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TMI Blog2019 (2) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... units of properties lying as stock in trade. 3. Succinctly, the factual matrix of the case is that the assessee is engaged in the business as a Builder and Developer. The Assessing Officer (AO) observed that the assessee was holding closing stock of one office building and one showroom. Invoking provisions of section 23(4) of the Income-tax Act, 1961 (hereinafter also called 'the Act'), the AO opined that the Annual Letting Value of the property was required to be determined and added to the assessee's total income. The assessee's contention that two units in respect of which "Income from house property" was proposed to be computed, were its stock in trade and hence, no income could be determined thereon under this head, did not find favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one some transformation. In Chennai Properties and Investments Ltd. Vs. CIT (2015) 373 ITR 673 (SC), the assessee whose business was to acquire properties, let out certain properties and the rental income as received therefrom was declared as business income. The AO held such income to be chargeable to tax under the head "Income from house property". The Hon'ble Supreme Court held that the deciding factor for determining as to whether the income is to be charged under the head "Income from house property" is not the ownership of property but the nature of operations in relation to them. Considering the objects of the company, the Hon'ble Supreme Court held that such income was chargeable to tax under the head "Profits and gains from busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of income from house property, which is not let out, but it is equally trite that a deeming provision cannot be extended beyond its ambit, so as to cover the heads of income or the sections, to which it does not operate. My attention has not been drawn by the ld. DR towards any specific provision under Chapter IV-D of the Act which deems rental income on the properties held as stock in trade, waiting for sale and not actually let out, as chargeable to tax under the head "Profit and gains of business or profession". As the assessee admittedly did not earn any rental income from letting out of these two units, which position has also not been disputed by the AO, in my considered opinion, taxing any hypothetical income, which is oth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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