The Income Tax Act did not intend to tax deemed rental income...

The Income Tax Act did not intend to tax deemed rental income from properties held as stock-in-trade prior to the assessment year 2018-19. Section 23(5), introduced from the assessment year 2018-19, permits the Assessing Officer to calculate deemed rental income on properties held as stock-in-trade, even if not let out. However, prior to this, Section 22 clearly stated that annual value of properties held as stock-in-trade for business purposes shall not be chargeable to income tax under the head "Income from House Property". The legislature's intention to tax such deemed rental income is evident only from the assessment year 2018-19 onwards, as Section 23(5) was not made retrospectively applicable. Consequently, the Assessing Officer cannot determine annual value or deemed rental income on unsold flats held as stock-in-trade for the assessment year 2016-17, and the addition made on this account must be deleted.