TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 430
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....onically filed its return of income for A.Y. 2014-15 on 26.11.2014 declaring total income of Rs. 107,78,02,634/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) r.w.s 144C of the Act vide order dt.22.12.2017 and the total income was determined at Rs. 107,94,27,110/-. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who vide order dt.22.05.2018 (in appeal No.PN/CIT(A)-7/CIR-14/10259/2017-18) granted partial relief to the assessee. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us and has raised the following grounds : "1. The learned CIT(A) erred in confirming the addition of Rs. 16,24,476/- u/s 22 r.w.s. 23(4) on account of deemed rent in respect of u....
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.... the deemed rent from those six flats at Rs. 16,24,476/- and made its addition. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who following the order of Hon'ble Delhi High Court in the case of Ansal Housing Finance & Leasing Co., Ltd., reported in 29 taxmann.com 303 and the decision of Hon'ble Punjab and Haryana High Court in the case of Susham Singla Vs. CIT reported in 244 Taxman 302, upheld the order of AO. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us. 5. Before us, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that identical issue arose in the case of its sister concern i.e., M/s. Kolte Patil Developers Limited in A.Y. 2012-13, wherein ....
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....s, Builders and Developers and had in the closing stock of 32 unsold flats. It is also an undisputed fact that these 32 flats were vacant and no rental income was derived by the assessee during the year under consideration. We find that Hon'ble Gujarat High Court in the case of CIT Vs. Neha Builders Pvt. Ltd., reported in [2007] 164 Taxmann 342 has held that when the business of the assessee is to construct the property and sell it or to construct or let out then that would be the "business" and the business stocks which may include movable and immovable properties would be taken to be "stock-in-trade" and any income derived from such stocks cannot be termed as "income from house property". We further find that the Co-ordinate Bench of the ....
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....s held as stock-in-trade any income derived rom stock would be "income from business" and not "income from house property". The relevant extract of the findings of Hon"ble High Court are as under : "7. From the order passed by the learned CIT(A), it would clearly appear that the case of the assessee was that the company was incorporated with the main object of purchase, take on lease, or acquire by sale, or let out the buildings constructed by the assessee. Development of land or property would also be one of the businesses for which the company was incorporated. 8. True it is, that income derived from the property would always be termed as 'income' from the property, but if the property is used as 'stock-in-trade', then the s....
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.... And Leasing Co. Ltd. (supra) the Hon'ble Delhi High Court taking a contrary view has held that annual rental value on unsold flats built by assessee engaged in construction business is assessable as income from house property. It is a well settled law that when two divergent views of non-jurisdictional High Courts are available and there is no decision on the issue from the Jurisdictional High Court, the view in favour of the assessee has to be adopted [Commissioner of Income Tax Vs. Vegetable Products Ltd.(supra)]. 9. In so far as the decision of Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Sane & Doshi Enterprises (supra) is concerned we find that the facts in the said case are at variance. In the said case ....
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....rdharilal K. Lulla Vs. DCIT (supra) under similar set of facts have taken a consistent view in holding notional annual rental value on unsold flats held as stock-in-trade by the assessee engaged in construction and development activities as "Business Income". 11. Before us, no distinguishing feature in the facts of the present case and the case decided by Pune ITAT noted herein above has been pointed out by Revenue. In view of the aforesaid facts, we following the decision of Co-ordinate Bench of the Pune Tribunal in the case of M/s. Cosmopolis Construction Vs. ITO (supra) hold that in the present case, no addition on account of deemed rent of 32 unsold flats can be made in hands of the assessee. We therefore set aside the addition made ....