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TMI Blog2021 (5) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... s that of a builder and developer As such, 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.2927/Mum/2019 - - - Dated:- 13-5-2021 - Shri C.N. Prasad, JM And Shri M. Balaganesh, AM For the Assessee : Dr. K. Shivaram For the Revenue : Shri Tharian Oommen ORDER PER M.BALAGANESH (AM): This appeal in ITA No.2927/Mum/2019 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-8, Mumbai in appeal No. dated CIT(A)-8/IT-439/2016-17 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2016 by the ld. Asst. Commissioner of Income Tax, Circle-3(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The Revenue has raised the following grounds:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of ₹ 2,98,51,737/- made by the Assessing Officer on account of notional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 though the decision of the Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd. (2013) 29 taxmann.com 303 wherein it has been held that the assessee is liable to 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 ₹ 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 s, the decision of a jurisdictional Tribunal delivered after considering such contrary decisions was to be followed. Accordingly, the CIT(A) relying on the decision of the ITAT, ITA No. 4369/Mum/2019 A.Y. 2013-14 DCIT, Circle -3(1)(1) Vs. M/s Bengal Shapoorji Housing Development Pvt. Ltd. 3 Mumbai in the case of C.R. Development Pvt. ltd. 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 driving home their respective contentions. Admittedly, it is a matter of fact that the flats in question were held by the assessee firm, a real estate developer, as stock-in-trade of its respective projects viz. (i) Ashwin CHS Projects; and (ii) Infinity 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty . 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 ITA No. 4369/Mum/2019 A.Y. 2013-14 DCIT, Circle -3(1)(1) Vs. M/s Bengal Shapoorji Housing Development Pvt. Ltd. 5 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 shall now advert to the judgment 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) by drawing support from which the A.O had determined and therein brought to tax the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer. In the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 brought to tax under the head house property . The Tribunal while concluding as hereinabove had also distinguished the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Sane Doshi Enterprises (2015) 377 ITR 165 (Bom), as was relied upon by the revenue. The Tribunal while concluding as hereinabove had observed as under: 6. We have carefully considered the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Court in the case of Sane Doshi Enterprises (supra) relied by the CIT(A) is concerned, the same, in our view, does not help the case of the Revenue. Quite clearly, the case before the Hon'ble High Court was relating to actual rental income received on letting out of unsold flats. The dispute pertained to the head of income under which such income was to be taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the property is obtained from the competent authority, shall be taken to be nil . Though the said provision is effective from 01.04.2018, yet even if one is to see the present case from the standpoint of Sec. 23(5) of the Act, no addition is permissible in the instant year. It may be relevant to note that the completion certificate is stated to Shri Rajend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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