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2023 (2) TMI 579 - AT - Income TaxRevision u/s 263 by CIT - annual letting value of flats/bungalows is income chargeable to tax as `Income from house property’ - HELD THAT:- A close scrutiny of the provision inducted by the Finance Act, 2017, transpires that where a property is held as stock-in-trade which is not let out during the year, its annual value for a period of one year, which was later enhanced by the Finance Act, 2019 to two years, from the end of the financial year in which the completion certificate is received, shall be taken as Nil. The amendment has been carried out w.e.f. 1.4.2018 and the Memorandum explaining the provisions of the Finance Bill also clearly provides that this amendment will take effect from 01.04.2018 and will, accordingly apply in relation to the assessment year 2018-19 and subsequent years. Obviously, it is a prospective amendment. The effect of this amendment is that stock-in-trade of buildings etc. shall be considered for computation of annual value under the head 'Income from house property' after one/two years from the end of the financial year in which the certificate of completion of construction of the property is obtained on and from the A.Y. 2018-19. Instantly, we are concerned with the assessment year 2014-15. As such, the amendment cannot apply to the year under consideration. In the absence of the applicability of such an amendment, no income can be said to have accrued to the assessee from unsold flats available as stock-in-trade as per the discussion made hereinabove. We, therefore, vacate the impugned order on this score having the effect that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue requiring any revision u/s 263 of the Act on this count. Disallowance u/s 80IB(10)(f) - The Hon’ble Bombay High Court in M/s. Kamat Constructions Pvt. Ltd. vs. ACIT [2020 (12) TMI 90 - BOMBAY HIGH COURT] has approved the granting of deduction u/s 80IB(10) on proportionate basis. In that view of the matter, the question of denial of deduction u/s 80IB(10) in full on account of violation of certain conditions qua a part of deduction remains no more res integra. We, therefore, hold that the ld. CIT was not justified in revising the order directing the withdrawal of full amount of deduction u/s 80IB(10) instead of proportionate disallowance, more so, when the proportionate disallowance pertained to an earlier year and the same was also made. Rental income earned by the assessee was shown as income chargeable under the head ‘Profits and gains of business or profession’, which should have been ‘Income from house property’ - While discussing the first issue about the notional rent on unsold units lying with the assessee as stock-in-trade, we have abundantly seen that any income anent to stock in trade can be considered only under the head ‘Profits and gains of business or profession’ unless expressly provided otherwise. As such, the view point of the ld. CIT in opining that such income should be considered as house property cannot be sustained. Assessee made a consolidated Profit & loss account and also separate Profit & loss account of 80IB(10) unit. No deduction of interest was claimed in the eligible unit, though such deduction was there in consolidated Profit & Loss account. This shows that such deduction was claimed only against the income of non-eligible units. The assessee furnished copious details before the ld. CIT to demonstrate that the loan of Rs.2.50 crore was taken only against Atharwa Vatika project on which the interest of Rs.13.99 lacs was paid and debited to the Profit & loss account of this project only. CIT did not find anything amiss in such averments and details, but, still went ahead with his own view. As the interest pertained to Atharwa Vatika project [non 80IB(10) unit], there was no rationale in putting such interest – fully or partly- in Profit & loss account of the eligible unit. We, therefore, hold that the ld. CIT was not justified on this count also. Assessee appeal is allowed.
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