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TMI Blog2020 (1) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming the additions of Rs. 58,81,176/- on account of notional rental income on unsold stock u/s 23(a) made by the AO by following the decision of Hon'ble Delhi High Court in the case of Ansal Housing Finance & leasing Ltd 354 ITR 180 (Delhi) (2) Because the ld CIT(A) has failed to appreciate that calculation of notional rental income on commercial property is outside the scope of section 23(1)(a). 3. Brief facts of the case are that the assessee is engaged in the business of construction of building, development and selling of immovable property etc., filed its return of income for relevant to the assessment year on 8.12.2014 declaring taxable income at Rs. 1,22,79,970/-. The case was selected for scrutiny. During the assessment the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the total income of the assessee. 4. On an appeal before learned CIT(A) action of the Assessing Officer was upheld. Thus further aggrieved the assessee has filed this appeal before us. 5. We have heard the submission of the learned AR of the assessee and learned Departmental Representative of the Revenue and perused the material available on record. Learned AR submits that the assessee constructed commercial building in Vashi after taking development rights from U.S. Roof Limited, who in turn obtained contract for development from APIDC. The assessee after obtaining development rights developed a plot allotted to APIDC. The assessee let out some part of developed property at ground floor to M/s. Kalyan Jewellers India Pvt. Limited. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 prescribed that the provisions of subsection (2) shall not apply if (a) the house or part of the house is actually let during the whole or any part of the previous year or (b) any other benefit therefrom is derived by the owner. Thus section 23 deals with residential property/house and not in respect of commercial property. 8. The Learned AR further submits that after cancellation of lease by the super lessor i.e. CIDCO the assessee could not have legally occupy the property nor could use for commercial exploitation there was legal impediment in letting out of the property. In support of his submission learned AR relied upon the decision of Hon'ble Bombay High Court in the case of Sharan Hospitality Pvt Ltd vs The Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 30% deduction made addition of Rs. 5,81,176/-to the total income of the assessee under the head 'income from house property'. 11. Before learned CIT(A) the assessee urged that the property/vacant portion is stock-in-trade, the same would partake character of stock in trade and any income derived therefrom would be income from business and not income from house property. It was also urged that the business of the assessee was to construct property and sale it and not to let out. Submission of the assessee was not accepted by learned CIT(A) as the assessee had leased out part of unsold property on commercial to M/s. Kalyan Jewellers India Pvt. Ltd., and learned CIT(A) affirmed the action of the Assessing Officer. 12. Before us learned AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 31.12.2015, therefore, we find force in the submission of learned AR of the assessee that after issuance of show-cause notice for cancellation of lease on which building was developed, the assessee was not entitled to let out occupied/constructed portion. Therefore, we find force in the submission of the learned AR that after issuance of show-cause notice the assessee was not entitled to let out the property. Hence, taxing notional income of unoccupied portion of building on the basis of deemed annual letting value is not justified by the Assessing Officer. Hence, we direct the Assessing Officer to delete the disallowance. Considering the fact that we have accepted the contention of learned AR that the assessee was legally not entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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