TaxTMI 
TaxTMI 
2024 (9) TMI 867
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.... the unsold units as its stock in trade and hence, since these units were occupied by the assessee for its business purposes, there was no reason to tax the annual value of such unsold units u/s 22 of the Act as income from house property. 4] Without prejudice to the above grounds, the assessee submits that assuming without admitting that the income of such unsold units was taxable as Income from House Property u/s. 22, it is submitted that the unsold units were vacant for the entire year and accordingly, the income thereon was to be considered at Rs. Nil in view of the provisions of section 23(1)(c) and hence, the entire addition made by the learned A.O. may kindly be deleted. 5] Without prejudice to the above grounds, the assessee submits that the net annual retable value adopted by the learned A.O. is on an adhoc basis and the same should be substituted by the municipal retable value determined for the various units by the local authorities. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 3. The facts of the case, in brief, are that the assessee is a firm engaged in construction activities as a Promoter and Builder. The as....
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....idering the reply of the assessee allowed the deduction as claimed by the assessee u/s 80IB(10) of the IT Act, but sustained the addition in respect of deemed rental income of Rs. 7,98,000/- from unsold flats held as stock in trade vide order dated 19-02-2024. 5. Being aggrieved with the decision of ld. CIT(A)/NFAC, the assessee preferred second appeal before this Tribunal. 6. LD AR submitted before us that the grounds raised in this appeal relates to addition of Rs. 7,98,000/- on the ground of deemed rental income in respect of unsold flats/units held as stock in trade u/s 22 r.w.s. 23(4) of the IT Act. It was submitted before us that ld. CIT(A)/NFAC erred in holding that these unsold units were not occupied by the assessee for the purposes of its business and hence the annual value of such unsold units was chargeable to tax as "Income from house property" u/s 22 of the IT Act. Alternately, it was also submitted that the unsold units were vacant for the entire year and accordingly the income thereon was to be considered at Rs. Nil in view of the provisions of section 23(1)(c) of the IT Act. It was further submitted by LD AR that the case of CIT vs. Ansal Housing & Construction, ....
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.... annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable: Provided that the taxes levied by the local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him. Explanation. - For the purposes of clause (b) or clause (c) of this sub-section, the amount of actual rent received or receivable b....
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.... year 2018-19 that a new section 23(5) was inserted which permits the Assessing Officer to calculate the deemed rental income of the property held as stock in trade even if such property is not let during the whole or any part of the previous year. Therefore, we are of the considered opinion that for assessment year 2016-17 there was no such provision which empowers the Assessing Officer to calculate the deemed rental income/annual value of the property which was held as stock in trade by the builder. In the light of section 22, it is clear that if the property was held as stock in trade i.e. for the purposes of business of the assessee, the annual value of such property shall not be chargeable to income tax under the head "Income from house property". Therefore, no annual value or deemed rental income can be determined of such property for the purposes of income tax prior to assessment year 2018-19. The intentions of the Legislature are very much clear because they introduced section 23(5) w.e.f. assessment year 2018-19 only and nowhere it was mentioned that it has been retrospectively made applicable. When the operation of this section was not made retrospective, it is very much ....