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TMI Blog2019 (3) TMI 1892X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee‟s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23. Since the case of the assessee has duly been covered by the decision of Ferani Hotels Pvt. Ltd, therefore, in the said circumstances by honoring the said decision, we deleted the addition raised by AO on account of notional income of the vacant flats. Accordingly, these issues are decided in favour of the assessee against the revenue. - I.T.A. No.5062 /Mum/2017 - - - Dated:- 13-3-2019 - SHRI RAJESH KUMAR, AM AND SHRI AMARJIT SINGH, JM For the Revenue : Shri Abirama Kartikiyen (DR) For the Assessee : Shri Sanjay Sawane (AR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 30.05.2017 passed by the Commissioner of Income Tax (Appeals)-52, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2013- 14. 2. The assessee has raised the following grounds of appeal: - 1. On the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the provisions u/s 22 23 of the Act. At the very outset, the Ld. Representative of the assessee has argued that the assessee was carrying the business of construction and builder and development of project and was having finished unit in three project namely Wanwadi Project- Pune in sum of ₹ 6,97,95,580/-, Vakola Project in sum of ₹ 43,01,115/- Radhanarayan in sum of ₹ 1,13,38,000/-, the total in sum of ₹ 8,54,34,695/- but the AO has wrongly assessed the notional income and assessed the tax in view of the provisions u/s 23/ 24 of the Act and added in sum of ₹ 39,75,545/- to the income of the assessee, hence, the finding of the CIT(A) confirming the order of the AO is wrong against law and facts and are liable to be set aside. The Ld. Representative of the assessee has argued that the case of the assessee has duly being covered by the decision of the Hon ble ITAT in the case of Ferani Hotels Pvt. Ltd. Vs. ACIT Central Circle 4(1) in ITA. No. 6332/M/2016 dated 21.12.2018, therefore, the claim of the assessee is liable to be allowed. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. On appraisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other facilities. The assessee also derived income from dividend, share of profit from partnership firm and profit from sale of flats. The assessee failed to sold the flat which was being treated by him as stock in trade. The AO assessed the notional income and brought to tax as income as house property which has no doubt confirmed by CIT(A). It is to be seen whether the income of the assessee is liable to be treated as house property or business income. It is necessary to discuss the finding in the case of M/s. Runwal Constructions Vs. ACIT in ITA. No.5409/M/2016 dated 22.02.2018 which has been given in para no. 7 to 10 and are hereby reproduced 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 assessees are in the business of builders, developers and construction. Both the assessees have constructed various projects and the projects were treated as stock in trade in the books of account. Flats sold by the assessees were assessed under the head income from business‟. There were certain unsold flats in stock in trade which the AO treated as property ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property as 'stock-intrade'. Not only this, it will also be clear from the records 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from house property. 7. In the case of titled as M/s. C.R. Developments P. Ltd. Vs. JCIT. The relevant para in 5 is hereby reproduced as under.: - 5. We have considered rival contentions and perused the record. The issue under consideration has been restored by the CIT(A) to the file of AO to compute the annual value. Recently the Hon‟ble Supreme Court in the case of M/s Chennai Properties Investments Ltd. Vs. CIT, reported in (2015) 42 SCD 651, vide judgment dated 9-4-2015 has held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treating the rental income as income from house property in place of income from business shown by the assessee was held to be not justified. The Hon‟ble Supreme Court held that since the assessee company‟s main object, is to acquire and held properties and to let out these properties, the income earned by letting out these properties is main objective of the company, therefore, rent received from the letting out of the properties is assessable as income from business. On the very same analogy in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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