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2019 (1) TMI 1879 - AT - Income TaxAddition under the head ‘Income from House Property’ representing Annual Letting Value of unsold flat - notional ALV of the unsold flat, which is held by the assessee as stock-in-trade - HELD THAT:- We find that our case of C.R. Developments Pvt. Ltd. [2015 (5) TMI 1161 - ITAT MUMBAI] 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-in-trade’. 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 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. No justification in the order of AO for estimating rental income from these vacant flats u/s 23 which is assessee’s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s 23 of the I.T. Act.” The aforesaid observation of our coordinate Bench squarely applies to the facts of the present case. We find that Sec. 23(5) of the Act has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018. In terms of the said section, it is prescribed that “where the property consisting of 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 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 - completion certificate is stated to 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 - we set-aside the order of CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee.
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