UNIQUE ESTATES DEVELOPMENT CO. LTD., MUMBAI V. DCIT -CC- 4(1), MUMBAI

ITA 2811/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1474 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 04-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Business income; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS.2811 & 2812/MUM/2018 ASSESSMENT YEARS : 2013-14 & 2014-15 UNIQUE ESTATES DEVELOPMENT CO. LTD. CONSTRUCTION HOUSE B- 2 ND FLOOR, 623 LINKING ROAD, KHAR (W), MUMBAI 400 052. PAN AAACU0699N VS. DCIT CC 4(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY SAWANT RESPONDENT BY : SHRI RAJEEV GUBGOTRA DATE OF HEARING : 07.08.2019 DATE OF PRONOUNCEMENT : 22 .08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THE CAPTIONED APPEALS FILED BY THE ASSESSEE PERTAIN ING TO A.Y. 2013-14 AND 2014-15 ARE DIRECTED AGAINST TWO SEPARATE ORDER S, BOTH DATED 12.03.2018 PASSED BY THE CIT(A)-52, MUMBAI, WHICH IN TURN ARIS E OUT OF ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER 'THE ACT'). 2. THE ONLY ISSUE RAISED IN APPEAL FOR A.Y. 2013-14 IS AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE DISALLOWANCE OF RS 6.52,2 43/- AS MADE BY THE AO BY ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 2 ESTIMATING THE ANNUAL LETTING VALUE (ALV) OF UNSOLD FLATS FORMING PART OF CLOSING STOCK IN TRADE AND ASSESSING THE SAME AS INCOME FR OM HOUSE PROPERTY. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE IS HOLDING SOME UNSOLD FLATS IN VARIOUS PR OJECTS CONSTRUCTED BY THE ASSESSEE AS STOCK-IN-TRADE. ACCORDING TO THE AO S AID FLATS CONSTITUTE PROPERTY IN THE HANDS OF THE ASSESSEE AND LIABLE TO BE ASSES SED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND, THUS, ESTIMATED THE ALV A T RS 9,31,776/-. FURTHER, THE AO AFTER ALLOWING DEDUCTION OF 30% TOWARDS STAT UTORY ALLOWANCE OF RS 2,79,533/- ADDED AN AMOUNT OF RS 6,52,243/- TO THE NET TAXABLE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE LEARNED AR SUBMITTED BEFORE THE BENCH THAT THE ISSUE IS SQUARE LY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH, VIDE ORDER DATED 20.03.2019, IN THE CASE OF ASSESSEES SISTER CONCER N MAKEWAVES SEA RESORT PVT. LTD. IN ITA NOS. 36 & 37/MUM/2018 FOR A.Y. 2013-14 AND 2014-15. IT IS SUBMITTED THAT SIMILAR ADDITION MADE BY THE ESTIMAT ING THE NOTIONAL RENT IN RESPECT OF UNSOLD FLATS WAS DELETED BY THE TRIBUNAL . THE LEARNED AR PRAYED BEFORE THE BENCH THAT THE ADDITION AS MADE BY THE A O ESTIMATING THE ALV OF UNSOLD FLATS BE DELETED BY FOLLOWING THE AFOREMENTI ONED ORDER OF THE TRIBUNAL. 4. THE LEARNED DR STRONGLY OBJECTED TO THE ARGUMENT S OF AR BY SUBMITTING THAT THE AO HAS RIGHTLY TREATED THE UNSOLD FLATS AS PROPERTY LIABLE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. HE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GUNDECHA B UILDERS [2019] 102 ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 3 TAXMANN.COM 27 (BOM). THE LEARNED AR SUBMITTED THA T IN THE SAID CASE THE ASSESSEE HAS RECEIVED RENTAL INCOME FROM UNSOLD PRO PERTY CONSTRUCTED BY IT, WHICH WAS HELD BY THE AO TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME TREATED BY THE ASSESSEE. T HE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WHEREIN INCOME WAS HELD TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. 