2018 (12) TMI 1875 - AT - Income Tax

Addition as deemed rent on unsold flats shown as stock in trade - HELD THAT - It is seen that similar issue came up for consideration before the Pune Bench of the Tribunal in M/s. Cosmopolis Construction 2018 (9) TMI 1621 - ITAT PUNE has held that no rental income can be computed when flats are held as stock in trade. In reaching this conclusion the Tribunal relied on certain other judgments and the orders. In the absence of any distinguishing fact having been brought to my notice by the ld. DR and respectfully following the precedent we overturn the impugned order on this score and direct to delete the addition. - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of deemed rent on unsold flats shown as stock in trade.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune pertained to the confirmation of addition of deemed rent on unsold flats shown as stock in trade. The assessee, a Builder, had declared five flats in its closing stock. The Assessing Officer computed the income under the head 'Income from house property' at Rs. 1,68,000/- based on the provisions of section 23 of the Income Tax Act, 1961. The CIT(A)-5, Pune upheld the addition, leading to the appeal.

Upon examination of the facts and relevant material, the Tribunal noted a similar issue considered in a previous case before the Pune Bench in M/s. Cosmopolis Construction vs. ITO. In that case, it was held that no rental income can be computed when flats are held as stock in trade. Citing this precedent and in the absence of any distinguishing fact brought to attention, the Tribunal Vice President overturned the impugned order and directed the deletion of the addition.

Consequently, the appeal was allowed, and the order was pronounced in the Open Court on 4th December 2018. The decision was based on the principle that rental income cannot be imputed on unsold flats held as stock in trade, aligning with the established legal position from prior judgments and orders.