M/S REPTON PROPERTIES PVT LTD., Mumbai V. ITO 5(3)(1), Mumbai

ITA 2307/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9190 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINAY SINHA LD
• Assessee Lawyers: NIKHIL PATHAK LD
• Keywords: Business income
• Section: 143(3); 13

Judgement Text

M/S REPTON PROPERTIES PVT. LTD. ASSESSMENT YEAR: 2012 - 13 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUM AR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 2307/M UM/ 2019 ( / ASSESSMENT YEAR: 2012 - 13 ) M /S REPTON PROPERTIES PVT. LTD. A - 5, 2 ND FLOOR, TARDEO ROAD, TARDEO, MUMBAI - 400 034 / VS. ITO 5 (3)(1) AA YKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. A A ACR - 2812 - A ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI NIKHIL PATHAK , LD. AR REVENUE BY : SHRI VINAY SINHA , LD. CIT - DR / DATE OF HEARING : 09 /08 /2021 / DATE OF PRONOUNCEMENT : 09/08/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2012 - 13 ARISES OUT OF THE ORDER OF LE ARNED COMMISSIONER OF INCO ME - TAX (APPEALS) - 10 , MUMBAI [CIT(A)], DATED 03/10 /20 18 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFF ICER (AO) U/S 143(3) OF THE ACT ON 14/11/2014 . 2. THE ONLY ISSUE UNDER THE APPEAL IS ADDITION OF NOTIONAL RENT ON UNSOLD FLATS HELD AS STOCK - IN - TR ADE. THE ASSESSEE BEING RESIDENT M/S REPTON PROPERTIES PVT. LTD. ASSESSMENT YEAR: 2012 - 13 2 CORPORATE ASSESSEE IS STATED TO BE ENGAGED AS REAL ESTATE BUILDERS & CONTRACTORS ETC. DURING ASSESSMENT PROCEEDINGS, LD. AO NOTED THAT THE ASSESSEE HAD CLOSING INVENTORIES OF UNSOLD FLATS. ACCORDINGLY, RELYING UPON THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S ANSAL HOUSING FINANCE & LEASING CO. LTD. (2013 ; 29 TAXMANN.COM 303 ) , LD. AO COMPUTED NOTIONAL RENT OF 8% ON UNSOLD FLATS WHICH CAME TO RS.62.26 LACS. AFTER PROVIDING FOR STATUTORY DEDUCTION O F 30% , NE T NOTIONAL RENTAL INCOME WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE LD. CIT(A), WHILE CONFIRMING THE ACTION OF LD. AO, DIRECTED HIM TO ADOPT THE RENT AL VALUE OF RS. 119/ - PER SQUARE FEET . AGGRIEVED, THE ASSESSEE I S IN FURTHER APPEAL BEFORE US. 3. WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN ASSESSEES FAVOR IN VARIOUS DECISIONS OF THIS TRIBUNAL, FEW OF WHICH ARE AS FOLLOWS: - APPELLANT RESPONDENT ITA NO. ORDER DATE A.Y. C.R. DEVELOPMENTS PVT. LTD. JCIT - 8(1)(OSD), MUMBAI 4277/MUM/2012 13.05.2015 2009 - 10 RUNWAL CONSTRUCTIONS ACIT CENTRAL CIRCLE - 4(1) MUMBAI. 5408/MUM/2016 22.02.2018 2012 - 13 PROGRESSIVE HOMES ACIT, CIRCLE - 4(4), MUMBAI. 5082/MUM/2016 16.05.2018 2012 - 13 ACIT , MUMBAI. HAWARE CONSTRUCTION PVT. LTD. 3321/MUM/2016 3172/MUM/2016 31.08.2018 2009 - 10 2011 - 12 HAWARE ENGINEERS & BUILDERS PVT. LTD, DCIT, CENTRAL CIRCLE - 4(2), MUMBAI. 7155/MUM/2016 10.10.2018 2012 - 13 FERANI HOTELS PVT. LTD. ACIT, CENTRAL CIRCLE - 4(1), MUMBAI. 6332/M/2016 21.12 .2018 2012 - 13 PALM GROVE BEACH HOTELS PVT. LTD . DCIT, CC 4(1) 1973/M/2019 01.07.2021 2014 - 15 ARIHANT ESTATE PVT. LTD. ITO 346/M/2019 06.01.2021 2014 - 15 IN ALL THE ABOVE DECISIONS, IT HAS BEEN HELD THAT ADDITION OF NOTIONAL RENTAL VALUE ON UNSOLD INVE NTORIES OF FLATS IN CASE OF REAL ESTATE BUILDER/ M/S REPTON PROPERTIES PVT. LTD. ASSESSMENT YEAR: 2012 - 13 3 DEVELOPER IS NOT SUSTAINABLE. THE AFORESAID DECISIONS HAVE BEEN RENDERED AFTER CONSIDERING THE DECISION OF HONBLE DELHI HIGH COURT AS RELIED UPON BY LOWER AUTHORITIES. KEEPING IN VIEW THE CONSISTENT STAND O F THIS TRIBUNAL, WE HOLD THAT I F A N IMMOVEABLE PROPERTY IN THE SHAPE OF FLATS / SHOPS IS HELD AS STOCK - IN - TRADE, THEN IT BECOMES PART OF TRADING OPERATIONS FOR THE ASSESSEE AND AS A NATURAL COROLLARY, ANY INCOME DERIVED THERE - FROM WOULD BE BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. THIS BEING SO, NOTIONAL RENTAL VALUE ON UNSOLD INVENTORIES COULD NOT BE ADDED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. R ESULTANTLY, THE IMPUGNED ADDITIONS AS CONFIRMED BY FIRST APPELLATE AUTHORITY STAND DELETED. 4. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 09 TH AUGUST, 2021. SD/ - SD/ - (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 09/08/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPO NDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.