Appeal successful: Deemed rent not applicable on unsold flats used for business. The Tribunal allowed the appeal of the assessee, holding that no addition on account of deemed rent on unsold flats could be made. The decision was based ...
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Appeal successful: Deemed rent not applicable on unsold flats used for business.
The Tribunal allowed the appeal of the assessee, holding that no addition on account of deemed rent on unsold flats could be made. The decision was based on the assessee meeting all the conditions for exclusion under section 22 of the Act, as the unsold flats were considered stock-in-trade and used for business purposes. The order of the CIT(A) was set aside, and the grounds raised by the assessee were allowed.
Issues: Whether the addition made by the AO on account of notional income from unsold flats is justified.
Analysis: The appeal was filed by the assessee against the CIT(A)'s order for the assessment year 2014-15. The main issue was whether the addition made by the AO on account of notional income from unsold flats was justified. The assessee, a Private Limited Company engaged in various businesses, had 37 unsold flats for which completion certificates were issued. The AO calculated deemed rent for these flats as the assessee had not offered any rental income. The assessee claimed the flats were stock-in-trade, and income from them should be considered as business income, not house property income. The CIT(A) confirmed the AO's addition. The assessee argued that the issue was in their favor, citing a Tribunal order in a similar case. The Tribunal discussed the conditions for exclusion under section 22 of the Act, emphasizing that if the property is occupied by the assessee as an owner for business purposes, the income should not be considered for taxation. The Tribunal found that all conditions for exclusion were met in this case, and hence, no addition for deemed rent on unsold flats was justified. The order of the CIT(A) was set aside, and the grounds raised by the assessee were allowed.
In conclusion, the Tribunal allowed the appeal of the assessee, holding that no addition on account of deemed rent on unsold flats could be made. The decision was based on the assessee meeting all the conditions for exclusion under section 22 of the Act, as the unsold flats were considered stock-in-trade and used for business purposes.
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