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TMI Blog2024 (1) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds inter-alia that: "ITA No.1508/M/2023 (Revenue's appeal) i) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of deemed income from house property. ii) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the judgement of Hon'ble Delhi High Court in the case of Ansal Housing Finance and Leasing Company Ltd (2013) 354 ITR 180 wherein on similar facts, the Hon'ble Court has upheld the action of AO in assessing deemed income from the unsold flats. iii) The appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal if need be". "Cross Objection No.56/M/2023 (Assessee's) 1) The learned Commissioner Appeals erred in confirming addition of Rs. 2,29,500/- u/s 43CA of the Income Tax Act, 1961 with reference to agreement of Sale for Flat No 1106, Ebony with Mrs. Pushpa S. Hajare without appreciating that difference between stamp value and agreement value is only 1.67% and thus Section 43CA has no application and hence addition of Rs. 2,29,500/- may be deleted. 2) The cross-objector craves leave to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenging the impugned order passed by the Ld. CIT(A) deleting the addition made by the AO to the tune of Rs. 4,24,78,935/- being the estimated ALV on unsold stock @ 8.5% after deducting 30%, as income from house property contended that the Ld. CIT(A) has erred in not considering the judgment rendered by Hon'ble Delhi High Court in case of CIT vs. Ansal Housing Finance & Leasing Co. Pvt. Ltd. (supra). 7. However, on the other hand, the Ld. A.R. for the assessee in order to repel the arguments addressed by the Ld. D.R. for the Revenue by relying upon the impugned order passed by the Ld. CIT(A) contended inter-alia that when one of the objects of the business of the assessee is leasing then rental income is taxed as business income and relied upon the decision rendered by the Hon'ble Gujarat High Court and Hon'ble Supreme Court in cases of CIT vs. Neha Builders (P) Ltd. (2008) 296 ITR 661 (Guj.) (HC) and Chennai Properties and Investment Ltd. vs. CIT (2015) 373 ITR 673 (SC). 8. The Ld. A.R. for the assessee further contended that after considering the decision rendered by Hon'ble Delhi High Court in case of CIT vs. Ansal Housing Finance & Leasing Co. Pvt. Ltd. (supra) the co-ordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to provide that where the house property consisting of any building and 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 upto 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. This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years." 4.7. Thus, it is clear that till AY 2017-18 the house property, even if held as stock- in-trade was liable to be taxed by computing the annual lettable value. It is only from AY 2018-19 that the Parliament in its wisdom has provided for certain exception while computing the ALV. Hence, in my view, the appellant is not entitled to claim the benefit of S. 23(5) for the year under reference, being prior to AY 2018-19. 4.8. At the same time, the Hon'ble ITAT Mumbai in the cases of M/s Seth Developers Pvt. Ltd. v. DCIT (ITA No. 1953/Mum/2019 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the Tribunal decisions had followed the decision of the Hon'ble Gujarat High Court in the case of Neha Builders (supra). We find that the issue in dispute is also covered by the decision of Pune Tribunal in the case of Kumar Properties and Real Estates (P.) Ltd. v. Dy. CIT (2021) 128 taxmann.com 364/190 ITD 212. For the sake of convenience, the entire order is reproduced hereunder:- "This appeal by the assessee is directed against the order passed by the CIT(A)-7, Pune on 1-9-2017 in relation to the assessment year 2013-14. 2. The assessee has assailed confirmation of addition of Rs. 1,47,65,688/- towards deemed rental income on stock-in-trade of unsold flats/bungalows held by the assessee, as a first major issue. Succinctly, the factual panorama of the case is that the assessee has been engaged in the business of development of properties with the projects 'Kumar Infinia' and 'Kumar Picasso' ITA No. 2977/PUN/2017 Kumar Properties and Real Estate (P.) Ltd. having certain unsold flats/bungalows for ready possession at the year end. The AO opined that the assessee ought to have offered deemed notional rental income on such vacant flats/bungalows. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of business or profession. iv. Profits of such business or profession should be chargeable to income-tax. ITA No. 2977/PUN/2017 Kumar Properties and Real Estate (P.) Ltd. 5. Only when the above four conditions are cumulatively satisfied that the property or its part goes outside the ken of section 22, not requiring computation of the annual letting value therefrom. Let us see if the above conditions are satisfied in the instant case ad seriatim. 