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TMI Blog2022 (8) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri G. N Singh, DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 11.02.2019, which in turn arises from the order passed by the A.O under Sec 143(3) of the Income-tax Act, 1961 (in short the Act ) dated 31.03.2016 for assessment year 2013-14. Before us the assessee has assailed the impugned order on the following grounds of appeal: 1) That Assessing Officer has passed assessment order without issuing notice u/s.143(2), therefore, assessment proceedings conducted by the AO are illegal and contrary to the provisions of the law. Consequent assessment order passed by the AO is illegal, abinitio-void and not sustainable. 2) That learned CIT(A) erred in not adjudicating on the ground regarding illegality of assessment order due to non-issuance of notice u/s 143(2) by the AO, who has passed the assessment order. 3) That learned CIT(A) erred in confirming the addition of Rs.1,91,406/- made by the Assessing Officer under the head Income from House Property for alleged notional rent u/s. 23(1)(a) on unsold flats and shops shown as Stock-in-trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 LS-104 First floor 774 11 LS-105 First floor 863 12 RS-201 Second floor 1035 13 RS-202 Second floor 1050 14 RS-203 Second floor 743 15 RS-204 Second floor 1060 16 RS-205 Second floor 1035 17 RS-301 Third floor 1035 18 RS-302 Third floor 1050 19 RS-304 Third floor 1050 20 RS-305 Third floor 1035 21 LS-301 Third floor 735 22 LS-304A Third floor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Sq.ft (85% of Rs.18) 5936.00 6 C-201 Second floor 388 Rs.14.40 per Sq.ft (80% of Rs.18) 5587.00 7 C-202 Second floor 388 Rs.14.40 per Sq.ft (80% of Rs.18) 5587.00 8 RS-101 First floor 1065 Rs.15.30 per Sq.ft (85% of Rs.18) 16,295.00 9 Flats ( Multi Block) RS-102 First floor 1035 Rs.15.30 per Sq.ft (85% of Rs.18) 15,836.00 10 LS-104 First floor 774 Rs.15.30 per Sq.ft (85% of Rs.18) 11,842.00 11 LS-105 First floor 863 Rs.15.30 per Sq.ft (85% of Rs.18) 13,294.00 12 RS-201 Second floor 1035 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. Controversy involved in the present appeal hinges around the solitary issue, i.e., as to whether or not ALV of the unsold flats held by the assessee as stock-in-trade of his business as that of a builder/developer is liable to be assessed u/s.22 of the Act? We find that the aforesaid issue is squarely covered by the order of the ITAT, Mumbai, C Bench in the case of Osho Developers Vs. ACIT (2020) 208 TTJ 802 (Mum.) (to which one of us, the JM was a party), after exhaustive deliberations qua the issue in hand a/w. a reference to the amendment made available on the statute u/s. 23(5) of the Act had vide Finance Act, 2017 w.e.f. 01.04.2018 held, 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 sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst 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 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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), [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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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