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2018 (1) TMI 805 - HC - Income TaxIncome from house property - unsold inventory of built- up residential houses/flats were subject to the provisions of Section 22 read with Section 23 - notional annual letting value was taxable in the hands of the Assessee under the heads“Income from House Property” - as per assessee in view of the amendment to Section 23 of the Act with effect from 1st April 2002 in the assessee’s case, the annual letting value of the properties held as stock in trade was to be considered as “Nil” - Held that:- There is no dispute that the effect of the amendment, inserting Section 23(1)(c), would not be to change the incidence of taxability of the properties held as stock in trade. Therefore, this Court’s finding that such properties were to be assessed as income from house property and not income from “business or profession”, in its judgement dated 31.10.2012, would be good law, even in view of the insertion of Section 23(1)(c). As in the assessee’s case, the properties held as stock in trade will be taxable under the notional annual letting value method prescribed u/s 23(1)(a), since in view of the decision in Vivek Jain (2011 (1) TMI 897 - Andhra Pradesh High Court), the assessee cannot claim the benefit of Section 23(1)(c) having never actually let out the properties held as stock in trade. Thus sub- section (5) would be squarely applicable, but for the fact that sub- section (5) has been inserted w.e.f. 1 April 2018. Moreover, sub-section (5) does not use language which would indicate that it has been inserted as a clarification (which would make clear that it was always the legal position) or by way of abundant caution. The amendment therefore clearly applies prospectively and since a separate sub-section was inserted in Section 23, it is clear that the legislative intent is that the peculiar situation in sub-section (5) was not already covered by sub-section (3). That being the case, for the relevant assessment years, the properties held as stock in trade would be taxable on the basis of notional annual letting value under Section 23. - Decided against assessee.
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