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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 ..... o pay income tax on the annual lettable value of finished flats owned by it under the head 'income from House Property', is clearly in favour of Revenue? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of Rs. 2,44,04,876/- made by the Assessing Officer on account of notional rent u/s 23 relying on the decision of the Hon'ble ITAT in the case of C.R. Developments Pvt. Ltd. vs. JCIT (OSD) (ITA No.4277/Mum/2012) and Runwal Constructions vs. ACIT (ITA No.5408/Mum/2016) without appreciating that the decision of the Hon'ble ITAT in the case of C.R. v Developments Pvt. Ltd was not accepted by the Revenue and further appeal was filed before Hon'ble High Court which was later withdrawn following CBDT Instructions applicable at that time due to low tax effect and the decision in the case of Runwal Constructions was not accepted by the Revenue, but appeal was not filed following CBDT Instructions applicable at that time due to low tax effect? 3. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of Assessing Officer be restored 4. The appellant craves leave to amend, alter, del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. JCIT (OSD) (ITA No. 4277/Mum/2012) and Runwal Constructions Vs. ACIT (ITA No. 5408/Mum/2016) therein concluded that the addition made by the A.O could not be sustained and was liable to be vacated. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short 'D.R') relied on the assessment order. Further, the ld. D.R drew support from 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) and submitted that the A.O had rightly concluded that the ALV of the flats though held by the assessee as its stock-in-trade was liable to be assessed under Sec.22 of the Act. 6. The ld. Authorized Representative (for short 'A.R') for the assessee Dr. K. Shivaram, Senior Advocate took us through the facts of the case. The ld. A.R assailed the assessing of the ALV of the flats that were held by the assessee firm, a real estate developer, as it stock-in-trade of its business for the year under consideration. It was the claim of the ld. A.R that as the flats in question were held by the assessee firm as stock-in- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfinity Project. As observed by us hereinabove, the A.O had determined and therein brought to tax the ALV of the aforesaid flats under the head 'house property' in the hands of the assessee firm. Our indulgence in the present appeal has been sought by the assessee, to adjudicate, the sustainability of the view taken by the lower authorities that the ALV of the flats held by the assessee as stock-in-trade was liable to be determined and therein brought to tax under the head 'house property'. As is discernible from the assessment order, the A.O by relying on the order of the Hon'ble High Court of Delhi in the case of CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del), had determined the ALV of the flats which were held by the assessee as part of the stock-in-trade of its business of a builder and developer, and had brought the same to tax under the head 'house property'. On appeal, the CIT(A) had found favour with the view taken by the A.O by drawing support from the order of the Hon'ble High Court of Bombay in the case of CIT Vs. Gundecha Builders (2019) 102 CCH 426 (Bom). 8. On a perusal of the order of the Hon'ble Jurisdictional High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the flats held by the assessee as stock-in-trade of its business as that of a builder and developer. In the aforesaid case, it was the claim of the assessee that unlike the other builders as it was not into letting out of properties, the determination of deemed income which had formed the basis for assessment under the ALV method, was not called for in its case. However, the High Court being of the view that the levy of income tax in the case of an assessee holding house property was premised not on whether the assessee carries on business, as landlord, but on the ownership, thus, turned down the aforesaid claim of the assessee. To sum up, in the backdrop of its conviction that the incidence of charge under the head house property was based on the factum of ownership of property, the High Court was of the view that as the capacity of being an owner was not diminished one whit, because the assessee carried on the business of developing, building and selling flats in housing estates, therefore, the ALV of the flats held as stock-in-trade by the assessee in its business of a builder and developer was liable to be determined and brought to tax under the head 'house property'. But then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal while concluding as hereinabove had observed as under: "6. We have carefully considered the rival submissions. The short point involved in this appeal is the validity of addition sustained by the CIT(A) on account of notional ALV of the unsold flat, which is held by the assessee as stock-in-trade. Factually speaking, it is not in dispute that the flat in question is not yielding any rental income to the assessee, as it has not been let-out. It is also not in dispute that the project in question has been completed during the year under consideration, and the said flat is shown as stock-in-trade at the end of the year. At the time of hearing, the learned representative also pointed out that the flat has been ultimately sold on 06.11.2012. We find that our coordinate Bench in the case of C.R. Developments Pvt. Ltd. (supra) dealt with charging of notional income under the head 'Income from House Property' in respect of unsold shops which were shown by assessee therein as part of 'stockin- trade'. As per the Tribunal "The three flats which could not be sold at the end of the year was shown as stock-in-trade. Estimating rental income by the AO for these three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d flats. The dispute pertained to the head of income under which such income was to be taxed - whether as 'Business Income' or as 'Income from House Property'. In the present case, the facts are quite different inasmuch as the unsold flat in question has not yielded any rental income as the flat has not been let-out, and is being held by the assessee purely as stock-in-trade; and, what the Assessing Officer has tried to do is to assess only a notional income thereof. Thus, the ratio of the judgment of the Hon'ble Bombay High Court in the case of Sane & Doshi Enterprises (supra) has been rendered in the context of qualitatively different facts, and is not applicable in the present case." Accordingly, preferring the view taken by the Hon'ble High Court of Gujarat in CIT vs. Neha Builders Pvt. Ltd. (2008) 296 ITR 661 (Guj), as per which the ALV of the unsold property held by an assessee as stock-in-trade could not be determined and brought to tax under the head 'house property', as against that arrived at by the Hon'ble High Court of Delhi holding to the contrary in CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del); and also followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be relevant to note that the completion certificate is stated to Shri Rajendra Godshalwar have been obtained on 28.11.2011 and going by the provisions of Sec. 23(5) of the Act, no addition is permissible in the instant assessment year. Be that as it may, we are only trying point out that the assessability of notional income in respect of unsold flat, which is taken as stock-in-trade, is not merited in the instant case. Thus, we set-aside the order of CIT(A) and direct the Assessing Officer to delete the addition." 11. We, thus, in the backdrop of our aforesaid deliberations not being able to concur with the view taken by the lower authorities, therein, set aside the order of the CIT(A) and direct the A.O to delete the addition made by him towards the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer. The Grounds of appeal Nos. 1 to 4 are allowed in terms of our aforesaid observations. 12. As we have concluded that the assessability of notional income i.e ALV in respect of unsold flats held by the assessee as stock-in-trade of its business as that of a builder and developer is not merited in the instant case, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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