TMI Blog2019 (2) TMI 1752X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Shri Maurya Pratap ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) -12, Mumbai [hereinafter in short Ld.CIT(A) ] dated 09.04.2018 for the Assessment Year 2013-14. 2. Assessee has raised the following grounds in its appeal: - I.) The Learned CIT(A) erred in law and facts of the case in directing AO to recompute the notional ALV by considering Municipal Rate-able Value, of unsold shops and penthouse, which are held as a stock in trade as on 31/03/2013, as income under the head income from House property. II.) The Learned CIT(A) failed to appreciate that amendment to the sub-sec 23 by insertion of sub-sec(5), by Finance Act 2017, will be effective from 01.04/2018. III.) the appellant crave leave to submit additional grounds of appeal, if any, at or before the time of hearing and / or after, modify, reframe any grounds of appeal at or before the time of hearing. 3. At the outset, Ld. Counsel for the assessee submitted that the issue in appeal i.e., whether notional ALV on the unsold flats w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the annual value of the said property, for a period up to one year from the end of the financial year in which the certificate of completion of construction and property is obtained from the competent authority, shall be taken to be nil. This amendment brought in Section 23 sub-section(5) of the Act is effective only from A.Y.2018-19 onwards and cannot be applied retrospectively. Hence, there cannot be any addition that could be made based on notional rental income or deemed rental income in the hands of the assessee in respect of unsold flats held as stock in trade by the assessee during the year under consideration under the head income from business also. We have already held that the rental income, if any, derived from properties held as stock in trade cannot be assessed as income from house property by placing reliance on the decision of Hon ble Gujarat High Court referred to supra. We find that the Delhi High Court in the case of Ansal Housing Finance referred to supra had held the decision in favour of the revenue which are on the very same set of facts. We find when there are divergent views given by two non-Jusidrictional High Courts by interpreting the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness as that of a developer would loose its color and character as that of a property simpliciter owned by him. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Neha Builders (P) Ltd . (2008) 296 ITR 661 (Guj). The Hon ble High Court while disposing off the appeal filed by the revenue in the case of an assessee company which was engaged in the business of construction of property, had observed that where a property is held as stock-in-trade, then the same would become or partake the character of the stock, and any income derived therefrom would be income from business and cannot be held as income from property. The Hon ble High Court while concluding as hereinabove had observed as under: 7. From the order passed by the learned CIT(A), it would clearly appear that the case of the assessee was that the company was incorporated with the main object of purchase, take on lease, or acquire by sale, or let out the buildings constructed by the assessee. Development of land or property would also be one of the businesses for which the company was incorporated. 8. True it is, that income derived from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 ITR 192 (SC), wherein the Hon ble Apex Court had observed that if two reasonable constructions of a taxing provision is possible, then that construction which favours the tax payer must be adopted. Further, we find that ITAT, Mumbai in the case of ACIT-15(2)(1) Vs. M/s Haware Construction Pvt. Ltd. [ITA no. 3321 3172/Mum/2016; dated 31.08.2018] had after deliberating on the aforesaid judgments of the Hon ble High Court of Gujarat in Neha Builders (P) Ltd.(supra) and that of the Hon ble High Court of Delhi in Ansal Housing Finance Leasing Company Ltd.(supra), had by taking support of the judgment of the Hon ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), had followed the decision of the Hon ble High Court of Gujarat in Neha Builders (P) Ltd. (supra), and had concluded that the notional lettable value of the unsold flats held by the assessee cannot be determined and brought to tax under the head Income from house property‟. Still further, a similar view had also been taken by the Tribunal in the case of M/s C.R Development Pvt. Ltd. Vs. JCIT-8(1)(OSD), Mumbai [ITA No. 4277/ Mum/2012; dated 13.05.2015]. It was observed by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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