5. AFTER HEARING BOTH THE PARTIES AND PERUSAL OF MA TERIAL AVAILABLE ON RECORD, WE OBSERVE THAT THE ISSUE OF ESTIMATION OF NOTIONAL RENT IN RESPECT OF UNSOLD PLOTS HAS BEEN DECIDED IN THE CASE OF ASSESS EES SISTER CONCERN MAKEWAVES SEA RESORT PVT. LTD (SUPRA), WHEREIN IT H AS BEEN HELD AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISI ON RELIED UPON BY THE ASSESSEE. AS POINTED OUT BY THE LD. COUNSEL THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE AS SESSEE IN THE CASE OF FERANI HOTELS LTD. VS. ACIT (SUPRA). THE FINDING S OF THE COORDINATE BENCH ARE AS UNDER:- 6. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED TH E CONFIRMATION OF THE ADDITION OF RS.13,22,90,044/- U NDER THE HEAD OF INCOME FROM HOUSE PROPERTY ON ACCOUNT OF DE EMED INCOME FROM UNSOLD UNIT/ FLAT WHICH WAS CLOSING STO CK OF THE APPELLANT AS PER PROVISIONS OF SECTIONS 22 AND 23 O F THE ACT. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE A SSESSEE HAS ARGUED THAT THE ASSESSEE IS DERIVING ITS INCOME FROM HOTEL BUSINESS AND CONSTRUCTION. THE ASSESSEE WAS A LSO DERIVING INCOME FROM DIVIDEND, SHARE OF PROFIT AND SALE OF FLATS AND DUE TO THE RECESSION, THE ASSESSEE FAILED TO SOLD OUT ALL THE FLATS, THEREFORE, SOME FLATS REMAIN VACANT WHICH WAS BEING TREATED AS STOCK IN TRADE. THE AO HAS WRONGLY ASSESSED THE NOTIONAL RENT AND ASSESSED THE RENT IN VIEW OF THE PROVISION U/S 24 OF THE ACT WRONGLY WHICH CAN ONLY BE TREATED ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 4 UNDER THE HEAD OF INCOME FROM BUSINESS, THEREFORE, THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACT S AND IS LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE CASE OF RUNWAL CON STRUCTION VS. ACIT IN ITA. NO. 5408/M/2016 & C.R. DEVELOPMENT S VS. JCIT IN ITA. NO. 4277/M/2012 DATED 13.05.2015. HOWE VER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DE PARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF TH E FACTS OF THE CASE AND RELEVANT RECORD ON THE FILE, WE NOTICE D THAT THE OBJECT OF THE ASSESSEE IS DERIVING OF INCOME FROM H OTEL BUSINESS AND CONSTRUCTION. THE ASSESSEE COMPANY IS RUNNING A FIVE STAR HOTEL IN THE NAME AND STYLE OF THE CARL TON AT KODAIKANNAL, TAMIL NADU, HAVING ROOMS AND OTHER FAC ILITIES. THE ASSESSEE ALSO DERIVED INCOME FROM DIVIDEND, SHA RE OF PROFIT FROM PARTNERSHIP FIRM AND PROFIT FROM SALE O F FLATS. THE ASSESSEE FAILED TO SOLD THE FLAT WHICH WAS BEING TR EATED BY HIM AS STOCK IN TRADE. THE AO ASSESSED THE NOTIONAL INCOME AND BROUGHT TO TAX AS INCOME AS HOUSE PROPERTY WHIC H HAS NO DOUBT CONFIRMED BY CIT(A). IT IS TO BE SEEN WHET HER THE INCOME OF THE ASSESSEE IS LIABLE TO BE TREATED AS H OUSE PROPERTY OR BUSINESS INCOME. IT IS NECESSARY TO DIS CUSS THE FINDING IN THE CASE OF