The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently quashed additions made on account of determination of Annual Letting Value in respect of Unsold Residential Units.
The Assessee Pride Purple Properties, is a firm engaged in the business of construction & sale of residential flats, which at the closure of the financial was holding 03 residential units as its ‘stock-in-trade’ which were neither let-out nor occupied for its business and hence no income therefrom offered to tax in the return of income filed under Section 139(1) of the Income Tax Act.
While assessing proceedings the AO considered the provisions of section 23(4) of the Income Tax Act determined the annual letting value 03 residential unit at ₹2,52,000 after allowing 30% standard deduction under Section 24(a) Income Tax Act and added the same to the total income while assessing income.
Aggrieved by the assessment order assessee filed appeal before the CIT(A) who confirmed the addition. Further the assessee filed second appeal before the tribunal.
The tribunal observed that the Finance Act, 2017 introduced sub-section (5) to section 23 providing that where a property held as ‘stock in trade’ is not let out during the year, its annual value after a period of one year or as revised to two years, shall be considered for the purposes of inclusion under the head `Income from House property.
This amendment has been brought out with effect from 01-04-2018. This provision manifestly does not apply to the impugned AY 2014-15.
Thus the two member bench of S. S. Godara, (Judicial Member) and G.D. Padmahshali, (Accountant Member) deleted the addition made by the lower Authority.
Suhas Bora appeared for the assessee. M. G. Jasnan appeared for the revenue.
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