HAWARE INFOTECH LTD, NAVI MUMBAI V. DCIT CC 4(2), MUMBAI

ITA 281/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4110 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Deemed to accrue or arise in india
• Section: 143(1)

Judgement Text

P A G E | 1 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS.281 & 291/MUM/2018 (ASSESSMENT YEARS: 2013 - 14 & 2014 - 15 ) HAWARE INFOTECH LTD. 413/416 VARDHAMAN MARKET SECTOR 17, DBC, VASHI, NAVI MUMBAI 400 705 VS. ACIT - CENTRAL CIRCLE - 4(2) AIR INDIA BUILDING, 19 TH FLOOR, NARIMAN POINT, MUMBAI 400 021 PAN AABCH1613G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RUTURAJ H. GURJAR , A.R RESPONDENT BY: SHRI MANOJ KUMAR SINGH, D.R DATE OF HEARING: 02 .05.2019 DATE OF PRONOUNCEMENT: 0 8 .05.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 52, MUMBAI, DATED 31.10.2017 FOR A.Y. 2013 - 14 AND A.Y. 2014 - 15, WHICH IN TURNS ARISES FROM THE RESPECTIVE ASSESSMENT ORDERS PASSED UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT I - T ACT). AS COMMON ISSUE S ARE INVOLVED IN THE AFOREMENTION ED APPEALS, THEREFORE , THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER. WE SHALL FIRST ADVERT TO THE APPEAL OF THE ASSESSEE FOR A.Y. 2013 - 14. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROU NDS OF APPEAL : P A G E | 2 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER (AO) IN CHARGING NOTIONAL INCOME AS INCOME FROM HOUSE PROPERTIES IN RESPECT OF U NSOLD UNITS (BOTH RESIDENTIAL/ COMMERCIAL), WHICH WERE HELD BY THE A PPELLANT AS ITS STOCK IN TRADE. 2. WITHOUT PREJUDICE TO THE GROUND TAKEN ABOVE, THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ALV OF THE UNSOLD UNITS (BOTH RESIDENTIAL/ C OMMERCIAL) HELD BY THE APPELLANT AS STOCK IN TRADE AT RS.7,43,420/ - , THE ESTIMATION SO MADE IS HIGHLY EXORBITANT. 3. THE APPELLANT RESERVES ITS RIGHT TO ADD TO, ALTER, AMEND, MODIFY OR DELETE ANY OF THE GROUNDS TAKEN IN THIS APPEAL. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF DEVELOPER OF REAL ESTATE S HAD FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 30.11.2013, DECLARING INCOME OF RS.18,38,950/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR S CRUTINY ASSESSMENT UNDER SEC. 143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD DEVELOPED A PROPERTY I.E A PLOT NO. 16, 30 - A , VASHI , UNDER THE NAME AND STYLE OF VASHI INFOTECH PARK . IT WAS OBSERVED BY THE A.O THAT THE C LOSING STOCK IN RESPECT OF THE COMPLETED UNITS NOT SOLD DURING THE YEAR UNDER CONSIDERATION AMOUNTED TO RS. 87,46,11,119/ - . INSOFAR THE PROJECT AT 39/3/30 - A VIZ. HAWARE INFOTECH PAR K WAS CONCERNED, THE SAME WAS UNDER CONSTRUCTION AN D WAS YET NOT COMPLETED DURING THE YEAR. THE A.O BEING OF THE VIEW THAT THE A NNUAL LETTABLE VALUE (FOR SHORT ALV) OF THE AFORESAID CLOSING STOCK OF FINISHED UNSOLD COMPLETED UNITS OF THE PROJECT VIZ. VASHI INFOTECH PARK WAS LIABLE TO BE BROUGHT TO TA X UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THUS CALLED UPON THE ASSESSEE TO PUT FORTH ITS EXPLANATION AS REGARDS THE SAME. THE A . O WHILE CONCLUDING AS HEREINABOVE TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. AN SAL HOUSING FINANCE & LEASING COMPANY LD. (2013) 354 ITR 180 (DEL) AND THE P A G E | 3 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) ORDERS OF