TaxTMI 
TaxTMI 
2021 (7) TMI 40
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....see had filed detailed written submission dated 19.02.2021 which is already placed on record. 4. We find that the learned DR fairly agreed that the issue in dispute is already covered by the decision of this Tribunal in assessee's own case for AY 2013-14 in ITA No.5062/Mum/2017 dated 13.03.2019 under the identical facts and circumstances. The entire facts and the decision rendered thereon for AY 2013-14 are hereby reproduced:- "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 6,9795,580 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 ....
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....on'ble ITAT in ITA. No.6332/M/2016 dated 21.12.2018 titled as Ferani Hotels Pvt. Ltd. The relevant finding has been given in para no. 6 to 8 which are hereby reproduced as under: - "Under this issue the assessee has challenged the confirmation of the addition of Rs. 13,22,90,044/- under the head of 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 d....
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....ness 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 '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 'stock- 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 distin....
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....s main objective of the company, therefore, rent received from the letting out of the properties is assessable as income from business. On the very same analogy in the instant case, assessee is engaged in business of construction and development, which is main object of the assessee company. The 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 t....
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.... 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." 8. In the factual position of the present case is quite similar to the facts of the case mentioned above. In view of the law relied upon the law representative of the assessee i.e. M/s. Runwal Constructions Vs. ACIT and M/s. C.R. Developments P. Ltd. Vs. JCIT (supra), we are of the view that the finding of the CIT(A) on this issue is wrong against law and facts whereas the case of the assessee has duly been covered by the law mentioned above, therefore, by honoring the orders mentioned above. We deleted the addition raised by assessee on account of notional income of vacant flats. Accordingly, this issue is decided in favour of the assessee against the revenue." 5. On appraisal of the above mentioned finding, we noticed that the factual position of the present case is quite similar to the factual position of decision of the Hon'ble ITAT in the case of Ferani Hotels Pvt. Ltd. (supra). Since the case of the assessee has duly been covered by the decision of the Hon'ble ITAT in the c....