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2022 (3) TMI 246 - AT - Income TaxAssessment of income from construction and sale of residential apartments of Victoria Towers under the head 'business income' - Whether CIT(A) has admitted the additional evidence like Memorandum of Association and aims & objects of the company in violation of provisions of Rule 46A of the Income Tax Rules, 1962? - HELD THAT:- We noted that the CIT(A) has gone through the provisions of section 23 of the Act and noted that while determining the ALV of the assets held as stock-in-trade, the provisions of section 23 will not apply because assessee is engaged in the business of real estate and further having treated the said asset as 'stock-in-trade'. We noted that the proviso added to section 23(5) of the Act, as introduced by Finance Act, 2017 w.e.f. 01.04.2018, wherein the scope of applying annual letting value has been extended to stock-in-trade and according to us, this is a prospective amendment and being a prospective amendment, the same would further fortify the plea of the assessee on the non-applicability of provisions relating to ALV to the unsold apartments kept by assessee as stock-in-trade during the assessment year under consideration i.e., 2012-13. Further, we are in agreement with the arguments of ld. Senior DR that the CIT(A) has no power to set aside the assessment but he has referred back the issue for limited purpose of verification of Memorandum of Association and Article of Association i.e., aims and objects of the assessee company. With regard to the ground raised by Revenue on violation of Rule 46A of the Rules, we are of the view that these are vital documents and CIT(A) after admitting those and going through the same has held the income derived from unsold stock kept as stock- in-trade as 'business income'. We find no infirmity in directing the AO to verify these documents. Hence, these issues raised in regard to income assessed on account of residential apartment of unsold stock in the project of 'Victoria Towers', of the Revenue's appeal is dismissed. Assessment of notional ALV of shopping mall i.e., Coromandal Plaza - disallowance of depreciation - HELD THAT:- We are of the view that once the income of shopping mall Coromandal Plaza is assessed as business income, the consequential expenses and depreciation relating to the operation of shopping mall is to be allowed. But the AO will verify and also go into the genuineness of expenses and then will decide the issue. Hence, this issue is set aside to the file of the AO.
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