The Tax Publishers2020 TaxPub(DT) 4744 (Mum-Trib) : (2020) 208 TTJ 0802

INCOME TAX ACT, 1961

Section 23

Flats held by assessee as stock-in-trade of its business of builder and developer, having not been let out, not yielded any rental income, and therefore, ALV of unsold property held by assessee as stock-in-trade could not be determined and brought to tax under the head 'House Property', especially when statutory provision, i.e., section 23(5) is applicable prospectively, i.e., with effect from assessment year 2018-19, having no bearing in the year under consideration.

Income from house property - Annual lettable value - Property held by developer as stock-in-trade -

Assessee was engaged in real estate development. AO held that annual lettable value 'ALV' of flats held by assessee as its stock-in-trade was liable to be determined under section 22. Assessee contended that income on sale of unsold flats forming part of its 'closing stock' was liable to be assessed as its business income and not as income from house property, therefore, ALV of said flats was not exigible to tax under the head 'Income from house property'.Held: Flats held by assessee as stock-in-trade of its business of builder and developer, having not been let out, not yielded any rental income, and therefore, ALV of unsold property held by assessee as stock-in-trade could not be determined and brought to tax under the head 'house property', especially when statutory provision, i.e., section 23(5) is applicable prospectively, i.e., with effect from assessment year 2018-19, having no bearing in the year under consideration.

Supported by:Rajendra Godshalwar v. ITO-21(3)(1), Mumbai (ITA No. 7470/Mum/2017, dated 31-1-2019). Followed:CIT v. Neha Builders (P) Ltd. (2008) 296 ITR 661 (Guj) : 2008 TaxPub(DT) 294 (Guj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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