Tribunal rules unsold unit deemed rent not justified as business income, favoring assessee appeal

The Tribunal held that the addition made by the AO on account of deemed rent from unsold units in closing stock was not justified. The decision was based on previous Tribunal orders and judicial precedents, establishing that notional annual rental value on unsold flats held as stock-in-trade should be treated as business income. The Tribunal emphasized the distinction between notional rental income and actual rental income earned by the assessee, ultimately ruling in favor of the assessee and allowing the appeal.

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Issues: Whether the CIT(A) was justified in confirming the addition made by the AO on account of deemed rent from unsold units lying in closing stock.

Analysis:
The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-11, Pune for the assessment year 2015-16. The main issue raised in the appeal was regarding the addition made by the Assessing Officer (AO) on account of deemed rent from unsold units in closing stock. The representatives for both the assessee and the revenue agreed that the issue was covered by previous Tribunal orders in the assessee's own case for assessment years 2013-14 and 2014-15. The Tribunal referred to various judicial precedents, including the case of Commissioner of Income Tax Vs. Ansal Housing Finance And Leasing Co. Ltd., to determine the treatment of annual rental value on unsold flats held as stock-in-trade by the assessee. The Tribunal concluded that no addition is maintainable on account of deemed rent on unsold flats treated as stock-in-trade, following the consistent view taken by the Tribunal in similar cases. Therefore, the grounds raised by the assessee were allowed, and the appeal was allowed in favor of the assessee.

In summary, the Tribunal held that the addition made by the AO on account of deemed rent from unsold units in closing stock was not justified. The decision was based on previous Tribunal orders and judicial precedents, which established that notional annual rental value on unsold flats held as stock-in-trade should be treated as business income. The Tribunal emphasized the distinction between notional rental income and actual rental income earned by the assessee, ultimately ruling in favor of the assessee and allowing the appeal.

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