The Pune Bench of Income Tax Appellate Tribunal (ITAT) has upheld the decision of Commissioner of Income Tax (CIT(A) that there were no provisions under Profits and Gains from Business or Profession which treat Rent from Unsold Flats held as Stock as ‘Business income’.
The assessee-Shah Bafna Associates, firm was a Promoter, Builder and Developer, which furnished its return declaring total income at Rs.37,499/- after claiming deduction u/s.80IB (10) of the Income Tax Act 1961 and Assessing Officer (AO) disallowed the deduction on the ground that the assessee had not obtained completion certificate and the project was required to be completed by 31-03-2012. The Commissioner of Income Tax (CIT(A)) overturned the assessment order on the reason that no deduction was claimed in respect of incomplete projects and deduction was claimed on a pro-rata basis.
Prateek Jha appeared for the assessee and M.G. Jasnani appeared for the revenue.
R.S. Syal, (Vice President) and Partha Sarathi Chaudhury, (Judicial Member) observed that “it is seen that the assessment year under consideration is 2014-15. The Finance Act, 2017 introduced subsection (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 w.e.f. 01-04-2018. Thus, this provision manifestly does not apply to the assessment year under consideration.”
The Bench upheld the CIT(A) decision referring Cosmopolis Construction vs. ITO that no provision was present under the head “Profits and Gains from business or profession” which deemed the rental income from unsold flats held as stock as ‘Business income’.
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