TaxTMI 
TaxTMI 
2020 (2) TMI 1089
X X X X Extracts X X X X
X X X X Extracts X X X X
....ouse property. On appeal before CIT(A), the action of AO was affirmed. The ld. CIT(A) affirmed the action of AO by relying upon the decision of Hon'ble Delhi High Court in Housing Finance & Leasing 354 ITR 180 (Delhi). Thus, further aggrieved by the order of CIT(A), the assessee filed the present appeal. 3. The assessee has raised the following grounds of appeal:- "Grounds of appeal against the Appellant Order & Grounds of Decision dated 04/06/2018 passed by the Hon'ble Commissioner of Income Tax (Appeals) - 53, Mumbai. Following grounds of appeal are without prejudice to each other: 1. a. The Learned CIT (A) has erred in law & on facts in upholding the Learned AO's action of making addition of deemed rental income (Rs. 64/000/- )/ALV being rent of Rs. 8000/- pm for 8 months in relation to unsold closing stock being one unsold residential unit at Dheeraj Kiran Flat which were lying unsold at the beginning of the year & sold in December 2014 and taxed the same under the head "Income from House Property", which is bad in law. b. The Learned CIT (A) has erred in law & on facts in relying on the decision of Hon'ble Delhi high Court in the case of Ansal Housing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f ld. DR and perused the material available on record. There is no dispute that assessee is a builder and developer. During the assessment, the AO treated the Annual Letting Value (ALV) of unsold unit and on the basis of ALV so computed and granting 30% deduction under section 24, brought the income of such units under the head "Income from house property". The Ld. CIT (A) confirmed the action of AO by making reliance on the decision of Hon'ble Delhi High Court in Housing Finance & Leasing (supra). 8. There is no dispute that the assessee is in the business of real estate. Further, there is no dispute that the assessee has shown one unit of 540 Sq Feet in its stock in trade, which was ultimately sold during the year. The unit was sold during the relevant period is assernable from the facts the AO worked out the ALV of this unit only for 8 months. The ld CIT(A) affirmed the action of AO by relying on the decision of Delhi High Court in Ansal Housing & Finance Ltd (supra). 9. The Hon'ble Delhi High Court in CIT Vs Ansal Housing Finance Ltd (supra) has taken a view that ALV of unsold flat built by the builder is assessable as income from the house property. However, there is contr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he rental income received from any property in the construction business can be claimed under the head 'income from property' even though the said property was included in the closing stock. The Hon'ble Gujarat High Court held that if the business of the assessee is to construct the property and sell it or to construct and let out the same, then that would be the business and the business stocks, which may include movable and immovable, would be taken to be stock in trade and any income derived from such stocks cannot be termed as income from house property. While holding so the Hon'ble High Court observed as under: - "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 said property would become or partake the character of the stock, and any income derived from the stock, would be 'income' from the business, and not income from the property. If the business of the assessee is to construct the property and sell it or to construct and let out the same, then that would be the 'business' and the business stocks, which may i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Delhi High Court in the case of Ansal Housing Finance & Leasing Co. Ltd., 354 ITR 180 (Delhi) in support of the proposition that even in respect of unsold flats by the developer is liable to be taxed as income from house property. 5. We have considered rival contentions and perused the record. The issue under consideration has been restored by the CIT(A) to the file of AO to compute the annual value. Recently the Hon'ble Supreme Court in the case of M/s Chennai Properties & Investments Ltd. Vs. CIT, reported in (2015) 42 SCD 651, vide judgment dated 9-4-2015 has held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treating the rental income as income from house property in place of income from business shown by the assessee was held to be not justified. The Hon'ble Supreme Court held that since the assessee company's main object, is to acquire and held properties and to let out these properties, the income earned by letting out these properties is main objective of the company, therefore, rent received from the letting out of the properties is assessable as in....