TMI Blog2018 (7) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head ‘income from business’ when they are sold and therefore the AO is not correct in bringing to tax notional annual letting value in respect of those unsold flats under the head ‘income from house property’. We direct the AO to delete the addition made under Section 23 of the Act as income from house property.” Admittedly in this case on hand the unsold property being shops were held as stock in trade. In the circumstances, respectfully following the above decision we uphold the order of the Ld.CIT(A) and reject the ground raised by the Revenue. - ITA NO.6037/MUM/2016 - - - Dated:- 27-6-2018 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For The Assessee : Shri Dharan V. Gandhi And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 354 ITR 180] and held that unsold flats which are stock in trade when they were sold they were assessable under the head income from the business and therefore Assessing Officer is not correct in bringing to tax notional annual letting value. 4. Ld. DR vehemently supported the orders of the Assessing Officer. 5. We have heard the rival submissions, perused the orders of the authorities below. Identical issue has come up before the Coordinate Bench in the case of the M/s. Runwal Constructions v. ACIT (supra) and the Tribunal held as under: - 3. The brief facts of the case are that the assessees, engaged in the business of builders and developers, filed return of income for A.Y. 2012- 13. The assessment was completed under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 that identical issue has been decided by the Coordinate Bench holding that in the case of property held as stock in trade the income should be assessable under the head income from business and no income shall be brought to tax as notional annual letting value under the head income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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-trade', then the said property would become or partake the character of the stock, and any income derived from the stock, would be 'income' from the business, and not income from the property. If the business of the assessee is to construct the property and sell it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinate 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 and notionally computing annual letting value under Section 23 of the Act. While holding so the Coordinate Bench observed as under: - 3. The ld. AR placed the order of Bombay Tribunal in the case of M/s Perfect Scale Company Pvt. Ltd., ITA Nos.3228 to 3234/Mum/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to be taxed as business income. Accordingly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee s stock in trade as at the end of the year. Accordingly, the AO is directed to delete t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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