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2022 (7) TMI 251 - AT - Income TaxCorrect head of income - income from house property or Addition as 'Business income’ being, notional rent on unsold flats held as ‘stock-in-trade’ - whether the annual value of such units can be assessed in the hands of assessee? - Scope of amendment - HELD THAT:- A close scrutiny of the provision introduced 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. 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, with the assessment year 2013-14. As such, the amendment cannot apply to the year under consideration. In the absence of the applicability of such an amendment, no rental income can be said to have accrued to the assessee from unsold flats available as stock-in-trade under the head `Income from House property’. In that view of the matter, the view point of the AO on this score is vacated. Taxing the amount as ‘Business income’ - In the hue of the fact that the Finance Act, 2017 has covered this aspect of the matter u/s 23(5) of the Act, obviously, it becomes manifest that the intention of the Legislature has been to treat such income as falling under the head ‘Income from house property’ and not as the ‘Business income’. Be that as it may, arguendo, we go with the standpoint of CIT(A) that income in question is chargeable to tax as ‘business income’, there is no provision under the Chapter IV-D of the Act which can envelope the above amount within its fold. Admittedly, the assessee did not earn any actual rental income from the letting out of the 11 units. Ex conseqeunti, taxing hypothetical income of rent, which is otherwise not covered under any provision of Chapter IV-D of the Act, cannot be allowed. The ld. DR also failed to point out any specific provision under Chapter IV-D of the Act for taxing such hypothetical income. In view of the foregoing discussion, it is held that the ld. CIT(A) was not justified in taxing as ‘Business income’. The impugned order is set aside and the addition is directed to be deleted. Appeal of assessee allowed.
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