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of <h1>Holding: Tax Appeal Dismissed on Treatment of Unsold Shops as Stock in Trade vs. Income from House Property</h1> <h3>Income Tax Officer 2 (1) (1), Mumbai Versus M/s. Arihant Estates Pvt. Ltd.</h3> Income Tax Officer 2 (1) (1), Mumbai Versus M/s. Arihant Estates Pvt. Ltd. - TMI Issues:Computation of notional annual letting value on unsold shops held as stock in trade by the assessee.Analysis:The appeal by the Revenue concerns the computation of notional annual letting value on unsold shops treated as stock in trade. The assessee argued that similar issues were decided in favor of the assessee by the Mumbai Bench of the Tribunal and the Hon'ble Gujarat High Court. The Revenue, represented by the Ld. DR, supported the Assessing Officer's orders. The Tribunal considered the arguments and previous decisions, including those of the Hon'ble Gujarat High Court and the Hon'ble Delhi High Court. The Tribunal noted that the assessees were engaged in the business of builders and developers, treating the unsold flats as stock in trade. It was held that income from such stock in trade should be assessed under the head 'income from business' and not under 'income from house property.'The Hon'ble Gujarat High Court's decision in the case of Neha Builders Pvt. Ltd. was cited, emphasizing that if the property is used as stock in trade, any income derived from such stock should be considered as business income. The Coordinate Bench also referred to the decision of the Hon'ble Delhi High Court and the Hon'ble Supreme Court, concluding that unsold flats held as stock in trade should be assessed under the head 'business income.' The Tribunal upheld that the unsold shops, being stock in trade, should not have their notional annual letting value computed under the head 'income from house property.' Therefore, the addition made by the Assessing Officer under Section 23 of the Act as income from house property was directed to be deleted.In the case at hand, where unsold shops were held as stock in trade, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the Revenue's appeal. The decision was based on the principle that income from stock in trade should be assessed under the head 'income from business,' not 'income from house property.' The Tribunal emphasized that the unsold property being treated as stock in trade precluded the computation of notional annual letting value under the head 'income from house property.'
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