TMI Blog2021 (12) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... s, respectfully following the above said decisions we hold that the unsold flats which are stock in trade when they were sold they are assessable under the head income from business when they are sold and therefore the AO is not correct in bringing to tax notional annual letting value in respect of those unsold flats under the head income from house property . Thus, we direct the AO to delete the addition made under Section 23 of the Act as income from house property Thus allow the grounds raised by the assessee and direct the Assessing Officer to delete the notional rent assessed on the property held as stock in trade. Grounds raised by the assessee are allowed. - ITA NO. 1521/MUM/2020 (A.Y: 2015-16) - - - Dated:- 25-11-2021 - SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock and any income derived from stock in trade would be income from business and not income from house property . Further, placing reliance on the decision of the Hon'ble Culcutta High Court in the case of Madgul Udyog v. CIT [184 ITR 484] submitted that the Hon'ble High Court held that the question of notional income would not arise in relation to stock in trade. Ld. Counsel for the assessee submits that in assessee s sister concerns case namely M/s. Runwal Constructions v. ACIT in ITA.No. 5408/Mum/2016 dated 22.02.2018 similar issue had come up and the Tribunal deleted the notional rent assessed by the Assessing Officer on the stock in trade under the head income from house property . 5. Ld. DR strongly placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra). The action of the AO was upheld by the learned CIT(A). 8. The Hon'ble Gujarat High Court in the case of Neha Builders Pvt. Ltd. (supra) considered the question whether the rental income received from any property in the construction business can be claimed under the head income from property even though the said property was included in the closing stock. The Hon'ble Gujarat High Court held that if the business of the assessee is to construct the property and sell it or to construct and let out the same, then that would be the business and the business stocks, which may include movable and immovable, would be taken to be stock in trade and any income derived from such stocks cannot be termed as income from house prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-in-trade'. 9. Similarly the Coordinate Bench has considered similar issue as to whether the unsold property which is held as stock in trade by the assessee can be assessed under the head income from house property by notionally computing the annual letting value from such property and the Coordinate Bench considering the decision of the Hon'ble Delhi High Court in the case of Ansal Housing Finance Leasing Co. Ltd. (supra) which the AO relied upon and the decision of the Hon'ble Supreme Court in the case of Chennai P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from house property in place of income from business shown by the assessee was held to be not justified. The Hon ble Supreme Court held that since the assessee company s main object, is to acquire and held properties and to let out these properties, the income earned by letting out these properties is main objective of the company, therefore, rent received from the letting out of the properties is assessable as income from business. On the very same analogy in the instant case, assessee is engaged in business of construction and development, which is main object of the assessee company. The three flats which could not be sold at the end of the year was shown as stock-in-trade. Estimating rental income by the AO for these three flats as inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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