Sai Spacecon India Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 6, Pune

ITA 2824/PUN/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0380 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 03-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 22

Judgement Text

आयकर अपीऱीय अधिकरण “बी” न्यायपीठ प ु णे म ें । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA No.2824/PUN/2017 नििाारण वषा / Assessment Year : 2014-15 Sai Spacecon India Pvt. Ltd., 11 th Floor, Sai Capital, Senapati Bapat Road, Pune – 411016 PAN : AAPCS8607M .......अऩीऱाथी / Appellant बिाम / V/s. Dy. Commissioner of Income Tax, Circle – 6, Pune ......प्रत्यथी / Respondent Assessee by : Shri Sunil Ganoo Revenue by : Shri S.P. Walimbe स ु नवाई की तारीख / Date of Hearing : 23-11-2021 घोषणा की तारीख / Date of Pronouncement : 10-01-2022 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 08-06-2017 passed by the Commissioner of Income Tax (Appeals)-4, Pune [„CIT(A)‟] for assessment year 2014-15. 2. The assessee raised two grounds amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in 2 ITA No.2824/PUN/2017, A.Y. 2014-15 confirming the addition made by the AO on account of notional income in respect of the unsold flats in the facts and circumstances of the case. 3. Heard both the parties and perused the material available on record. We note that the assessee is a Private Limited Company engaged in the business of Promoter, Developer, Builder and Power Generation. The AO found 37 unsold flats ready for possession and completion certificate in respect of said flats were also issued. He observed the assessee has not offered any rent income on these 37 unsold flats. The assessee claimed that the flats are stock-in-trade and the income from it is income from Business and Profession and not from House Property. The AO did not accept the submissions of the assessee and proceeded to calculate deemed rent vide its Para No. 5.4 to an extent of Rs.27,97,200/-. The CIT(A) confirmed the same. According to ld. AR that the issue is covered in favour of the assessee and the addition made by the AO as confirmed by the CIT(A) is not maintainable and the assessee recognized unsold flats as stock-in-trade. The ld. AR placed on record of order of this Tribunal in the case of Kumar Properties and Real Estate Private Limited in ITA No. 2977/PUN/2017 for A.Y. 2013-14. The Co-ordinate Bench of Tribunal vide order dated 28-04-2021 discussed the issue in detail from Para Nos. 3 to 13 of the said order and held that an exception has been carved out in section 22 of the Act that any such property or its part, which is occupied by the assessee for the purposes of any business or profession carried, the profits of which are chargeable to income-tax, shall be excluded on satisfying the conditions therein. The Co-ordinate Bench, further discussed the four conditions in Para Nos. 6, 7, 8 and 9. The first condition being that the property or its part should be occupied by the assessee as an owner. There is no material evidence to show before us that the assessee is not occupied the said unsold 37 flats. The second 3 ITA No.2824/PUN/2017, A.Y. 2014-15 condition is that any business or profession should be carried on by the assessee. We note that the assessee filed return showing income from such business and also engaged in the business of property development. The third condition is that the occupation of the property should be for the purpose of business or profession wherein the assessee before us shown the said 37 unsold flats as stock in trade. The last condition is that profits of such business or profession should be chargeable to income-tax. In the present case that there is no dispute that the profits of the business of construction by the assessee are chargeable to income-tax. Therefore, in our view that the unsold 37 flats are occupied by the assessee are as owner; business of construction is carried on by the assessee; the occupation of the flats is for the purpose of business; and profits of such business are chargeable to Income-tax. Thus, in our opinion, all the four conditions provided in exclusion clause in section 22 of the Act are to be excluded, therefore, we hold that no addition on account of deemed rent on unsold 37 flats can be made in the hands of the assessee. The ld. DR did not dispute that the assessee recognized the unsold flats as stock-in-trade but however relied on the order of CIT(A). Thus, the order of CIT(A) is not justified and it is set aside. Thus, the grounds raised by the assessee are allowed. 4. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 10 th January, 2022. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER ऩ ु णे / Pune; ददनाांक / Dated : 10 th January, 2022. रवव 4 ITA No.2824/PUN/2017, A.Y. 2014-15 आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-4, Pune 4. The Pr. CIT-3, Pune 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, ऩ ु णे / DR, ITAT, “B” Bench, Pune. 6. गार्ड फ़ाइऱ / Guard File. //सत्यावऩत प्रतत// True Copy// आदेशान ु सार / BY ORDER, वररष्ठ तनजी सधचव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩ ु णे / ITAT, Pune