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TMI Blog2018 (12) TMI 1963X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have heard the rival submissions and perused the relevant material on record. We find that the assessee is engaged in sale of shops and flats. The assessee has shown the unsold stock-in trade of 16 shops and flats amounting to Rs.1,91,36,585/- in the inventory of schedule 6 of balance sheet as on 31.03.2010. The AO was of the view that provisions of section 22 and section 23 are applicable which creates deeming provisions for taxing income from house property. Accordingly, the AO has worked out deemed income from house property at Rs.15,75,850/- from these properties and taxed the same as income from house property. 4. Being aggrieved, the assessee filed an appeal before the ld. CIT (A). It was contended that the properties under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of immovable property and treated properties as stock in trade income from such property was assessable as business income and not as income from house property. It was further contended that the AO and CIT has not relied on the judgment of jurisdictional Hon'ble Gujarat High Court and relied on non-jurisdictional Hon'ble Delhi High Court, which is not in accordance with law. 6. Per contra, the ld. Senior Departmental Representative (Sr. DR) supported the orders of the Lower Authorities. 7. We have heard the rival submissions and perused the material on record. It is an undisputed fact the assessee has shown the properties as stock in trade in the books of accounts. The shops and flats sold by the assessee were assessed under head income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruct 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', 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 Runw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival contentions and perused the record. The issue under consideration has been restored by the CIT(A) to the file of AO to compute the annual value. Recently the Hon'ble Supreme Court in the case of M/s Chennai Properties & Investments Ltd. Vs. CIT, reported in (2015) 42 SCD 651, vide judgment dated 9-4- 2015 has held that where assessee company engaged in the activity of letting out properties and the rental income received was shown as business income, the action of AO treating the rental income as income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 assessee are allowed." 10. In the light above judicial pronouncements, we are of the considered opinion that provisions of section 23 of the Act are not applicable in the case of the assessee. Accordingly, the AO is directed to delete the addition made by estimating letting value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has received interest from deposit made for the purposes of business and also paid interest on excess money withdrawal from firm which was/is used for the purposes of business. The assessee has sufficient capital of Rs.1709.18 lakhs to invest in non business investment. The excess withdrawals has been shown under current liabilities and used to finance current assets, hence both interest received and paid has nexus and to be treated as business income (interest received) and business expenditure (interest paid). The disallowance only can be made u/s 14 read with rule 8D. In the case of assessee there is positive income from interest and we rely on jurisdictional Hon'ble Gujarat High Court decision in case of Pr.CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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