The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that no income tax shall be levied on unsold flats held by a builder.
The Assessee, Cosmopolis Constructions has filed the appeal as to whether Commissioner of Income Tax Appeals CIT(A) was justified in confirming the addition made by the AO on account of deemed rent from unsold units lying in closing stock.
Neelesh Khandelwal, on behalf of the assessee and Ramnath P. Murkunde on behalf of the revenue fairly conceded that the issue raised in the present appeal was covered by the orders of this Tribunal in assessee’s own case which were on record in ITA Nos.230 & 231/PUN/2018 for A.Ys. 2013-14 and 2014-15 vide order dated 12-09-2018.
They reproduced the findings in Income Tax Vs. Ansal Housing Finance and Leasing Co. Ltd.
“We further find that the Mumbai Bench of the Tribunal in M/s. C.R. Developments Pvt. Ltd. Vs. JCIT (supra), M/s. Runwal Constructions Vs. ACIT (supra) and Shri Girdharilal K. Lulla Vs. DCIT (supra) under similar set of facts have taken a consistent view in holding notional annual rental value on unsold flats held as stock-in-trade by the assessee engaged in construction and development activities as ‘Business Income’”, this observation made in assessee’s own case was referred.
In assessee’s earlier case the decision of Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Sane & Doshi Enterprises was also referred.
The Division Bench of Inturi Rama Rao(Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) allowed the appeal holding that the addition was maintainable on account of deemed rent on unsold flats which were treated as stock-in-trade by the assessee.
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