THE ITAT, MUMBAI, IN THE CASE OF OMPRAKASH & COMPANY (2004) 87 TTJ 183 (MUM) & CHEMMECK PVT. LTD. ( 2002) 83 ITD 427 (MUM) . IN THE BACKDROP OF HIS AFORESAID DELIBERATIONS , THE A.O CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS ALONG WITH WORKING OF THE ALV OF THE AFORESAID UNITS . IN REPLY, THE ASSESSEE SUBMITTED THAT AS THE AFORESAID UNITS WERE HELD BY IT AS A DEVELOPER, THEREFORE, THE ALV OF THE SAME COULD NOT BE BROU GHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE AFORESAID CONTENTION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. IN FACT, THE A.O WAS OF THE VIEW THAT AS THE ASSESSEE WAS THE O WNER OF THE AFORESAID COMPLETED UNITS AND WAS OCCUP YING THE SAID PROPERTIES WITH THE FULL RIGHT TO S ELL THE SAME, THEREFORE, THE ALV OF THE SAME WAS LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY . AS THE ASSESSEE FAILED TO PROVIDE THE DETAILS AS REGARDS THE ALV OF THE AFORESAID SHOPS AND UNITS, THEREFORE, THE A.O ESTIMATED T HE SAME @ 8.5% OF THE COST OF CONSTRUCTION OF THE SAID PROPERTY. ON THE BASIS OF HIS AFORESAID OBSERVATIONS, THE A.O WORKED OUT THE TOTAL DEEMED INCOME FROM HOUSE PROPERTY AT RS.7,43,420/ - (I.E @ 8.5% OF RS. 87,46,129/ - ). ACCORDINGLY, AFTER ALLOWING DEDUCTION UNDER SEC. 24(B) I.E @ 30% OF THE ALV OF RS.7,43,420/ - , THE A.O MADE A NET ADDITION OF RS. 5, 20,394/ - [RS.743,420/ - ( - ) 30% OF RS.7,43,420/ - ]. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE CIT(A). HOWEVER, THE CIT(A) OBSERVING THAT THE ISSUE INVOLVED WAS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE & LEASING COMPANY LTD. (2013) 354 ITR 180 (DEL), THUS AFTER NECESSARY DELIBERATIONS UPHELD THE VIEW TAKEN BY THE A.O AND SUSTAINED THE ADDITION OF RS.5,20,394/ - MADE BY HIM. P A G E | 4 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (F OR SHORT A.R) FOR THE ASSESSEE , AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT CASE WAS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PR. CIT, CENTRAL - 1 VS. M/S CLASS IQUE ASSOCIATES LTD. (ITA NO.1216 OF 2016, DATED 28.01.2019) (BOM) . IT WAS SUBMITTED BY THE LD. A.R THAT THE HONBLE HIGH COURT IN ITS AFOREMENTIONED JUDGMENT HAD AFTER REFERRING TO THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. N EHA BUILDER (P) LTD. (2008) 296 ITR 661 (GUJ) HAD C O N CURRED WITH THE VIEW THEREIN TAKEN , AND HAD OBSERVED THAT THE INCOME GENERATED BY AN ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF ACQUIRING AND HOLDING PROPERTIES WOULD BE ITS BUSINESS INCOME AND NOT IN COME UNDER THE HEAD HOUSE PROPERTY. APART THERE FROM, THE LD. A.R RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NEHA BUILDER (P) LTD. (2008) 296 ITR 661 (GUJ). FURTHER, IT WAS SUBMITTED BY THE LD. AR THAT A SIMILAR ISSUE HAD BEEN ADJUDICATED IN THE CASE OF IT S SISTER CONCERN S VIZ.(I) HAWARE ENGINEERS & BUILDERS PVT. LTD. VS. ACIT, CENTRAL CIRCLE - 4(2), MUMBAI, (ITA NO.282 &283/MUM/2018; AND (II) ACIT VS. HAWARE CONSTRUCTION PVT. LTD. (ITA NO. 3321/MUM/2016 & 3172/MUM/201 6, DATED 31.08.2018). IT WAS THUS SUBMITTED BY TH E LD. A.R THAT THE LOWER AUTHORITIES HAD GRAVELY ERRED IN CONCLUDING THAT THE ALV OF THE PROPERTIES HELD BY THE ASSESSEE AS C LOSING STOCK OF ITS BUSINESS OF DEVELOPER OF REAL ESTATE WAS TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER S OF THE LOWER AUTHORITIES. P A G E | 5 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) 7. