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2017 (12) TMI 519 - AT - Income TaxEstimation of income from the unsold vacant units as income on notional basis - Held that:- As relying on case of C.R. Developments Pvt. Ltd. [2015 (5) TMI 1161 - ITAT MUMBAI] relying on the case of M/s Chennai Properties & Investments Ltd. Vs. CIT (2015 (5) TMI 46 - SUPREME COURT) held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treating the rental income as income from house property in place of income from business shown by the assessee was held to be not justified. On the very same analogy in the instant case, assessee is engaged in business of construction and development, which is main object of the assessee company. 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. Accordingly, we do not find any 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 - Decided in favour of assessee.
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