TaxTMI 
TaxTMI 
2022 (7) TMI 741
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....16 & 27/12/2017 respectively by the ld. Dy. Commissioner of Income Tax, Central Circle 5(4), Mumbai (hereinafter referred to as ld. AO). 2. At the outset, the ld. AR submitted that there is a delay of 743 days in filing of these appeals by the assessee. An affidavit in support of the condonation petition was duly filed for all the cases before us. In the said affidavit, it has been stated that the orders of ld. CIT(A) were received by the assessee on 19.9.2019 ; that the appellate orders were immediately sent by email to the Chartered Accountant on 19.9.2019 itself ; later the partner of the firm who is incharge of income tax affairs, got admitted in hospital on 19.9.2019 itself and discharged on 21.9.2019 ; later on 24.9.2019, the partner wrote another letter to the CA ; later the partner again got himself admitted in hospital for his treatment and got discharged on 15.11.2019 ; again on 15.11.2019, the partner wrote another letter to the CA seeking advice from the CA for preferring further appeals before the Tribunal. The copy of medical reports together with the discharge summary issued by the hospital and the copy of letters sent to CA are placed on record. At that time, the C....
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....Ltd reported in 354 ITR 180 (Del) , wherein it was held that the ld. AO was justified in bringing to tax the Annual Lettable Value (ALV) of unsold flats as income from house property. The ld. AO observed that the assessee furnished documents in order to derive the rateable value of the property. The ld. AO however determined the notional rent @ 8% of the value of the property as ALV for the year under consideration and granted statutory deduction at the rate of 30% u/s 24 of the Act under the head 'Income from House Property'. We find that this action of the ld. AO is upheld by the ld. CIT(A). 5.2. We find that the issue in dispute is no longer res integra in view of the co-ordinate bench decision of this tribunal in the case of Shri Rajendra Godshalwar vs ITO in ITA No. 7470/Mum/2017 dated 31.1.2019 for Asst Year 2012-13 wherein after considering the various decisions of Hon'ble Gujarat High Court in the case of CIT vs Neha Builders Pvt Ltd reported in 296 ITR 661 (Guj) and Tribunal including the decision of Hon'ble Delhi High Court referred to supra, the tribunal had rendered the decision in favour of the assessee stating that the deemed rental income cannot be assessed on value....
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....erprises, 377 ITR 0165 (Bom.) wherein the issues were altogether different. 5. On the other hand, the ld. DR has defended the decision of the lower authorities by placing reliance on the same. 6. We have carefully considered the rival submissions. The short point involved in this appeal is the validity of addition sustained by the CIT(A) on account of notional ALV of the unsold flat, which is held by the assessee as stock-in-trade. Factually speaking, it is not in dispute that the flat in question is not yielding any rental income to the assessee, as it has not been let-out. It is also not in dispute that the project in question has been completed during the year under consideration, and the said flat is shown as stock-in-trade at the end of the year. At the time of hearing, the learned representative also pointed out that the flat has been ultimately sold on 06.11.2012. We find that our coordinate Bench in the case of C.R. Developments Pvt. Ltd. (supra) dealt with charging of notional income under the head "Income from House Property" in respect of unsold shops which were shown by assessee therein as part of "stock-in-trade". As per the Tribunal "The three flats which could no....
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....ing to actual rental income received on letting out of unsold flats. The dispute pertained to the head of income under which such income was to be taxed - whether as "Business Income" or as "Income from House Property". In the present case, the facts are quite different inasmuch as the unsold flat in question has not yielded any rental income as the flat has not been let-out, and is being held by the assessee purely as stock-in-trade; and, what the Assessing Officer has tried to do is to assess only a notional income thereof. Thus, the ratio of the judgment of the Hon'ble Bombay High Court in the case of Sane & Doshi Enterprises (supra) has been rendered in the context of qualitatively different facts, and is not applicable in the present case. 9. Apart therefrom, we find that Sec. 23(5) of the Act has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018. In terms of the said section, it is prescribed that "where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for....
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....the assessee had earned interest income on its fixed deposits amounting to Rs 17,74,906/-. The said interest income was credited by the assessee to the running project accounts. In other words, interest income was credited to work in progress by the assessee in the books of accounts. The assessee explained before the ld. AO that the fixed deposits were placed as a margin provided to the banks for securing Bank Guarantees from the Bank in favour of third parties and it was pleaded that the said Guarantees had to be issued by the assessee for the smooth conduct and running of the business. The purpose of issuing Performance Guarantees and Financial Guarantees by the Banks in favour of various third parties including the Government Agencies, for which purpose, the assessee had to necessarily invest cash margins in the form of fixed deposits, were duly explained by the assessee before the lower authorities and the same are duly captured in pages 3 to 5 of the order of the ld. CIT(A). The same are not reiterated for the sake of brevity. Hence the assessee pleaded that the deposits were invested out of business exigencies. It was specifically pointed out that it is not a case of surplus ....
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....ery. In this view of the matter the ratio laid down by this Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172, will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC). The appeal is dismissed. There will be no order as to costs." 6.4. Similar views were expressed by the Hon'ble Supreme Court in the case of CIT vs Bokaro Steel Ltd reported in 236 ITR 315 (SC) ; Hon'ble Supreme Court in the case of Bongaigaon Refinery and Petrochemicals Ltd vs CIT reported in 251 ITR 329 (SC); Hon'ble Jurisdictional High Court in the case of Shree Maheshwar Hydel Power Corporation Ltd vs CIT reported in 96 taxmann.com 167 (Bom) and Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd vs ITO reported in 315 ITR 255 (Del). 6.5. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hold that the interest income earned on fixed deposits should be treated as capital receipt and to be reduced from the project cost. Hence we do not find any infirmity in the treatment given by the assessee in....