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TMI Blog2025 (5) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... tary ground of appeal is on the addition of Rs. 3,82,200/- made under the head 'Income from house property', where the ld. AO has taken the notional rent of unsold shops/flats at Rs. 5,46,000/- as per the provision of Section 23(1)(a) r.w.s. 23(4) of the Act. 4. Briefly stated that the assessee is an individual and engaged in the business of Civil Construction and Builders and Developers and had filed his return of income dated 30.10.2015, declaring total income at Rs. 3,84,95,290/- from sale of flats amounting to Rs. 18,58,75,250/- and other income of Rs. 36,07,952/- after debiting various expenses and claiming deduction under Chapter VIA of the Act amounting to Rs. 1,74,997/- and the same was processed u/s. 143(1) of the Act. The assessee's case was selected for limited scrutiny under CASS, for the reason that the assessee has not declared income from house property for unsold shops/flats which remained vacant during the year under consideration. The learned Assessing Officer ('ld. AO' for short) then passed the assessment order u/s. 143(3) of the Act dated 21.12.2017, thereby determining total income at Rs. 3,88,77,490/- after making an addition of Rs. 3,82,200/- u/s. 23(4)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . c. Kumar Properties and Real Estate (P.) Ltd. Vs. DCIT [2021] [128 taxmann.com 364] [Pune ITAT]. d. Shivsagar Builders (P.) Ltd. vs. ACIT [2020] [118 taxmann.com 349] [Delhi ITAT] e. Runwal Constructions v. ACIT [2018] [ITA 5408/Mum/2016] [Mumbai ITAT] f. ACIT, Mumbai vs. Haware Construction (P.) Ltd. [2019] [101 taxmann.com 168] [Mumbai ITAT]. g. Haware Engineers and Builders Pvt. Ltd. Vs. DCIT [2018] [ITA 7155/Mum/2016] [ITAT Mumbai]. h. C. R. Development (P.) Ltd. [2016] [ITA 4277/Mum/2022] [Mumbai ITAT] i. Progressive Homes vs. ACIT [2018] [ITA 5082/Mum/2016] [Mumbai ITAT] j. Giridharilal K. Lulla vs. DCIT [2017] [ITA 1604/Mum/2016] [Mumbai ITAT]. 8. The ld. AR contended that even otherwise, in case of notional rent to be added to the income of the assessee, the same has to be as per the Municipal Rentable Value and that the same is to be determined not for assessment years prior to 2018-19 onwards as per Section 23(5) of the Act. Though the assessee has raised only one effective ground of appeal challenging the addition made, the reliance placed by counsels for the assessee and the revenue on various decisions put us in a position to discuss multiple aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that such properties were to be assessed as income from house property and not income from "business or profession", in its judgement dated 31.10.2012, would be good law, even in view of the insertion of Section 23(1)(c). That being the position, in the assessee's case, the properties held as stock in trade will be taxable under the notional annual letting value method prescribed under Section 23(1)(a), since in view of the decision in Vivek Jain (supra), the assessee cannot claim the benefit of Section 23(1)(c) having never actually let out the properties held as stock in trade. 10. Finally, this Court notices that the Finance Act, 2017 has amended Section 23 of the Act to insert sub-section (5), which provides: "(5) Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermining the rental income received from unsold flats held as stock-in-trade has been held to be income from house property by Hon'ble Jurisdictional High Court into case of CIT vs. Sane and Doshi Enterprises (2015) 377 ITR 165/ 232 taxmann.com 452 Bombay and in the case of CIT vs. Gundecha Builders (2019) 102 taxmann.com 27 (Bombay), the deemed rental on flats lying vacant would also be covered by the Provisions of Section 23(4)(b) of the Act and the subsequent Amendment by way of insertion of Clause (5) was only to give relief to the assessee that when it was not let out for whole or any part of the previous year then the annual value would be NIL for two years (earlier one year as per Finance Act, 2019) from the end of the FY in which certificate of completion of construction was obtained. 12. The assessee has placed reliance on the Tribunal decision in the case of the Inorbit Malls Pvt. Ltd. (supra) stating that the Tribunal has held that Section 23(5) is applicable only for A.Y. 2018-19 onwards, we are of the considered view that though at para 19 it has stated that the provision would apply prospectively, at para 20 of the said decision, it has held the same against the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Jurisdictional High Court in the case of CIT vs. Tip Top Typography [2014] 48 taxmann.com 191/[2015] 228 Taxman 244 (Mag.)/[2014] 368 ITR 330, which has relied on the full bench decision of the Hon'ble Delhi High Court in the case of CIT vs. Moni Kumar Subba, [2011] 333 ITR 38, where it has been reiterated that for determination of ALV u/s. 23(1)(a) of the Act, the same has to be in accordance with the municipal laws after duly considering the inflated or deflated rent based on extraneous circumstances, if any, which in any case cannot exceed the standard rent as per the Rent Control Legislation applicable to the said property. It has also specified various methods of valuation for arriving at the hypothetical rent. The coordinate bench in the case of Inorbit Malls (supra) has also relied on the decision of the Hon'ble Jurisdictional High Court in the case of Tip Top Typography (supra) for determining the ALV for computing the notional rent. By respectfully following the proposition laid down by the Hon'ble Jurisdictional High Court in the case of Tip Top Typography (supra), we direct the ld. AO to determine the notional rent in accordance with the principles emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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