TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 739
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....ty 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 of builder and developer, had e-filed his return of income for the assessment y....
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....L-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) 13,294.00 12 RS-201 Second floor 1035 Rs.14.40 per Sq.ft (80% of Rs.18) 11,994.00 13 RS-202 Second floor 1050 Rs.14.40 per Sq.ft (80% of Rs.18) 15120.00 14 RS-203 Second floor 743 Rs.14.40 per Sq.ft (80% of Rs.18) 10,699.00 15 RS-204 Second floor 1060 Rs.14.40 per Sq.ft (80% of Rs.18) 15,120.00 16 RS-205 Second floor 1035 Rs.14.40 per Sq.ft (80% of Rs.18) 14,904.00 17 RS-301 Third floor 1035 Rs.13.50 per Sq.ft (75% of Rs.18) 13,973.00 18 RS-302 Third floor 1050 Rs.13.5....
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.... 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 brought the same to tax under the head "house property". On appeal, the CIT(A) had found favour with the view taken by the A.O by drawing support from the order of the Hon'ble High Court of Bombay in the case of CIT Vs. Gundecha Builders (2019) 102 CCH 426 (Bom). 8. On a perusal of the order of the Hon'ble Jurisdictional High Court in the case of Gundecha Builders (supra), we find, that the issue before the High Court was that where an assessee, a real estate developer, was in receipt of rental income from a property held as stock-in-trade of its business as that of a real estate developer, then, whether the said receipts were to be brought to tax under the head "house property"....
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....ot 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 capacity of being an owner was not diminished one whit, because the assessee carried on the business of developing, building and selling flats in housing estates, therefore, the ALV of the flats held as stock-in-trade by the assessee in its business of a builder and developer was liable to be determined and brought to tax under the head "house property". But then, we find, that taking a contrary view the Hon'ble High Court of Gujarat had way back in the case of CIT vs. Neha Builders (2008) 296 ITR 661 (Guj), observed, that rental income derived by an assessee from the property which was treated as stock-in-trade is assessable as business income and cannot be assessed under the head "Income f....
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.... 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- intrade'. As per the Tribunal "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 Shri Rajendra Godshalwar 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....
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.... 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 Court of Gujarat in CIT vs. Neha Builders Pvt. Ltd. (2008) 296 ITR 661 (Guj), as per which the ALV of the unsold property held by an assessee as stock-in-trade could not be determined and brought to tax under the head "house property", as against that arrived at by the Hon‟ble High Court of Delhi holding to the contrary in CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del); and also following the order of ITAT, Mumbai in Shri. Rajendra Godshalwar Vs. ITO-21(3)(1), Mumbai [ITA No. 7470/Mum/2017, dated 31.01.2019], we herein conclude that the ALV of flats held by the assessee as part of the stock-in-trade of its business as that of a builder and developer could not have been determined and therein brought to tax un....