M/S. RUNWAL CONSTRUCTIONS VS . ACIT IN ITA. NO.5409/M/2016 DATED 22.02.2018 WHICH HAS BEEN GIVEN IN PARA NO. 7 TO 10 AND ARE HEREBY REPRODUCED AS UNDER.: - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIO NS RELIED UPON. IT IS AN UNDISPUTED FACT THAT THE ASSESSEES A RE IN THE BUSINESS OF BUILDERS, DEVELOPERS AND CONSTRUCTION. BOTH THE ASSESSEES HAVE CONSTRUCTED VARIOUS PROJECTS AND THE PROJECTS WERE TREATED AS STOCK IN TRADE IN THE BOOKS OF ACCO UNT. FLATS SOLD BY THE ASSESSEES WERE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THERE WERE CERTAIN UNSOLD FLATS IN STOCK IN TRADE WHICH THE AO TREATED AS PROPERTY ASSESSABLE U NDER THE HEAD INCOME FROM HOUSE PROPERTY AND COMPUTED NOTI ONAL ANNUAL LETTING VALUE ON SUCH UNSOLD FLATS PLACING R ELIANCE ON THE DECISION IN THE CASE OF ANSAL HOUSING FINANCE & LEASING CO. LTD. (SUPRA). THE ACTION OF THE AO WAS UPHELD B Y THE LEARNED CIT(A). 8. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N EHA BUILDERS PVT. LTD. (SUPRA) CONSIDERED THE QUESTION WHETHER ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 5 THE RENTAL INCOME RECEIVED FROM ANY PROPERTY IN THE CONSTRUCTION BUSINESS CAN BE CLAIMED UNDER THE HEAD INCOME FROM PROPERTY EVEN THOUGH THE SAID PROPERTY WAS IN CLUDED IN THE CLOSING STOCK. THE HON'BLE GUJARAT HIGH COURT H ELD THAT IF THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PR OPERTY 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 I N TRADE AND ANY INCOME DERIVED FROM SUCH STOCKS CANNOT BE T ERMED AS INCOME FROM HOUSE PROPERTY. WHILE HOLDING SO THE HON'BLE HIGH COURT OBSERVED AS UNDER: - 8. TRUE IT IS, THAT INCOME DERIVED FROM THE PROPER TY WOULD ALWAYS BE TERMED AS 'INCOME' FROM THE PROPERT Y, BUT IF THE PROPERTY IS USED AS 'STOCK-IN-TRADE', THEN THE SAID PROPERTY WOULD BECOME OR PARTAKE THE CHARACTER OF T HE STOCK, AND ANY INCOME DERIVED FROM THE STOCK, WOULD BE 'IN COME' FROM THE BUSINESS, AND NOT INCOME FROM THE PROPERTY . IF THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPER TY AND SELL IT OR TO CONSTRUCT AND LET OUT THE SAME, THEN THAT WOULD BE THE 'BUSINESS' AND THE BUSINESS STOCKS, WHICH MAY I NCLUDE MOVABLE AND IMMOVABLE, WOULD BE TAKEN TO BE 'STOCK- IN- TRADE', AND ANY INCOME DERIVED FROM SUCH STOCKS CAN NOT BE TERMED AS 'INCOME FROM PROPERTY'. EVEN OTHERWISE, I T IS TO BE SEEN THAT THERE WAS DISTINCTION BETWEEN THE 'INCOME FROM BUSINESS' AND 'INCOME FROM PROPERTY' ON ONE SIDE, A ND 'ANY INCOME FROM OTHER SOURCES'. THE TRIBUNAL, IN OUR CO NSIDERED OPINION, WAS ABSOLUTELY UNJUSTIFIED IN COMPARING TH E RENTAL INCOME WITH THE DIVIDEND INCOME ON THE SHARES OR IN TEREST INCOME ON THE DEPOSITS. EVEN OTHERWISE, THIS QUESTI ON WAS NOT RAISED BEFORE THE SUBORDINATE TRIBUNALS AND, AL L OF SUDDEN, THE TRIBUNAL STARTED APPLYING THE ANALOGY. 9. FROM THE STATEMENT OF THE ASSESSEE, IT WOULD CLEARLY APP EAR THAT IT WAS TREATING THE PROPERTY AS 'STOCK-IN TRADE'. NOT ONLY THIS, IT WILL ALSO BE CLEAR FROM THE RECORDS THAT, EXCEPT FO R THE GROUND FLOOR, WHICH HAS BEEN LET OUT BY THE ASSESSEE, ALL OTHER PORTIONS OF THE PROPERTY CONSTRUCTED HAVE BEEN SOLD OUT. IF THAT BE SO, THE PROPERTY, RIGHT FROM THE BEGINNING WAS A 'STOCK-IN-TRADE'. 