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD AND JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM . ADMITTEDLY, THE ASSESSEE WHO IS A DEVELOPER OF REAL ESTATE HAD DEVELOPED A PROPERTY VIZ. PROJECT AT PLOT NO. 16 - 30 - A, VASHI, UNDER THE NAME AND S TYLE OF VASHI INFOTECH PAR K . AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, THE ASSESSEE WAS HOLDING CLOSING STOCK OF FINISHED UNSOLD UNIT S IN VASHI INFOTECH PARK OF RS.87,46,129/ - . IN SUM AND SUBSTANCE, THERE IS NO DISPUTE ON THE FACT THAT THE FINISHED UNSOLD UNITS IN VASHI INFOTECH PARK WERE HELD BY THE ASSESSEE AS THE CLOSING STOCK O F ITS BUSINESS AS THAT OF A DEVELOPER OF REAL ESTATE . 8. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE ASSESSEE FOR ADJUDICATING, AS TO WHETHER THE CIT(A) IS RIGHT IN LAW AND THE FACTS OF THE CASE IN CONCURRING WITH THE A.O THAT THE ANNUAL LETTABLE VALUE OF THE VACANT UNSOLD UNITS HELD BY THE ASSESSEE AS STOCK - IN - TRADE OF ITS BUSINESS OF A REAL ESTATE DEVELOPER, WERE LIABLE TO BE B ROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY, OR NOT. ADMITTEDLY, THE ASSESSEE ON 31.03.2013 WAS HOLDING STOCK - IN - TRADE OF VACANT UNSOLD COMPLETED FLATS/SHOPS OF RS.87,4 6 ,1 2 9/ - . THE A.O DRAWING SUPPORT FROM THE JUDGMENT OF THE HONBLE HIGH COU RT OF DELHI IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE AND LEASING COMPANY LTD. (2013) 354 ITR 180 (DEL), HAD CONCLUDED THAT THE ALV OF THE AFORESAID VACANT PROPERTIES HELD BY THE ASSESSEE AS STOCK - IN - TRADE OF ITS BUSINESS OF REAL ESTATE DEVELOPER, WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AS THE ASSESSEE FAILED TO FURNISH THE DETAILS AS REGARDS THE ANNUAL RATEABLE VALUE OF THE AFOREMENTIONED PROPERTIES, THEREFORE, THE A.O ESTIMATED THE ALV OF THE SAID PROPERTIES @ 8.5% OF THE AGGREGATE COST OF THEIR CONSTRUCTION AND WORKED OUT THE SAME AT RS.7,43,420/ - (I.E P A G E | 6 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) 8.5% OF 87,46,1 2 9/ - ). FURTHER, AFTER ALLOWING THE STATUTORY DEDUCTION UNDER SEC. 24(B) @ 30% OF THE ALV OF RS. 7,43,420/ - , THE A.O BROUGHT THE BALANCE AMOUNT OF RS.5,20,394/ - TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 9 . WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION, IN THE BACKDROP OF THE OBSERVATIONS OF THE LOWER AUTHORITIES. WE FIND THAT THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NEHA BUILDERS (P) LTD. (2008) 296 ITR 661 (GUJ) , HAD OBSERVED THAT IF THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT PROPERTY AND SELL IT OR TO CONSTRUCT AND LET OUT THE SAME, THEN ANY INCOME DERIVED FROM THE IMMOVABLE PROPERTIES HELD BY IT AS ITS S TOCK - IN - TRADE CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE HONBLE HIGH COURT WHILE CONCLUDING AS HEREIN ABOVE, HAD OBSERVED AS UNDER: 8. TRUE IT IS, THAT INCOME DERIVED FROM THE PROPERTY WOULD ALWAYS BE TERMED AS INCOME FROM THE PROPERTY, BUT IF THE PROPERTY IS USED AS 'STOCK - IN - TRADE', THEN THE SAID PROPERTY WOULD BECOME OR ' PARTAKE THE CHARACTER OF THE STOCK, AND ANY INCOME DERIVED FROM THE STOCK, WOULD BE 'INCOME' FROM P THE BUSINESS, AND NOT INCOME FROM THE PROPERTY. IF THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPERTY