TaxTMI 
TaxTMI 
2023 (2) TMI 579
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....n stock-in-trade; (ii) Sale of two flats to one person - Deduction u/s 80IB(10) of the Act to be disallowed in entirety; (iii) Rental income in respect of stock-in-trade ought to have been offered to tax as 'Income from other sources' instead of 'Business income'; and (iv) Interest wrongly claimed as deduction in respect of non-80IB(10) unit. 3. We have heard the rival submissions and perused the relevant material on record. We will espouse the above points raised by the ld. CIT, one by one for consideration and decision. 4. The first point taken note of by the ld. CIT is not offering income in respect of unsold units under the head `Income from house property'. He noted that the value of unsold flats and bungalows in the assessee's Profit & loss account stood as stock-in-trade at Rs.7.96 crore. No income was offered from such property. He treated such properties lying in stock as deemed to be let out. Rate of 8% was applied to the value of stock-in-trade for determining gross rent. After allowing standard deduction at 30%, income from house property was computed at Rs.44,57,996. It was opined that such house property income ought to have been inclu....
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....ws lying unsold at the year end. Now the question is whether these flats etc. can be said to be `occupied' by the assessee? The term `occupy' has neither been defined in section 2 (general definitions under the Act) nor section 27 (definitions relating to income from house property). Rather it is defined nowhere in the Act. In such a scenario, we will have to understand its connotation in common parlance. The term `occupation' (in land law) has been defined in the Oxford Dictionary of Law to mean `the physical possession and control of land'. Thus, occupation of a property means having its physical possession coupled with dominion rather than the physical possession coupled with actual use. Once a property is in physical possession and control of a person, it is said to be in his occupation, even if it is not actually used by him. Adverting to the facts of the extant case, we find that the unsold flats etc. were in the physical possession and control of the assessee. In fact, there is no one other than the assessee having physical possession and control over such flats, thereby making the assessee solely in `occupation'. Thus the first condition is fulfilled as the flats etc. were ....
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.... Ergo, all the four conditions for exclusion from section 22 of the Act are cumulatively satisfied in the present case. 13. The ld. CIT has canvassed a view that the annual letting value of flats/bungalows is income chargeable to tax as `Income from house property' by relying on CIT VS. Ansal Housing Finance and Leasing Company Ltd. (213 Taxman 143). There is no doubt that the Hon'ble Delhi High Court in the above case has held that Annual letting value of unsold flats at the year end is chargeable to tax under the head 'Income from house property'. At the same time, we find that the Hon'ble Gujarat High Court in CIT Vs. Neha Builders (Pvt.) Ltd. (2008) 296 ITR 661(Guj) has held that income from the properties held as stock in trade can be treated as Income from business and not as `Income from house property. Our attention has been drawn towards certain Tribunal decisions including Cosmopolis Construction, Pune vs. ITO dated 18.06.2018 (ITA NO. 230 & 231/PUN/2018), wherein, after taking note of both the above judgments and finding no judgment available from the Hon'ble jurisdictional High Court, a view has been canvassed in favour of the assessee by holding that no income from ....
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....us nor prejudicial to the interest of the Revenue requiring any revision u/s 263 of the Act on this count. 16. The second point taken note of by the ld. CIT is that the assessee sold two flats to one person and hence was not entitled to claim deduction u/s 80IB(10). In this regard, the assessee submitted before the ld. CIT that undoubtedly, two flats were sold to Shri Abhijeet Kale on 03.01.2012 in violation of section 80IB(10) (f) of the Act. The assessee agreed for proportionate disallowance pro tanto during the course of proceedings for the assessment year 2012-13. Since such disallowance was made in assessment year 2012-13, it was contended that there was no room for making disallowance in assessment year 2014-15 again. 17. We have gone through the assessment order dated 22.03.2015 for the assessment year 2012-13, whose copy has been placed at page 35 onwards of the paper book. It can be seen from the order that there is reference to such two flats sold to Shri Abhijeet Kale on 03.01.2012 and also that the assessee agreed for proportionate disallowance u/s 80IB(10)(f) of the Act for sum of Rs.51.28 lacs. The Assessing Officer (AO) made such disallowance while completing t....