble High Court of Delhi in Ansal Housing Finance Leasing Co. Ltd. (2013) 354 ITR 180 (Delhi) and that of the Hon ble High Court of Gujarat in CIT vs. Neha Builders Pvt. Ltd., (2008) 296 ITR 661 (Guj), had concluded, that the ALV of the unsold property held by the assessee as stock-in-trade could not be determined and brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the judgment of the Hon'ble Gujarat High Court in the case of CIT vs Neha Builders Pvt. Ltd., 296 ITR 661 (Guj.) as also the judgment of the Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd., 354 ITR 180 (Delhi) and finally observed as under :- 10. In the case on hand before us it is an undisputed fact that both assessees 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 house property'. Thus, we direct the AO to delete the addition made under Section 23 of the Act as income from house property. Following the aforesaid precedents, we find merit in the plea of the assessee, which deserves to be upheld. 8. Insofar as the judgment of the Hon'ble Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0] from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil. As the said statutory provision i.e Sec. 23(5) is applicable prospectively i.e w.e.f A.Y 2018-19, the same, thus, would have no bearing on the year under consideration in the case of the present assessee before us. Our aforesaid view is fortified by the aforesaid order of the ITAT, Mumbai in the case of Shri. Rajendra Godshalwar Vs. ITO-21(3)(1), Mumbai [ITA No. 7470/Mum/2017, dated 31.01.2019], wherein in context of the said aspect it was observed as under: 9. Apart therefrom, we find that Sec. 23(5) of the Act has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018. In terms of the said section, it is prescribed that where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to one year from the end of the financial year in which the certificate of completion of construction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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