TMI Blog2018 (2) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of those unsold flats under the head ‘income from house property’. Thus, we direct the AO to delete the addition made under Section 23 of the Act as income from house property. - Decided in favour of assessee. - ITA No. 5408/Mum/2016 And ITA No. 5409/Mum/2016 - - - Dated:- 22-2-2018 - Shri C.N. Prasad, Judicial Member And Shri A.L. Saini, Accountant Member For The Appellant : Shri Rishabh Shah For The Respondent : Shri V. Vidhyadhar ORDER Per C.N. Prasad, JM Both these appeals are filed by assessees of the same group against separate orders of CIT(A)-52, Mumbai for A.Y. 2012-13. 2. The common issue in these appeals is that the learned CIT(A) erred in confirming the action of the AO in making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax the notional annual letting value under the head income from house property in respect of the unsold flats. Aggrieved, assessees are in appeal before us. 5. The learned A.R. before us strongly placing reliance on the decision of the Hon'ble Gujarat High Court in the case of Neha Builders Pvt. Ltd. (supra) submitted that if the property is used as stock in trade then such property would become or partake the character of stock and any income derived from such stock in trade would be income from business and not income from house property. The learned counsel also placed reliance on the decision of the Coordinate Bench in the case of C.R. Developers Pvt. Ltd. vs. JCIT in ITA No. 4277/Mum/2013 dated 13.05.2015 and submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction business can be claimed under the head income from property even though the said property was included in the closing stock. The Hon'ble Gujarat High Court held that if the business of the assessee is to construct the property and sell it or to construct and let out the same, then that would be the business and the business stocks, which may include movable and immovable, would be taken to be stock in trade and any income derived from such stocks cannot be termed as income from house property. While holding so the Hon'ble High Court observed as under: - 8. True it is, that income derived from the property would always be termed as 'income' from the property, but if the property is used as 'stock-in-trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Coordinate Bench has considered similar issue as to whether the unsold property which is held as stock in trade by the assessee can be assessed under the head income from house property by notionally computing the annual letting value from such property and the Coordinate Bench considering the decision of the Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd. (supra) which the AO relied upon and the decision of the Hon'ble Supreme Court in the case of Chennai Properties Investments Ltd. vs. CIT reported in 373 ITR 673, held that unsold flats which are in stock in trade should be assessed under the head business income and there is no justification in estimating rental income from those flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties, the income earned by letting out these properties is main objective of the company, therefore, rent received from the letting out of the properties is assessable as income from business. On the very same analogy 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 income arising on its sale is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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