No deemed rental house property income when flats held as stock in trade

No deemed rental house property income can be computed when flats are held as stock in trade – ITAT deletes addition

ABCAUS Case Law Citation:
ABCAUS 2668 (2018) (12) ITAT

Important Case Laws Cited/reliedupon:
M/s. Cosmopolis Construction vs. ITO
M/s. C.R. Developments Pvt. Ltd. Vs. JCIT
M/s. Runwal Constructions Vs. ACIT
Shri Girdharilal K. Lulla Vs. DCIT
Commissioner of Income Tax Vs. Vegetable ProductsLtd
Commissioner of Income Tax Vs. Neha Builders (P.)Ltd

The assessee had appealed against the order passed by the CIT(A) confirming the addition of deemed rent on unsold flats shown as stock in trade.

The assessee was a Builder which declared five flats in its closing stock. The Assessing Officer (AO) applying the provisions of section 23 of the Income tax Act, 1961 (the Act), computed the notional income under the head `Income from house property’ at the rate of Rs. 4,000/- per month per flat.

No relief was allowed to the assessee in the first appeal

The Tribunal following its earlier judgment held that no rental income can be computed when flats are held as stock in trade. Accordingly the impugned order was reversed and Assessing Officer (AO) was directed to delete the addition.

Related Update: No notional income for house property held as stock-in-trade till certificate of completion is obtained >>

Download Full Judgment Click Here >>

• AO took a reasonable stand that 25 kg written in WhatsApp chat was 25 lakh – ITAT
• Shareholders can’t be taxed for income from properties owned by the company – HC
• Jurisdictional error in reassessment approval can’t be shielded by the law of limitation
• ITAT ought to remanded whole matter of bogus purchases instead of profit determination
• Where proceedings u/s 153C barred by limitation, AO can’t invoke section 148 & 148A