6. The first condition is that the property or its part should be occupied by the assessee as an owner. The assessee is engaged in the business of developing buildings. Admittedly, the assessee is owner of the flats/bungalows lying unsold at the year end. Now the question is whether these flats etc. can be said to be 'occupied' by the assessee? The term 'occupy' has neither been defined in section 2 (general definitions under the Act) nor section 27 (definitions relating to income from house property). Rather it is defined nowhere in the Act. In such a scenario, we will have to understand its connotation in common parlance. The term 'occupation' (in land law) has been defined in the Oxford Dic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from such property or something like that as a sine qua non for exception. If the intention of the legislature had been to provide exception in a limited manner, it would have used a suitable constrained expression. Coming back to the factual scenario prevailing in the instant case, we find that the purpose of occupation of the flats is to hold them either for readying them for final sale or during the interregnum from the ready stage to sale stage, which satisfies the test of 'for the purpose of business'. 9. The last condition is that profits of such business or profession should be chargeable to income-tax. It is indisputable that the ITA No. 2977/PUN/2017 Kumar Properties and Real Estate (P.) Ltd. profits of the business of property development by the assessee are chargeable to income-tax. 10. On a bird's-eye view, we find that flats/bungalows are occupied by the assessee owner; business of property development is carried on by the assessee; the occupation of the flats etc. is for the purpose of business; and profits of such business are chargeable to income- tax. Ergo, all the four conditions for exclusion from section 22 of the Act are cumulatively satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year in which the completion certificate is received, shall be taken as Nil. The amendment has been carried out w.e.f. 1-4-2018 and the Memorandum explaining the provisions of the Finance Bill also clearly provides that this amendment will take effect from 1-4-2018 and will, accordingly apply in relation to the assessment year 2018-19 and subsequent years. Obviously, it is a prospective amendment. The effect of this amendment is that stock-in- trade of buildings etc. shall be considered for computation of annual value under the head 'Income from house property after one/two years from the end of the financial year in which the certificate of completion of construction of the property is obtained on and from the A.Y. 2018-19. Instantly, we are concerned with the assessment year 2013-14. As such, the amendment cannot apply to the year under consideration. In the absence of the applicability of such an amendment, no income can be said to have accrued to the assessee from unsold flats available as stock-in-trade. We, therefore, overturn the impugned order on this score and delete the addition of Rs. 1.47 crore sustained in the first appeal." 5.14 In view of the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was within 10% margin no addition is to be made and relied upon the order passed by the co-ordinate Bench of the Tribunal in cases viz. Sai Bhargavanath Infra vs. ACIT (2022) 197 ITD 496 (Pune-Trib.), Maria Fernandes Cheryl vs. ITO (2021) 187 ITD 738 (Mum-Trib.) & Sheth Developers Pvt. Ltd. vs. Dy. CIT (supra). 16. The co-ordinate Bench of the Tribunal in case of Sai Bhargavanath Infra vs. ACIT (supra) held that first proviso to section 43CA inserted by Finance Act, 2020 with effect from 01.04.2021 is applicable retrospectively and thus where difference recorded between sale value of flats sold by assessee and stamp value of such flats was within 10% margin, no addition to be made. In the instant case the difference between the sale value and stamp value is 1.67% and as such within the threshold limit of 10%, so following the order passed by the co-ordinate Bench of the Tribunal in case of Sai Bhargavanath Infra vs. ACIT (supra), we are of the considered view that the Ld. CIT(A) has erred in confirming this addition which is ordered to be deleted. So ground No.1 raised by the assessee in its cross objections is hereby allowed. 17. In view of what has been discussed above, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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