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TMI Blog2018 (9) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 Rs. 75,50,995/- 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 prejudice to above, on facts and circumstances prevailing in the case and as per provisions & scheme of the Act if for any reason the addition made by the AO is held to be sustainable then it be held that the alleged deemed income arising from unsold stock in trade is assessable under the head profits and gains from business or profession and not under the head Income from House Property. The addition made under the head Income from House property is unwarranted, unjustified, contrary to the provisions of the Act and facts prevailing in the case. The addition so made be assessed under the correct head of income. The appellant be granted just and proper relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 House Property‟. In support of his submissions the ld. AR placed reliance on the Hon‟ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Neha Builders (P.) Ltd. reported as 296 ITR 661. 3.1 The ld. AR submitted that dominant intention of the assessee is to sell the flats after completion. The unsold flats were held as stock and were part of business asset of the assessee. The assessee had disclosed all unsold units as closing stock while finalizing its account. The Department has accepted the accounts furnished by the assessee. After the sale of units, the assessee has disclosed income under the head Business Income and not as Long Term Capital Gain. Thus, any income arising from business asset has to be assessed under the head Business Income and not under any other head. The ld. AR submitted that the Hon‟ble Gujarat High Court in the case of Gujarat Ginning & Manufacturing Company Vs. Commissioner of Income Tax reported as 205 ITR 314 has held that whether property shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal 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 is against the assessee. However, the ld. AR submitted that in view of the decision of Hon‟ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Vegetable Products Ltd. reported as 88 ITR 192 the ratio laid down by the Hon‟ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Neha Builders (P.) Ltd. (supra) has to be followed. 6. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue in the appeal by assessee is against the addition of Rs. 75,50,995/- under the head „Income from House Property‟ in respect of notional rental income on the flats held as stock-in-trade. In so far as the facts narrated by the ld. AR of the assessee, there is no dispute. 7. The issue before us for adjudication is whether the notional annual rental value on unsold flats held as stock-in-trade by the assessee is to be assessed under the head „Business Income‟ or under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e'." 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 value on unsold flats built by assessee engaged in construction business is assessable as income from house property. It is a well settled law that when two divergent views of non-jurisdictional High Courts are available and there is no decision on the issue from the Jurisdictional High Court, the view in favour of the assessee has to be adopted [Commissioner of Income Tax Vs. Vegetable Products Ltd.(supra)]. 9. In so far as the decision of Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Sane & Doshi Enterprises (supra) is concerned we find that the facts in the said case are at variance. In the said case the assessee was engaged in construction business. The assessee rented out unsold flats and suo-motu offered rental income from the flats under the head „Income from House Property‟. On the contrary the Revenue wanted to tax rental income under the head „Business Income‟. The matter travelled to the Tribunal. The Tribunal held that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified 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 prejudice to above, on facts and circumstances prevailing in the case and as per provisions & scheme of the Act if for any reason the addition made by the AO is held to be sustainable then it be held that the alleged deemed income arising from unsold stock in trade is assessable under the head profits and gains from business or profession and not under the head Income from House Property. The addition made under the head Income from House property is unwarranted, unjustified, contrary to the provisions of the Act and facts prevailing in the case. The addition so made be assessed under the correct head of income. The appellant be granted just and proper relief in this respect. 3. Without prejudice to the above, on facts and circumstances prevailing in the case and as per provisions & scheme of the Act if at all it is held that the annual letting value has to be assessed as income of the appellant, it be held that said income arising out of unsold units of 801B(10) compliant housing project an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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