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M/s. C.R. Developments Pvt Ltd Versus JCIT 8 (1) (OSD) , Mumbai

2015 (8) TMI 317 - ITAT MUMBAI

Computation of annual value - CIT(A) confirming the action of AO in charging notional Income as Income from House Property in respect of the 3(three) unsold shops shown as Stock-in-trade - Held that:- Recently in the case of M/s Chennai Properties & Investments Ltd. Vs. CIT (2015 (5) TMI 46 - SUPREME COURT) held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treating the rental income as .....

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s engaged in business of construction and development, which is main object of the assessee company. The three flats which could not be sold at the end of the year was shown as stock-in-trade. Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable .....

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IT Vs. C.Jaichander & Sriram Indubal [2014 (11) TMI 54 - MADRAS HIGH COURT] wherein held as from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. No merit for disallowing claim of deduction u/s.54EC. - Decided in favour of assessee. - ITA No. 4277/Mum/2012 - Dated:- 13-5-2015 - R C Sharma, AM A .....

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respect of the 3(three) unsold shops shown as Stock-in-trade. 2. "The Ld. CIT(A) has grossly erred in law as well as on facts in confirming the action of A.O. in restricting the claim of deduction u/s.54EC of the I.T.Act to ₹ 50,00,000/- as against ₹ 1 Crore claimed by the Appellant." 2. Rival contentions have been heard and record perused. The assessee is engaged in the business of construction and development. During the course of scrutiny assessment the AO found that ass .....

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onal rental income in assessee's hands u/s.23. By the impugned order the CIT(A) restored the matter back to the file of the AO with the following observations :- "2.3.1. I have carefully considered the contention of the appellant and also carefully gone through the documents available on record. Similar issue arose for my consideration in the previous year i.e. A.y. 2007-08 wherein I have directed the Ld. AO to determine the annual rateable value as per the directions given by the Hon&# .....

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he property might fetch. If he finds that the actual rent received is less than the fair rent for the reason that the assessee has received abnormally high interest-free security deposit, he can undertake necessary exercise in that behalf- However, by no stretch of imagination, the notional interest on interest-free security deposit can be taken as a determinative factor to arrive at the fair rent-Provisions of s. 23(1)(a) do not mandate this. Since the provisions of fixation of annual rent unde .....

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safe yardstick. Thus, in a given case, AO can ignore the municipal valuation for determining the annual letting value if he finds that the same is not based on relevant material and there is sufficient material on record for taking a different valuation. Therefore, the Ld. AO is directed to adopt the net rateable value accordingly. This ground of appeal is thus allowed for statistical purpose." 3. The ld. AR placed the order of Bombay Tribunal in the case of M/s Perfect Scale Company Pvt. .....

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sidered rival contentions and perused the record. The issue under consideration has been restored by the CIT(A) to the file of AO to compute the annual value. Recently the Hon'ble Supreme Court in the case of M/s Chennai Properties & Investments Ltd. Vs. CIT, reported in (2015) 42 SCD 651, vide judgment dated 9-4-2015 has held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treatin .....

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in the instant case, assessee is engaged in business of construction and development, which is main object of the assessee company. The three flats which could not be sold at the end of the year was shown as stock-in-trade. Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and incom .....

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1 crore claimed by the assessee. From the record we found that the assessee has shown long term capital gain of ₹ 40,15,660/- on sale of equity shares of India Finance &. Construction Co. Pvt. Ltd. after availing deduction u/s.54EC amounting to ₹ 1,00,00,000/-. The.AO noted that assessee company sold equity shares of India Finance & Construction Co. Pvt. Ltd on 31.03.2009 and earned long term capital gains of ₹ 1,40,15,680/- on which assessee has claimed deduction of &# .....

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