AND SELL IT OR TO CONSTRUCT AND LET OUT THE SAME, THEN THAT WOULD BE THE 'BUSINESS' AND THE BUSINESS STOCKS, WHICH MAY INCLUDE MOVABLE AND IMMOVABLE, WOULD BE TAKEN TO BE STOCK - IN - TRADE, AND ANY INCOM E DERIVED FROM SUCH STOCKS CANNOT BE TERMED AS 'INCOME FROM PROPERTY'. EVEN OTHERWISE, IT IS TO BE SEEN THAT THERE WAS DISTINCTION BETWEEN THE 'INCOME FROM BUSINESS' AND 'INCOME FROM PROPERTY' ON ONE SIDE, AND 'ANY INCOME FROM OTHER SOURCES'. THE TRIBUNAL, IN OUR CONSIDERED OPINION, WAS ABSOLUTELY UNJUSTIFIED IN COMPARING THE RENTAL INCOME WITH THE DIVIDEND INCOME ON THE SHARES OR INTEREST INCOME ON THE DEPOSITS. EVEN OTHERWISE, THIS QUESTION WAS NOT RAISED BEFORE THE SUBORDINATE TRIBUNALS AND, ALL OF SUDDE N, THE TRIBUNAL STARTED APPLYING THE ANALOGY. 10 . FURTHER, WE FIND THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PCIT, CENTRAL - 1 VS. M/S CLASSIQUE ASSOCIATE LTD. (ITA NO.1216 OF 2016, DATED 28.01.2019) C ONCURRING WITH THE VIEW TAKEN P A G E | 7 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NEHA BUILDERS PVT. LTD. (2008) 296 ITR 661 (GUJ) , AND FURTHER RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT (2015) 377 ITR 673 (SC) , HAD OBSER VED , THAT THE INCOME GENERATED BY AN ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF ACQUIRING AND HOLDING PROPERTIES FROM SUCH SOURCE WOULD BE ITS BUSINESS INCOME AND NO T ITS INCOME UNDER THE HEAD HOUSE PROPERTY. ALSO, WE FIND THAT THE TRIBUNAL WHILE DISP OSING OFF THE APPEAL IN THE CASE OF THE SISTER CONCERN OF THE ASSESSEE IN HAWARE ENGINEERS AND BUILDERS PVT. LTD. VS. DCIT, CENTRAL CIRCLE - 4(2), MUMBAI [ITA NO. 7155/MUM/2016, DATED 10.10.2018], HAD CONCLUDED THAT IF AN IMMOVABLE PROPERTY IN THE SHAPE OF FLATS/SHOPS IS HELD BY THE ASSESSEE AS STOCK - IN - TRADE OF ITS BUSINESS, THEN IT BECOMES PART OF ITS TRADING OPERATIONS, AND ANY INCOME DERIVED THERE FROM WOULD BE ITS BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. ON THE BASIS OF THE AFORESAID DEL IBERATIONS, THE TRIBUNAL WHILE DISPOSING OFF THE AFORESAID APPEAL HAD VACATED THE ADDITION OF THE ALV THAT WAS MADE BY THE LOWER AUTHORITIES IN RESPECT OF THE FLATS/SHOPS WHICH WERE HELD BY THE ASSESSEE BEFORE THEM AS STOCK - IN - TRADE OF ITS BUSINESS OF A REAL ESTATE DEVELOPER. IN FACT, THE TRIBUNAL WHILE CONCLUDING AS HEREINABOVE, HAD PRIMARILY RELIED ON THE VIEW EARLIER TAKEN BY IT IN THE CASE OF ANOTHER SISTER CONCERN OF THE ASSESSEE VIZ. ACIT VS. HAWARE CONSTRUCTION PVT. LTD. [ITA NO.3321/MUM/2018 & 3 172/MUM/2016, DATED 31.08.2018]. APART THERE FROM, THE TRIBUNAL HAD ALSO DRAWN SUPPORT FROM THE ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL VIZ. (I) M/S RUNWAL CONSTRUCTION VS. ACIT [ITA NO. 5408/MUM/2016, DATED 22.02.2018]; AND (II). PROGRESSIVE HOME S VS. ACIT [ITA NO.5082 /MUM/2016, DATED 16.05.2018]. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. IT MAY P A G E | 8 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) ALSO BE RELEVANT AND PERTINENT T O POINT OUT THAT THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL IN THE CASE OF THE SISTER CONCERN OF THE ASSESSEE VIZ. ACIT VS. HAWARE CONSTRUCTION PVT. LTD. [ITA NO.3321/MUM/2018 & 3172/MUM/2016, DATED 31.08.2018] HAD DULY CONSIDERED THE JUDGMENT OF THE HO NBLE HIGH COURT OF DELHI IN CIT VS. ANSAL HOUSING FINANCE & LEASING COMPANY LTD. (2013) 354 ITR 180 (DEL). 