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2019 (5) TMI 675 - AT - Income TaxDisallowance u/s 14A - Assessee made suo moto disallowed u/s 14A - non recording of satisfaction by AO - AO rejected on the ground that the disallowance was not worked out as per mandate of Rule 8D of IT Rules and computed the disallowance u/s.14A r.w.r 8D - HELD THAT:- On the issue of necessity of recording the satisfaction before proceeding to work out disallowance under Rule 8D of IT Rules, we find that in the case of CIT Vs. Asian Paints Limited [2019 (2) TMI 819 - BOMBAY HIGH COURT] and after considering the decision of Godrej and Boyce Manufacturing Co., Ltd., Vs. DCIT reported [2017 (5) TMI 403 - SUPREME COURT] has held that Rule 8D of the rules cannot be invoked where suo moto disallowance made by the assessee is not found to be satisfactory by the AO having regard to the account of the assessee. It has further held that in the absence of recording of non-satisfaction in terms of Sec.14A(2), invocation of Rule 8D is not permissible Thus absence of recording of necessary satisfaction in terms of Sec.14A(2), we are of the view that in the present case, no disallowance of expenses under Sec.14A r.w.r 8D is called for - Decided in favour of assessee Taxability of rental income on property held in stock in trade under the head income from house property - 32 unsold flats/shops - Deemed rent in respect of unsold units - AO was of the view that since assessee was owner of two or more house properties, provision of Sec.23(4) would be attracted and as per which assessee should have offered deemed rental income from the aforesaid properties - why the deemed rent in respect of closing stock not be brought to tax? - HELD THAT:- We find that in the case of CIT Vs. Neha Builders Pvt. Ltd. [2006 (8) TMI 105 - GUJARAT HIGH COURT] has held that when the business of the assessee is to construct the property and sell it or to construct or let out then that would be the “business” and the business stocks which may include movable and immovable properties would be taken to be “stock-in- trade” and any income derived from such stocks cannot be termed as “income from house property”. Following the decision of Co-ordinate Bench of the Pune Tribunal in the case of M/s. Cosmopolis Construction Vs. ITO [2018 (9) TMI 1621 - ITAT PUNE] hold that in the present case, no addition on account of deemed rent of 32 unsold flats can be made in hands of the assessee. We therefore set aside the addition made by AO. Thus, the ground of the assessee is allowed.
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