9. SIMILARLY THE COORDINATE BENCH HAS CONSIDERED SIMILAR ISSUE AS TO WHETHER THE UNSOLD PROPERTY WHI CH IS HELD AS STOCK IN TRADE BY THE ASSESSEE CAN BE ASSESSED U NDER THE HEAD INCOME FROM HOUSE PROPERTY BY NOTIONALLY COM PUTING THE ANNUAL LETTING VALUE FROM SUCH PROPERTY AND THE ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 6 COORDINATE BENCH CONSIDERING THE DECISION OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINAN CE & LEASING CO. LTD. (SUPRA) WHICH THE AO RELIED UPON A ND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT REPORTED IN 3 73 ITR 673, HELD THAT UNSOLD FLATS WHICH ARE IN STOCK IN T RADE SHOULD BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND TH ERE IS NO JUSTIFICATION IN ESTIMATING RENTAL INCOME FROM THOS E FLATS AND NOTIONALLY COMPUTING ANNUAL LETTING VALUE UNDER SEC TION 23 OF THE ACT. WHILE HOLDING SO THE COORDINATE BENCH OBSE RVED AS UNDER: - 3. THE LD. AR PLACED THE ORDER OF BOMBAY TRIBUNAL IN THE CASE OF M/S PERFECT SCALE COMPANY PVT. LTD., IT A NOS.3228 TO 3234/MUM/2013, ORDER DATED 6-9-2013, WH EREIN IT WAS HELD THAT IN RESPECT OF ASSETS HELD AS BUSIN ESS, INCOME FROM THE SAME IS NOT ASSESSABLE U/S.23(1) OF THE IT ACT. 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSI NG FINANCE & LEASING CO. LTD., 354 ITR 180 (DELHI) IN SUPPORT OF THE PROPOSITION THAT EVEN IN RESPECT OF UNSOLD FLAT S BY THE DEVELOPER IS LIABLE TO BE TAXED AS INCOME FROM HOUS E PROPERTY. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE UNDER CONSIDERATION HAS BEEN RESTORED BY THE CIT(A) TO THE FILE OF AO TO COMPUTE THE ANNUAL VALUE. RECENTLY THE HON BLE SUPREME COURT IN THE CASE OF M/S CHENNAI PROPERTIES & INVES TMENTS LTD. VS. CIT, REPORTED IN (2015) 42 SCD 651, VIDE JUDGMENT D ATED 9-4-2015 HAS HELD THAT WHERE ASSESSEE COMPANY ENGAGED IN THE ACTIVITY OF LETTING OUT PROPERTIES AND THE RENTAL INCOME RECEIV ED WAS SHOWN AS BUSINESS INCOME, THE ACTION OF AO TREATING THE RENT AL INCOME AS INCOME FROM HOUSE PROPERTY IN PLACE OF INCOME FROM BUSINESS SHOWN BY THE ASSESSEE WAS HELD TO BE NOT JUSTIFIED. THE H ONBLE SUPREME COURT HELD THAT SINCE THE ASSESSEE COMPANYS MAIN O BJECT, IS TO ACQUIRE AND HELD PROPERTIES AND TO LET OUT THESE PR OPERTIES, THE INCOME EARNED BY LETTING OUT THESE PROPERTIES IS MA IN OBJECTIVE OF THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. O N THE VERY SAME ANALOGY IN THE INSTANT CASE, ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCTION AND DEVELOPMENT, WHICH IS MAIN OBJECT OF THE ASSESSEE COMPANY. THE THREE FLATS WHICH COULD NOT BE SOLD AT THE END OF THE YEAR WAS SHOWN AS STOCK-IN-TRADE. ESTIMATING RENTAL INCOME BY THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPE RTY WAS NOT ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 7 JUSTIFIED INSOFAR AS THESE FLATS WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAS INTENTION TO EARN RENT BY LETTING OUT THE FLATS. THE FLATS NOT SOLD WAS ITS STOCK-IN-TRADE AND INCOME ARISING ON ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF AO FOR ESTIMATING REN TAL INCOME FROM THESE VACANT FLATS U/S.23 WHICH IS ASSESSEES STOCK IN TRADE AS AT THE END OF THE YEAR. