Tribunal directs deletion of notional rent on stock-in-trade property, ruling in favor of business income.

The Tribunal allowed the appeal, directing the Assessing Officer to delete the notional rent assessed on the property held as stock in trade. The decision was based on the principle that income from unsold flats held as stock in trade should be treated as business income, not income from house property. The Tribunal's ruling was in line with previous judgments and legal interpretations, emphasizing the distinction between income from business and income from property.

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Issues:
Appeal against the order of the Learned Commissioner of Income Tax (Appeals) regarding the addition of deemed let out value of closing stock under income from house property.

Detailed Analysis:

Issue 1: Addition of deemed let out value of closing stock
The Assessing Officer computed the annual letting value of unsold flats as 8% of the closing stock. The assessee argued that notional rent cannot be charged on unsold flats. The Ld.CIT(A) upheld the AO's decision. The assessee cited precedents from Mumbai benches of the Tribunal and decisions from the Hon'ble Gujarat and Culcutta High Courts. The Tribunal noted that the property was stock in trade and held that notional rent cannot be assessed under income from house property. Referring to a similar case, the Tribunal emphasized that income from stock in trade is business income, not income from house property. The Coordinate Bench also ruled that unsold flats held as stock in trade should be assessed under business income, not house property income. Citing the Hon'ble Supreme Court's decision, the Tribunal held that rental income from properties held as stock in trade is assessable as business income. The Tribunal directed the AO to delete the addition made under Section 23 of the Act as income from house property.

Conclusion:
The Tribunal allowed the appeal, directing the Assessing Officer to delete the notional rent assessed on the property held as stock in trade. The decision was based on the principle that income from unsold flats held as stock in trade should be treated as business income, not income from house property. The Tribunal's ruling was in line with previous judgments and legal interpretations, emphasizing the distinction between income from business and income from property.

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