TMI Blog2018 (9) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/PUN/2018 - - - Dated:- 12-9-2018 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri Neelesh Khandelwal For the Revenue : Dr. Vivek Aggarwal ORDER PER VIKAS AWASTHY, JM : These two appeals are by the assessee. ITA No. 230/PUN/2018 is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 14-07-2017 for the assessment year 2013-14. In ITA No. 231/PUN/2018 the assessee has assailed the order of Commissioner of Income Tax (Appeals)-4, Pune dated 24-07-2017 for the assessment year 2014-15. Since, the issues involved in both the appeals are identical and are arising from same set of facts, these appeals are taken up together for adjudication and are being disposed of vide this common order. 2. In ITA No. 230/PUN/2018 the grounds raised by the assessee are as under : 1. On facts and circumstances prevailing in the case and as per provisions Scheme of the Act it be held that, Honorable Commissioner of Income Tax- (Appeals) (Hon'ble CIT(A)) erred in confirming the addition made by Learned Assessing Officer (Ld. AO) on account of deemed rent from unsold units lying in closing stock under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal at the time of hearing. 3. Shri Neelesh Khandelwal appearing on behalf of the assessee submitted that the assessee is a builder and developer. During the impugned assessment years the assessee developed two housing projects i.e. Project A and Project B at Survey No. 186, Shastri Nagar, Pune. Project A was completed on 31-03-2008. 53 units in the said project were unsold and was held as stock-in-trade. The assessee received booking amount in respect of 8 units out of the said 53 units in the financial year ending on 31-03-2013. The Project B was not complete till 31-03-2013. The assessee filed return of income for assessment year 2013-14 declaring loss of ₹ 7,15,951/-. In scrutiny assessment proceedings, the Assessing Officer made addition of ₹ 75,50,995/- under the head Income from House Property‟ on account of notional rent in respect of unsold residential units held as stock-in-trade. The ld. AR pointed that the assessee was holding unsold units as stock-in-trade, which partake the character of stock. Therefore, any notional rent on such flats has to be assessed as Business Income‟ of the assessee and not under the head Income from Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance And Leasing Co. Ltd., 354 ITR180 (Delhi). iii. S.G. Mercantile Corpn. (P.) Ltd. Vs. Commissioner of Income Tax, AIR 1972 SC 732. 5. The ld. AR controverting the submissions of the DR submitted that the case laws relied upon by the Department is distinguishable. The ld. AR pointed that in the instant case the addition has been made by determining notional annual rental value on unsold units. Whereas, in the case of Commissioner of Income Tax Vs. Sane Doshi Enterprises (supra) the assessee had actually rented out the flats and had offered the rental income under the head Income from House Property‟. The Department intended to tax the amount under the head business income. The Tribunal ruled in favour of the assessee. The Department carried the matter in appeal before the Hon‟ble High Court, the Hon‟ble High Court upheld the findings of Tribunal. In the present case, the assessee has not rented out the flats. The Assessing Officer has determined notional annual rental value. In respect of decision rendered in the case of Commissioner of Income Tax Vs. Ansal Housing Finance And Leasing Co. Ltd. (supra) the ld. AR fairly admitted that the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-trade , and any income derived from such stocks cannot be termed as 'income from property . Even otherwise, it is to be seen that there was distinction between the 'income from business and 'income from property on one side, and 'any income from other sources . The Tribunal, in our considered opinion, was absolutely unjustified in comparing the rental income with the dividend income on the shares or interest income on the deposits. Even otherwise, this question was not raised before the subordinate Tribunals and, all of sudden, the Tribunal started applying the analogy. 9. From the statement of the assessee, it would clearly appear that it was treating the property as 'stock-in-trade . Not only this, it will also be clear from the records that, except for the ground floor, which has been let out by the assessee, all other portions of the property constructed have been sold out. If that be so, the property, right from the beginning was a 'stock-intrade . 8. In the case of Commissioner of Income Tax Vs. Ansal Housing Finance And Leasing Co. Ltd. (supra) the Hon‟ble Delhi High Court taking a contrary view has held that annual rental val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities as Business Income‟. 11. Thus, in view of the facts of the case and the decision rendered in the case of Commissioner of Income Tax Vs. Neha Builders (P.) Ltd. (supra) we find merit in the submissions of assessee and allow the appeal. 12. In the result, the impugned order is set aside and the appeal of assessee is allowed. ITA No. 231/PUN/2018 (A.Y. 2014-15) 13. The assessee has assailed the findings of Commissioner of Income Tax (Appeals) by raising following grounds : 1. On facts and circumstances prevailing in the case and as per provisions Scheme of the Act it be held that, Honorable Commissioner of Income Tax- (Appeals) (Hon'ble CIT(A)) erred in confirming the addition made by Learned Assessing Officer (Ld. AO) on account of deemed rent from unsold units lying in closing stock under the Head Income from House Property. The addition of ₹ 1,21,28,928/- made by Ld. AO sustained by the Hon'ble CIT(A) is improper, unwarranted, unjustified and contrary to the provision of the Act and facts prevailing in the case. The addition so made be deleted. The appellant be granted just and proper relief in the respect. 2. Without pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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