TMI Blog2018 (12) TMI 1963X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 property. As in the case of Runwal Builders Pvt. Ltd. [ 2018 (2) TMI 1707 - ITAT MUMBAI] 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 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 Properties Investments Ltd. [ 2015 (5) TMI 46 - SUPREME COURT] held that unsold flats which are in stock in trade should be assessed under the head business income and there is no justification in estimating rental income from those flats are notionally computing annual letting value under Section 23. We are of the considered opinion that provisions of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court in the case of CIT vs. M/s. Ansal Housing Finance and Leasing [I.T.A.No. 18/1999 dtd. 31.10.2012] has upheld the addition made by the AO. 5. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the properties under consideration were used for business purpose and income if any has to be assessed as a business income. Therefore, provisions of section 23 of the Act are not applicable in the case of the assessee. Any property which is held as a stock in trade are used from time to time to show to prospective buyers and their brokers as agents, if such property is let out it will be difficult to treat it as a stock in trade and it will also be difficult to sell. The ld. Counsel further relied on the decision in the case of M/s. Runwal Builders Pvt. Ltd. vs. ACIT ITA No.5408 5409/Mum/2016 dated 22.02.2018 and ITO vs. Arihant Estates Pvt. Ltd. ITA No.6037/Mum/2016 dated 27.06.2018 wherein relying on the decision in the case of Neha Builders of Hon ble Gujarat High Court (supra) it was held that where the assessee was engaged in development construction, sale and lease of immovable property and tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be taken to be stock-in-trade , otherwise, it is to be seen that there was distinction between the income from property. 9. From the statement of the assessee, it would clearly appear that it was treating the property as stock-in-trade . Not only this, it will also be clear from the records that, 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 in the case of Runwal Builders Pvt. Ltd. (supra) 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 Properties Investments Ltd. vs. CIT reported in 373 ITR 673, held that unsold flats which are in stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable to be taxed as business income. Accordingly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23 of the I.T.Act. 10. In the case on hand before us it is an undisputed fact that both assessee have treated the unsold flats as stock in trade in the books of account and the flats sold by them were assessed under the head income from business . Thus, 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. 11. In the result, the appeals filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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