TMI Blog2023 (2) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate of completion of construction of the property is obtained on and from the A.Y. 2018-19. Instantly, we are concerned with the assessment year 2014-15. As such, the amendment cannot apply to the year under consideration. In the absence of the applicability of such an amendment, no income can be said to have accrued to the assessee from unsold flats available as stock-in-trade as per the discussion made hereinabove. We, therefore, vacate the impugned order on this score having the effect that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue requiring any revision u/s 263 of the Act on this count. Disallowance u/s 80IB(10)(f) - The Hon ble Bombay High Court in M/s. Kamat Constructions Pvt. Ltd. vs. ACIT [ 2020 (12) TMI 90 - BOMBAY HIGH COURT ] has approved the granting of deduction u/s 80IB(10) on proportionate basis. In that view of the matter, the question of denial of deduction u/s 80IB(10) in full on account of violation of certain conditions qua a part of deduction remains no more res integra. We, therefore, hold that the ld. CIT was not justified in revising the order directing the withdrawal of full amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g total income of Rs.73,94,651 after claiming deduction u/s 80IB(10) to the tune of Rs.2.20 crore. The assessment was completed u/s 143(3) at the returned income. Thereafter, the ld. CIT invoked his revisionary power u/s 263 by holding that the assessment order was erroneous and also prejudicial to the interest of Revenue on the following points: (i) Notional rent not charged on property lying in stock-in-trade; (ii) Sale of two flats to one person - Deduction u/s 80IB(10) of the Act to be disallowed in entirety; (iii) Rental income in respect of stock-in-trade ought to have been offered to tax as Income from other sources instead of Business income ; and (iv) Interest wrongly claimed as deduction in respect of non-80IB(10) unit. 3. We have heard the rival submissions and perused the relevant material on record. We will espouse the above points raised by the ld. CIT, one by one for consideration and decision. 4. The first point taken note of by the ld. CIT is not offering income in respect of unsold units under the head `Income from house property . He noted that the value of unsold flats and bungalows in the assessee s Profit loss account stood as stock-in-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the annual letting value therefrom. Let us see if the above conditions are satisfied in the instant case ad seriatim. 8. The first condition is that the property or its part should be occupied by the assessee as an owner. The assessee is engaged in the business of developing buildings. Admittedly, the assessee is owner of the flats/bungalows lying unsold at the year end. Now the question is whether these flats etc. can be said to be `occupied by the assessee? The term `occupy has neither been defined in section 2 (general definitions under the Act) nor section 27 (definitions relating to income from house property). Rather it is defined nowhere in the Act. In such a scenario, we will have to understand its connotation in common parlance. The term `occupation (in land law) has been defined in the Oxford Dictionary of Law to mean `the physical possession and control of land . Thus, occupation of a property means having its physical possession coupled with dominion rather than the physical possession coupled with actual use. Once a property is in physical possession and control of a person, it is said to be in his occupation, even if it is not actually used by him. Advertin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment by the assessee are chargeable to income-tax. 12. On a bird s-eye view, we find that that flats/bungalows are occupied by the assessee owner; business of property development is carried on by the assessee; the occupation of the flats etc. is for the purpose of business; and profits of such business are chargeable to income-tax. Ergo, all the four conditions for exclusion from section 22 of the Act are cumulatively satisfied in the present case. 13. The ld. CIT has canvassed a view that the annual letting value of flats/bungalows is income chargeable to tax as `Income from house property by relying on CIT VS. Ansal Housing Finance and Leasing Company Ltd. (213 Taxman 143). There is no doubt that the Hon ble Delhi High Court in the above case has held that Annual letting value of unsold flats at the year end is chargeable to tax under the head Income from house property . At the same time, we find that the Hon ble Gujarat High Court in CIT Vs. Neha Builders (Pvt.) Ltd. (2008) 296 ITR 661(Guj) has held that income from the properties held as stock in trade can be treated as Income from business and not as `Income from house property. Our attention has been drawn towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In the absence of the applicability of such an amendment, no income can be said to have accrued to the assessee from unsold flats available as stock-in-trade as per the discussion made hereinabove. We, therefore, vacate the impugned order on this score having the effect that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue requiring any revision u/s 263 of the Act on this count. 16. The second point taken note of by the ld. CIT is that the assessee sold two flats to one person and hence was not entitled to claim deduction u/s 80IB(10). In this regard, the assessee submitted before the ld. CIT that undoubtedly, two flats were sold to Shri Abhijeet Kale on 03.01.2012 in violation of section 80IB(10) (f) of the Act. The assessee agreed for proportionate disallowance pro tanto during the course of proceedings for the assessment year 2012-13. Since such disallowance was made in assessment year 2012-13, it was contended that there was no room for making disallowance in assessment year 2014-15 again. 17. We have gone through the assessment order dated 22.03.2015 for the assessment year 2012-13, whose copy has been placed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is that the assessee claimed deduction of interest amounting to Rs.13,99,944 qua Atharwa Vatika project, which was not eligible for deduction u/s 80IB(10), thereby reducing the income of the eligible project. In this respect, the assessee submitted before the ld. CIT that the Atharwa Project was started in the year 2010 after taking loan of Rs.2.50 crore from Deogiri Nagari Sahakari Bank Ltd on 13.08.2010. The money borrowed was utilized in Atharwa project only, hence interest pertaining to such project was also debited to the Profit loss account of this project only. The ld. CIT still opined that the assessment order, granting deduction of Rs.13.99 lacs against non eligible units, was erroneous and prejudicial to the interest of Revenue. 21. Having heard the rival contentions and perused the material on record, it is seen that the assessee made a consolidated Profit loss account and also separate Profit loss account of 80IB(10) unit. No deduction of interest amounting to Rs.13.99 lac was claimed in the eligible unit, though such deduction was there in consolidated Profit Loss account. This shows that such deduction was claimed only against the income of non-eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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