11. WE THUS IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS , RESPECTFULLY FOLLOWING THE AFORESAID SETTLED POSITION OF LAW, VACATE THE ADDITION OF RS.5,20,394/ - (I.E NET ALV ) MADE BY THE A.O TOWARDS DEEMED INCOME FROM HOUSE PROPERTY, WHICH THEREAFTER WAS SUSTAINED BY THE CIT(A). THE ORDER OF THE CIT(A) IS SET AS IDE IN TERMS OF OUR AFORESAID OBSERVATIONS. 12 . THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 291/MUM/2018 A.Y. 2014 - 15 1 3 . WE SHALL NOW ADVERT TO THE APPEAL OF THE ASSESSEE FOR A.Y. 2014 - 15. BRIEFLY STATED, THE ASSESSEE COMPANY HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2014 - 15 ON 14.11.2014 , DECLARING TOTAL INCOME OF RS.21,12,227/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY ASSESSMENT UNDER SEC. 143(2). 1 4 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O OBSERVED THAT THE ASSESSEE WAS HOLDING CLOSING STOCK OF FINISHED UNSOLD UNITS IN THE PROJECT, VIZ. (I) VASHI INFOTECH PARK; AND (II) HAWARE INFOTECH PARK OF A VALUE (COST OF CONSTRUCTION) OF RS.54,29,432/ - AND RS.43,72,09,039/ - , RESPECTIVELY. THE A.O RELYING ON THE JUDGMENT OF P A G E | 9 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE & LEASING COMPANY LTD. (2013) 354 ITR 180 (DEL) AND THE DECISION S OF THE ITAT, MUMBAI IN THE CASE OF OMPRAKASH & CO. ( 2004) 87 TTJ 183 (MUM) & CHEMMECH PVT. LTD. ( 2002) 83 ITD 42 (MUM) , WAS OF THE VIEW THAT THE ALV OF THE FINISHED UNSOLD UNITS HELD BY THE ASSESSEE IN THE AFORESAID PROJECTS I.E VASHI INFOTECH PARK & HAWARE INFOTECH PARK WE RE LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON THE BASIS OF HIS AFORESAID OBSERVATIONS , THE ALV OF THE PROPERTIES I.E @ 8.5% OF THEIR RESPECTIVE COST OF CONSTRUCTION WAS BROUGHT TO TAX BY THE A.O UND ER THE HEAD INCOME FROM HOUSE PROPERTY . ACCORDINGLY, THE TOTAL DEEMED INCOME OF THE ASSESSEE FROM HOUSE PROPERTY WAS WORKED OUT AT RS.3,76,24,270/ - . FURTHER, AFTER ALLOWING DEDUCTION UNDER SEC. 24(B) I.E @ 30% OF THE ALV OF RS.3,76,24,270/ - , THE NET A DDITION OF RS.2,63,36,989/ - WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 1 5 . AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT FINDING FAVOUR WITH THE CONTENTION S ADVANCED BY THE ASSESSEE UPHELD THE AFORESAID ADDITION. 1 6 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL REMAINS THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE ASSES SEE FOR THE IMMEDIATELY PRECEDING YEAR I.E A.Y. 2013 - 14 IN ITA NO. 281/MUM/2018, THEREFORE, OUR ORDER PASSED WHILE DISPOSING OFF THE AFORESAID APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSING OFF THE PRESENT APPEAL I.E A.Y. 2014 - 15 IN ITA N O. 291/MUM/2018. 1 7 . ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. P A G E | 10 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2) 1 8 . THE APPEALS FILED BY THE ASSESSEE FOR A.Y. 2013 - 14 IN ITA NO. 281/MUM/2018 AND FOR A.Y. 2014 - 15 IN ITA NO. 291/MUM/2018 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 8 .05.2019 S D / - S D / - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 08 .0 5 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . P A G E | 11 ITA NOS. 281 & 291/MUM/2018 A.YS. 2013 - 14 & 2014 - 15 HAWARE INFOTECH LTD. VS. ACIT, CC - 4(2)