TaxTMI 
TaxTMI 
2019 (3) TMI 1892
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....sion in the case of M/s. C.R. Developments Pvt. Ltd. V/s. JCIT-8(1)(OSD), Mumbai ITA. No. 4277/M/2012 decided on 13th May, 2015." 3. The brief facts of the case are that the assessee filed its return of income for the A.Y. 2013-14 on 30.09.2013 declaring total income to the tune of Rs. 9,72,43,120/-. The case was selected for scrutiny, therefore, notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee was having unsold unit the details of which is hereby given as under.:- S. No. Particulars No of flats Amount 1 Wanwadi Project- Pune 77 6,97,95,580/- 2 Vakola Project- Santacruz (E) 1 43,01,115/- 3 Radhanarayan - Bandra (E) 2 1,13,38,000/- 8,54,34,695/- Thereafter, the notice was given and after the reply of the assessee, the notional value of the unsold unit was assessed after the deduction u/s 24 of the Act in sum of Rs. 39,75,545/-. Feeling Aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the order of the AO, therefore, the assessee has filed the present appeal before us. ISSUE NO.1 & 2:- 4. Issue nos. 1 & 2 are inter-connected, therefore, are being taken up together....
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.... income from house property on account of deemed income from unsold unit/ flat which was closing stock of the appellant as per provisions of Sections 22 and 23 of the Act. At the very outset, the Ld. Representative of the assessee has argued that the assessee is deriving its income from hotel business and construction. The assessee was also deriving income from dividend, share of profit and sale of flats and due to the recession, the assessee failed to sold out all the flats, therefore, some flats remain vacant which was being treated as stock in trade. The AO has wrongly assessed the notional rent and assessed the rent in view of the provision u/s 24 of the Act wrongly which can only be treated under the head of income from business, therefore, the finding of the CIT(A) is wrong against law and facts and is liable to be set aside. It is also argued that the case of the assessee has duly been covered in case of Runwal Construction Vs. ACIT in ITA. No. 5408/M/2016 & C.R. Developments Vs. JCIT in ITA. No. 4277/M/2012 dated 13.05.2015. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. On appraisal of the facts of the case and relevan....
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....rom 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 'stockin- 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 include movable and immovable, would be taken to be 'stockITA in-trade', and any income derived from such stocks cannot be termed as 'income from property'. Even otherwise, it is to be seen that ITA. No.6332/M/2016 A.Y.2012-13 10 there was distinction between the 'income from business' and 'income from property' on one side, and 'any income from other sources'. The Tribunal, in our considered opinion, was absolutely unjustified in comparing the rental income with the dividend income on the shares or interest inco....
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....three flats which could not be sold at the end of the year was shown as stock-in-trade. Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable to be taxed as business income. Accordingly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee‟s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23 of the I.T. Act." 10. In the case on hand before us it is an undisputed fact that both assessees have treated the unsold flats as stock in trade in the books of account and the flats sold by them were assessed under the head "income from business‟. Thus, respectfully following the above said decisions we hold that the unsold flats which are stock in trade when they were sold they are assessable under the head "income from business‟ when they are sold and ....