TaxTMI 
TaxTMI 
2025 (3) TMI 1868
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....the 'Lead case'. 2. The grounds of the appeals are as under:- ITA No. 4802/MUM/2024 (A.Y. 2015-16)(Assessee) 1. Addition of Annual Let Out Value of Rs. 5,89,281/- u/s. section 22 of the Act: The learned A.O. had erred in law and facts in adding Annual Let Out Value of Rs 23,57,122/- under the head Income from House Property as per the provisions of section 22 of the Act by estimating deemed rent at Rs. 33,67,317/- at the rate of 10% on unsold Stock of Finished Goods ie, residential units of the Project developed and constructed by the Appellant and the Hon'ble Commissioner of Income-tax (Appeals) has erred in law and facts in confirming the aforesaid addition to the extent of Rs. 5,89,281/- by applying a rate of 2.50% on unsold Stock of Finished Goods ie, residential units of the Project developed and constructed by the Appellant by estimating the deemed rent at Rs. 8,41,830/-, and the learned A.O. and the Hon'ble Commissioner of Income-tax (Appeals) have ignored the facts that Section 23(5) of the Act came into effect from Assessment Year 2018-19. 3. Facts in brief are that the assessee is in the business of construction and is a Builder and Deve....
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....rent on unsold stock was to be taxed, the action of the AO in computing the income from house property was affirmed by him. 4.1 He however, reduced the income worked out at the rate of 7% by the AO relying on the decision in the case of Hon'ble ITAT in the case M/s. Chalet Hotels Ltd. in ITA No. 2505/Mum/2021 dt. 30.08.2023. He directed the AO is directed to re-compute the income from House Property at the rate of 2.50% instead of 7% as a reasonable estimate. 5. Before us, the ld.AR has submitted that the issue in hand is squarely already covered by the decision of the coordinate bench in ITA No.2771, 3258, 2793 and 2850/Mum/2017 dated 25.02.2019 in its own case in AY 2012-13 and 2013-14. The relevant paras of the order are reproduced as below: "The 2nd ground of appeal 2. The AO has erred in law and facts in adding annual let out value of Rs. 44,76,011/-under the head "Income from House Property under the provisions of section 22 of the Act by estimating deemed rent at Rs. 63,94,301/- on unsold property of the Project developed and constructed by the appellant held as stock in trade for sale and, the Commissioner of Income-tax (Appeals) has erred in confirm....
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.....5.1. We now come to the relevant provisions in the Act. The following sub-section (5) has been inserted after sub-section (4) of section 23 by the Finance Act, 2017, w.e.f. 01.04.2018: "(5) Where the property consisting 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 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 nil." Thus, in order to give relief to Real Estate Developers, section 23 has been amended w.e.f. AY 2018-19 (FY 2017-18). By this amendment, it is provided that if the assessee is holding any house property as his stock-in-trade which is not let out for the whole or part of the year, the annual value of such property will be considered as Nil for a period up to one year from the end of the financial year in which a completion certificate is obtained from the competent authority. In view of the above amendment to sect....
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....resent case, assessee had claimed dividend income and share of profit as exempted income. However, it did not quantify any amount for disallowance in terms of section 14A of the I.T. Act 1961. Accordingly, the AO computed the disallowance at a sum of Rs. 1,58,08,301/- as per section 14A of the Act and added to the income. 9. In the subsequent appeal, the ld.CIT(A) observed that in the present case, a search action u/s. 132 of the Act was conducted on 20.08.2019. Pursuant to the same, the appellant filed an application before the Hon'ble Income Tax Settlement Commission on 22.01.2021. The said application was decided by the Hon'ble Interim Board for Settlement-I, New Delhi (IBS-I) dated 28.04.2023. The appellant has offered an additional sum of Rs. 8,89,136/- for disallowance both under Regular and MAT provisions. The IBS-1 consists of 3 officers of the rank of Chief Commissioner of Income Tax. It is also seen that the appellant has made the offer of additional income which has been accepted by the Hon'ble IBS-1. Hence, the total disallowance u/s. 14A was restricted by him to Rs. 9,89,136/- under both regular and MAT provisions deleting the balance excess. 10. Before us, it th....