Deemed rent on unsold flats held not leviable where units are treated as stock-in-trade; appeal allowed.

Deemed rent on unsold flats treated as finished stock was contested; the article notes that where unsold flats are shown as stock-in-trade, annual letting value cannot be imposed, following precedent that exempts finished inventory from deemed rent assessment. The revenue failed to place contrary authority, and the conclusion supports annulment of deemed rental inclusion in income for such unsold units. The operative legal point is that characterization of units as stock-in-trade precludes imposition of annual letting value as deemed rent on those unsold flats.

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Issues: Whether annual letting value (deemed rent) could be imposed on unsold finished flats shown as stock-in-trade.

Analysis: The issue was examined in light of conflicting High Court authorities and this Tribunal's earlier decision in M/s. Cosmopolis Construction which analysed the Delhi High Court decision in Ansal Housing and the Gujarat High Court decision in Neha Builders. The Tribunal followed the view favouring computation of income from finished stock under the head "income from business" and rejected imposition of annual letting value on unsold flats treated as stock-in-trade.

Conclusion: Deemed rent in the form of annual letting value cannot be imposed on unsold finished flats shown as stock-in-trade; the addition on account of deemed rent is set aside in favour of the assessee.

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