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2019 (5) TMI 1640 - AT - Income TaxTaxability of property held in stock in trade - owner of the house property u/s 22 - deemed annual letting value - finished apartments - absence of occupancy / completion certificate - assessee submitted that it was not the owner of the said premises as they had already been allotted to various allottees - HELD THAT:- Once the appellant had executed requisite documentation evidencing the allotment of specific units / apartments in favour of intending purchasers and thereafter received consideration amounts in accordance with the terms of allotment, then the rights of specific performance as well as right to obtain conveyance in respect of the specified apartment had accrued in favour of the respective purchaser. In the circumstances even though the husk of a title, if any, vested in the Owner, in law such person could not be considered to be the ‘owner’ of the house property for the purposes of Section 22. Annual value of the property is to be determined as per the actual rent received or receivable by the owner of the property which is capable of being let legally. The legislative intention that the property which is legally habitable but it is not occupied by the owner then the annual value of such lettable property shall be deemed as income under the head ‘House Property’. Hon’ble Bombay High Court in the case of Shree Nirmal Commercial Ltd Vs CIT [1991 (4) TMI 91 - BOMBAY HIGH COURT] wherein it was held that if the property is of such nature that it is inherently incapable of being let out and the assessee owner thereof, then the charge u/s 22 cannot arise. In present case the property in question was granted the occupancy / completion certificate only on 01.07.2015, so the property in question for the both the assessment years 2011-12 and 2012-13 could not have construed to be properties capable of being legally let so as attract the rigors of Section 23(1)(c). We note that the view entertained by us now finds legislative support in sub-section (5) of Sec. 23, wherein the Legislature has provided where a builder holds flats as its stock in trade then the annual value of such property shall be taken as NIL for a period of two years from the end of the financial year in which the certificate of completion of construction of the properties obtained from the competent authority is obtained. In view of the latter enactment it is now abundantly clear that until the completion certificate is not issued by the competent authority and two years thereafter; annual value of the unsold units shall be NIL. For the reasons set out in the foregoing and the fact that the completion certificate was issued only on 01.07.2015, we delete the addition being the deemed notional annual value of the apartments included in the Inventory as on 31.03.2011. - appeals of assessee are allowed
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