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TMI Blog2023 (4) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... head Income from business and professions and not under the head Income from house property HELD THAT:- The income from constructed units of the assessee held as stock-in- trade was not assessable under the head income from house property as held by the ld.Pr.CIT. See Neha Builders [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] . As noted that even before the AO this issue was raised by the AO vide his notice issued u/s 142(1) specifically asking the assessee to show cause as to why notional income from house property u/s 22 should not be worked out and added to the income of the assessee for the impugned year. There was no error in the order of the AO who had accepted the explanation of the assessee that no income from completed units was assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 4. The learned PCIT erred in fact and in law in not dropping the proceedings u/s 263 and observing that the order passed u/s. 143(3) was made without proper verification and inquiry. 5. The learned PCIT erred in fact and in law in setting aside the assessment u/s. 143(3) and directing the Assistant Commissioner of Income Tax, Circle 1(2)(1), Vadodara ( the AO ) to frame fresh assessment. Without Prejudice to above 6. The learned PCIT erred in fact and in law in holding that the notional rent from stock-in-trade held for purpose of business was chargeable to tax under the head Income from House Property . 7. The learned PCIT erred in fact and in law in not appreciating the provisions of Section 22 in proper perspective. - 8. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in the case of CIT Vs. Ansal Housing Finance Leasing Co. Ltd. (ITA No.18 of 1999 and others) dated 31.10.2012 and the decision of Hon ble Calcutta High Court in the case of Azimganj Estate P.Ltd. 206 taxman 308, the rental income of such completed units was assessable under the head Income from house property as long as the assessee continued to be the owner of the vacant flats, and the basis of the assessment had to be at ALV on rational and scientific basis. The ld.Pr.CIT noted that the AO having made no verification regarding the issue and having not considered the judicial decisions of the Hon ble High Courts on the issue during the assessment proceedings, the assessment order passed therefore by him was erroneous causing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction to the AO to pass fresh assessment order after taking into consideration the issues, as were already considered together with the issues discussed in his revisionary order, afresh. 5. We have heard the contentions of both the parties; we have also gone through order of the ld.Pr.CIT and have also gone through various decisions cited by the ld.counsel for the assessee before us. 6. The error noted by the ld. Pr. CIT, at the cost of repetition we may state, is that the assessee being in the business of real estate had certain completed units reflected as stock-in-trade in its balance sheet. As per the ld. Pr. CIT, the assessee ought to have returned deemed rental income on the same ,equivalent to its Annual Letting Value ,under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his noting of the facts in both the cases and the finding of the Hon ble High Court in the case of Neha Builders P. Ltd. (supra), the decision was clearly applicable to the facts of the present case ,as rightly applied by the AO. The para 8.4 8.5 of the ld.Pr.CIT s order are reproduced hereunder: Stock-in-trade therefore the property would partake the character of the stock and any income derived from the stock cannot be taken to be income from property. 8. At para 8.5 the ld.Pr.CIT has noted the facts in the case of Neha builders (Supra) stating that in that case the assessee was in the business of construction of property and one of the building property was included in the closing stock in the balance sheet drawn for the business and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposition of law laid down by the jurisdictional High Court in the case of Neha Builders P. Ltd. (supra),the only relevant fact admittedly for applicability of the proposition being nature of the building units, whether held as stock in trade or not. Therefore, we hold that that there was no distinction between the facts of the case before the Hon ble jurisdictional High Court in the case of Neha Builders(supra) and that before the Ld.PCIT and the decision the Hon ble jurisdictional High Court squarely applied to the facts of the present case. Further applying the rule of judicial precedence, the said decision being that of the jurisdictional High Court, was applicable to the present case. Accordingly, we hold, that the income from co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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