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2022 (3) TMI 1345 - AT - Income TaxReopening of assessment u/s 147 - Eligibility of reasons to believe - AO has proposed to assess the income being notional rent in respect of the closing stock in the commercial complex, namely, “Kreishna Square” - HELD THAT:- There is no allegation by the AO in the reasons recorded that the income proposed to be assessed in the reassessment proceedings has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Even otherwise, we find that all the relevant material in respect of the issue of assessment of rental income of the unsold stock was already available with the Assessing Officer at the time of scrutiny assessment. Hence, when the original assessment was framed under section 143(3) and the reopening is after the expiry of four years from the end of the relevant assessment year then the Assessing Officer is not permitted to reopen the assessment until and unless the conditions prescribed in the proviso to section 147 are satisfied. Assessing Officer himself has not alleged that the income proposed to assess has escaped assessment for want of disclosure of all material facts necessary for assessment. Thus in view of the above facts and circumstances as well as the binding precedents on the issue being decision of GKN Driveshafts (India) Ltd,[2002 (11) TMI 7 - SUPREME COURT] and CIT Udaipur vs. Hindustan Zinc Ltd. [2016 (6) TMI 1045 - RAJASTHAN HIGH COURT], we are of the considered view that the assessee deserves to succeed and the impugned order of the ld. CIT (A) for A.Y. 2010-11 is set aside. Addition of the respective amounts by determining the ALV in respect of unsold stock of the assessee at “Krishna Square” the commercial complex - Notional ALV of the units held as stock in trade cannot be chargeable as income in the case of builder since the property is not constructed for letting out but the same is held for sale and actually was sold out on subsequent dates. Further, the builders take booking advance from several parties against the units and is under obligation to deliver possession of unsold stock to the concerned parties and such units cannot be let out by the builder. Therefore in absence of any specific provision in law ALV of stock in trade cannot be taxed. The sub-section (5) of section 23 was inserted by Finance Act 2017 with effect from 01.04.2018. The amended provision of sub section (5) of section 23 allows relaxation from taxability of ALV on unsold stock for the period upto 2 (two) years from the end of the financial year in which the certificate of completion of construction of the property is obtained. In the case of the assessee, construction of the property was completed on 31.08.2009. Even if we consider the relaxation period upto two years as envisaged in section 23(5), the ALV on unsold stock cannot be taxed for assessment year 2010-11 and 2011-12. Accordingly,e decide this issue against the revenue and in favour of the assessee and consequently the additions made by the AO and sustained by the ld. CIT (A) for A.Y. 2010-11 and 2011-12 are deleted and the order of the ld. CIT (A) is set aside.
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