TMI Blog2018 (9) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Section 23(1)(a) of the Act is concerned, there are divergent views of different Hon'ble High Courts. This is not a case of keeping the property vacant from year after year but the project itself was completed in the month of February, 2013 and therefore, as per provisions of Section 23(1)(a) of the Act, the annual letting value (ALV) of any property shall be deemed to be a sum for which the property might reasonably be expected to let from year to year. Thus, the annual letting value of the property is a sum for which the property might reasonably be expected to let out from year to year. We find that without allowing a reasonable period or time gap from the completion of construction of the property held as stock in trade to l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary, unjust, untenable and bad in fact and in law and in the alternative excessive due to following factors related to the assessment made: a. The findings of a non-comparable case were invoked b. The additions was made without have any specific provisions in The Income Tax Act, 1961 for taxing unsold stock of commercial space lying with the builder. c. Arbitrary mode of calculation has been adopted by taking a non comparable lease agreement as base. d. The addition was purely unconstitutional since the power to levy income tax comes from Entry No. 82 of The Union List or List 1 which does not cover the relevant part of case of the assessee e. No consideration was given to the fact that the premise was being used b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the ld. CIT(A) but could not succeed. 4. Before us, the ld AR of the assessee has submitted that the assessee engaged in the business of builders and developers which is the main object of the company purchased and constructed the property as stock in trade and income from such developed property is assessable as business income. Therefore they cannot be brought to tax under the head Income from House Property simply because the stock / offices remain unsold at the end of the year. The unsold offices have been treated as stock in trade in books of accounts which is well accepted during the assessment proceedings and thus an undisputed fact. Income derived from the property would always be termed as income from the property b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Pvt. Ltd. 296 ITR 661 (Guj). 5. On the other hand, the ld DR has relied upon the orders of the authorities below and submitted that the Assessing Officer has followed the decision of the Hon ble Delhi High Court and therefore, when commercial space was lying vacant, the provisions of Section 22 and 23 of the Act are applicable. 6. We have considered the rival submissions as well as relevant material on record. There is no dispute that the commercial space in the project in question was held by the assessee as stock in trade. Further the project was completed in the month of February itself, which is not in dispute as the Assessing Officer has also accepted this fact and assessed the income from house property only for the month of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht reasonably be expected to let from year to year. Thus, the annual letting value of the property is a sum for which the property might reasonably be expected to let out from year to year. In other words, the fair market rent of the property expected to be fetched if let out from year to year shall be deemed to be an annual letting value for the purpose of determining income from house property. This reasonably expected rent itself signifies the possibility of letting out of the property. However, there is a time lag between the acquisition of property or completion of construction of property and letting out the property thereafter. It is not practically not possible to let out the property on the next day of completion of construction or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we find that without allowing a reasonable period or time gap from the completion of construction of the property held as stock in trade to let out the same, the property cannot reasonably expect to let from year to year and fetch fair market rent just after completion of construction. Hence, in the facts and circumstances, we find that for the year under consideration, the provisions of Section 23(1)(a) of the Act cannot be applied in the property in question due to the peculiar reason that the completion certificate was obtained only in the month of February, 2013 and it is not expected to let out the property just after the completion of the project and therefore, the reasonable expected rent to be fetched by the property in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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