TaxTMI 
TaxTMI 
2022 (8) TMI 739
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....rred in not adjudicating on the ground regarding illegality of assessment order due to non-issuance of notice u/s 143(2) by the AO, who has passed the assessment order. 3) That learned CIT(A) erred in confirming the addition of Rs.1,91,406/- made by the Assessing Officer under the head "Income from House Property" for alleged notional rent u/s. 23(1)(a) on unsold flats and shops shown as "Stock-in-trade" in the balance sheet as on 31.03.2013 without considering the facts and circumstances of the case properly and judicially and without properly and completely appreciating the written submission furnished before him. 4) That learned CIT(A) erred in confirming action of the Assessing Officer in not allowing deduction under Chapter VI-A to the extent of Rs.11,512/- by stating that "as income has been assessed under the head "House Property", therefore, the deduction u/s. 80C is not allowable" without referring any provision of the Act or judicial pronouncement in this regard. 5) The appellant reserves the right to add, amend, or alter any ground or grounds of appeal at the time of hearing." 2. Succinctly stated, the assessee who is engaged in the business....
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.... Flat No./Shop No. Floor Area (in. Sq.ft) Rate of Nagar Nigam, Raipur for per Sq.ft per year (In Rs.) Annual Rental Value as per section 23(1)9a) of the Income Tax Act, 1961 (in Rs.) 1 Row House E-1 Ground floor 477 Rs.18 per sq.ft 8,586.00 2 E-1 First floor 477 Rs.15.30 per Sq.ft (85% of Rs.18) 7,298.00 3 Flats ( Old Block) ML-9 First floor 340 Rs.15.30 per Sq.ft (85% of Rs.18) 5202.00 4 C-101 First floor 388 Rs.15.30 per Sq.ft (85% of Rs.18) 5936.00 5 C-102 First floor 388 Rs.15.30 per Sq.ft (85% of Rs.18) 5936.00 6 C-201 Second floor 388 Rs.14.40 per Sq.ft (80% of Rs.18) 5587.00 7 C-202 Second floor 388 Rs.14.40 per Sq.ft (80% of Rs.18) 5587.00 8 RS-101 First floor 1065 Rs.15.30 per Sq.ft (85% of Rs.18) 16,295.00 9 Flats ( Multi Block) RS-102 First floor 1035 Rs.15.30 per Sq.ft (85% of Rs.18) 15,836.00 10 LS-104 First floor 774 Rs.15.30 per Sq.ft (85% of Rs.18) 11,842.00 11 LS-105 First floor 863 Rs.15.30 per Sq.ft (85% of Rs.18) ....
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....s well as the judicial pronouncements that have been pressed into service by them for driving home their respective contentions. Admittedly, it is a matter of fact that the flats in question were held by the assessee firm, a real estate developer, as stock-in-trade of its respective projects viz. (i) Ashwin CHS Projects; and (ii) Infinity Project. As observed by us hereinabove, the A.O had determined and therein brought to tax the ALV of the aforesaid flats under the head "house property‟ in the hands of the assessee firm. Our indulgence in the present appeal has been sought by the assessee, to adjudicate, the sustainability of the view taken by the lower authorities that the ALV of the flats held by the assessee as stock-in-trade was liable to be determined and therein brought to tax under the head "house property". As is discernible from the assessment order, the A.O by relying on the order of the Hon'ble High Court of Delhi in the case of CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del), had determined the ALV of the flats which were held by the assessee as part of the stock-in-trade of its business of a builder and developer, and had bro....
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....ered view being distinguishable on facts would not assist the case of the revenue before us. 9. We shall now advert to the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del) by drawing support from which the A.O had determined and therein brought to tax the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer. In the aforesaid case, it was the claim of the assessee that unlike the other builders as it was not into letting out of properties, the determination of deemed income which had formed the basis for assessment under the ALV method, was not called for in its case. However, the High Court being of the view that the levy of income tax in the case of an assessee holding house property was premised not on whether the assessee carries on business, as landlord, but on the ownership, thus, turned down the aforesaid claim of the assessee. To sum up, in the backdrop of its conviction that the incidence of charge under the head house property was based on the factum of ownership of property, the High Court was of the view that as the ....
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.... of the unsold property held by the assessee as stock-in-trade could not be determined and brought to tax under the head 'house property'. The Tribunal while concluding as hereinabove had also distinguished the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Sane & Doshi Enterprises (2015) 377 ITR 165 (Bom), as was relied upon by the revenue. The Tribunal while concluding as hereinabove had observed as under: "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....
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....in the plea of the assessee, which deserves to be upheld. 8. Insofar as the judgment of the Hon'ble Bombay High Court in the case of Sane & Doshi Enterprises (supra) relied by the CIT(A) is concerned, the same, in our view, does not help the case of the Revenue. Quite clearly, the case before the Hon'ble High Court was relating 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." Accordingly, preferring the view taken by the Hon'ble High Cour....
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....uch property or part of the property, for the period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil". Though the said provision is effective from 01.04.2018, yet even if one is to see the present case from the standpoint of Sec. 23(5) of the Act, no addition is permissible in the instant year. It may be relevant to note that the completion certificate is stated to Shri Rajendra Godshalwar have been obtained on 28.11.2011 and going by the provisions of Sec. 23(5) of the Act, no addition is permissible in the instant assessment year. Be that as it may, we are only trying point out that the assessability of notional income in respect of unsold flat, which is taken as stock-in-trade, is not merited in the instant case. Thus, we set- aside the order of CIT(A) and direct the Assessing Officer to delete the addition." 11. We, thus, in the backdrop of our aforesaid deliberations not being able to concur with the view taken by the lower authorities, therein, set aside the order of the CIT(A) and direct the A.O to delete the addition made by hi....