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY ESTIMATING LETTING VALUE OF THE FLATS U/S.2 3 OF THE I.T. ACT. 10. IN THE CASE ON HAND BEFORE US IT IS AN UNDISPUT ED FACT THAT BOTH ASSESSEES HAVE TREATED THE UNSOLD FLATS AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT AND THE FLATS SOLD BY THEM WERE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THUS, RESPECTFULLY FOLLOWIN G THE ABOVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE S TOCK IN TRADE WHEN THEY WERE SOLD THEY ARE ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS WHEN THEY ARE SOLD AND THEREFORE THE AO I S NOT CORRECT IN BRINGING TO TAX NOTIONAL ANNUAL LETTING VALUE IN RE SPECT OF THOSE UNSOLD FLATS UNDER THE HEAD INCOME FROM HOUSE PROP ERTY. THUS, WE DIRECT THE AO TO DELETE THE ADDITION MADE UNDER SEC TION 23 OF THE ACT AS INCOME FROM HOUSE PROPERTY. 7. IN THE CASE OF TITLED AS M/S. C.R. DEVELOPMENTS P. LTD. VS. JCIT. THE RELEVANT PARA IN 5 IS HEREBY REPRODUCED A S UNDER.: - 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE UNDER CONSIDERATION HAS BEEN RESTORED BY THE CIT(A) TO THE FILE OF AO TO COMPUTE THE ANNU AL VALUE. RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF M /S CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT, REPO RTED IN (2015) 42 SCD 651, VIDE JUDGMENT DATED 9-4-2015 HAS HELD THAT WHERE ASSESSEE COMPANY ENGAGED IN THE ACTIVITY OF LETTING OUT PROPERTIES AND THE RENTAL INCOME RECEIV ED WAS SHOWN AS BUSINESS INCOME, THE ACTION OF AO TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY IN PLAC E OF INCOME FROM BUSINESS SHOWN BY THE ASSESSEE WAS HELD TO BE NOT JUSTIFIED. THE HONBLE SUPREME COURT HELD THAT SINCE THE ASSESSEE COMPANYS MAIN OBJECT, IS TO ACQUIRE AND H ELD PROPERTIES AND TO LET OUT THESE PROPERTIES, THE INC OME EARNED BY LETTING OUT THESE PROPERTIES IS MAIN OBJECTIVE O F THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. O N THE VERY SAME ANALOGY IN THE INSTANT CASE, ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCTION AND DEVELOPMENT, WHICH IS MAIN OBJECT OF THE ASSESSEE COMPANY. THE THREE FLATS WHI CH COULD NOT BE SOLD AT THE END OF THE YEAR WAS SHOWN AS STO CK-IN- TRADE. ESTIMATING RENTAL INCOME BY THE AO FOR THESE THREE ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 8 FLATS AS INCOME FROM HOUSE PROPERTY WAS NOT JUSTIFI ED INSOFAR AS THESE FLATS WERE NEITHER GIVEN ON RENT NOR THE A SSESSEE HAS INTENTION TO EARN RENT BY LETTING OUT THE FLATS . THE FLATS NOT SOLD WAS ITS STOCK-INTRADE AND INCOME ARISING O N ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF AO FOR ESTIM ATING RENTAL INCOME FROM THESE VACANT FLATS U/S.23 WHICH IS ASSE SSEES STOCK IN TRADE AS AT THE END OF THE YEAR. ACCORDING LY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY ESTIMATI NG LETTING VALUE OF THE FLATS U/S.23 OF THE I.T. ACT. 8. IN THE FACTUAL POSITION OF THE PRESENT CASE IS Q UITE SIMILAR TO THE FACTS OF THE CASE MENTIONED ABOVE. IN VIEW O F THE LAW RELIED UPON THE LAW REPRESENTATIVE OF THE ASSESSEE I.E. M/S. RUNWAL CONSTRUCTIONS VS. ACIT AND M/S. C.R. DEVELOP MENTS P. LTD. VS. JCIT (SUPRA), WE ARE OF THE VIEW THAT T HE FINDING OF THE CIT(A) ON THIS ISSUE IS WRONG AGAINST LAW AN D FACTS WHEREAS THE CASE OF THE ASSESSEE HAS DULY BEEN COVE RED BY THE LAW MENTIONED ABOVE, THEREFORE, BY HONORING THE ORDERS MENTIONED ABOVE. WE DELETED THE ADDITION RAISED BY ASSESSEE ON ACCOUNT OF NOTIONAL INCOME OF VACANT FLATS. ACCO RDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGA INST THE REVENUE. 9. THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE AND THE ISSUE INVOLVED IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA). IN THE SAID CASE, THE COO RDINATE BENCH HAS DELETED THE ADDITION CONFIRMED BY THE CIT (A) ON AC COUNT OF NOTIONAL RENT DETERMINED BY THE AO BY HOLDING THAT THE ALV O F THE UNSOLD UNIT OF ASSESSEE PROJECT IS ASSESSABLE UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. SINCE, THE FINDINGS OF THE LD.CIT (A) IS NOT IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA), WE RESPECTFULLY FO LLOWING THE DECISION OF THE COORDINATE BENCH SET ASIDE THE ORDER OF THE LD. CIT (A) AND ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE ADDITION MADE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. ON PERUSAL OF THE SAID ORDER, WE FIND THAT THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND, HENCE, THE ORDER OF THE CIT(A) UPHOLDING THE ADDITION MADE BY AO ESTIMATING THE ALV IN RESPECT OF UNSOLD FLATS CANNOT BE SUSTAINED. THE DECISION RELIED UPON BY THE LEARNED DR IN THE C ASE OF CIT VS. GUNDECHA ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 9 BUILDERS (SUPRA), IS DISTINGUISHABLE ON FACTS AS IN THAT CASE THE UNSOLD PORTION OF THE PROPERTY CONSTRUCTED BY THE BUILDER WAS GIVEN O N RENT AND RENTAL INCOME WAS TREATED AS BUSINESS INCOME. WHEREAS, IN THE PR ESENT CASE, THE ASSESSEE HAS NOT LET OUT ANY FLATS AND ALL WERE LYING UNSOLD AS STOCK IN TRADE. ACCORDINGLY, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION ON ACCOUNT OF ESTIMATION OF ALV IN RESPECT OF UNSOLD FLATS FOR A.Y. 2013-14. THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE ISSUE INVOLVED IN THE APPEAL FOR A.Y. 2014-1 5 IS IDENTICAL TO THAT INVOLVED FOR A.Y. 2013-14, WHEREIN WE HAVE SET ASID E THE ORDER OF THE CIT(A) AND DELETED THE ADDITION AS MADE BY THE AO ON THIS ISSUE. THEREFORE OUR FINDING ON THIS GROUND WOULD MUTATIS MUTANDIS APPLY TO THIS APPEAL ALSO. 7. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 22 ND AUGUST, 2019. SD/- SD/- (RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22 ND AUGUST, 2019 SA ITA NOS. 2811 & 2812/MUM/2018 UNIQUE ESTATES DEVELOPMENT CO. LTD. 10 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI