Kumar Beharay Rathi, Pune V. Income-tax Officer, Ward - 7(5), Pune

ITA 327/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9871 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-01-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Business income; Deemed to accrue or arise in india; Set aside

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.327/PUN/2018 / ASSESSMENT YEAR : 2014-15 KUMAR BEHARAY RATHI, 10 TH FLOOR, KUMAR BUSINESS CENTRE (KBC), OPP. PUNE CENTRAL BUND GARDEN ROAD, PUNE-411001. PAN : AAAFK6677K . /APPELLANT VS. ITO, WARD-7(5), PUNE. . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI M. K. VERMA / DATE OF HEARING : 12.02.2019 / DATE OF PRONOUNCEMENT: 03.04.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-5, PUNE DATED 25.10.2017 FOR THE ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE-THE BUILDER IN THIS APPEAL RELATES TO THE ASSESSMENT OF NOTIONAL INCOME CALCULATED BASED ON THE DEEMED ALV WITH REFERENCE TO THE FLATS HELD AS STOCK-IN-TRADE AND NOT ACTUALLY LET OUT. 3. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.5,84,136/- U/S 22 R.W.S. 23(4) ON ACCOUNT OF DEEMED RENT IN RESPECT OF UNSOLD UNIT HELD AS STOCK IN TRADE BY THE APPELLANT COMPANY IN VARIOUS PROJECTS. 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT FIRM HAD HELD THESE UNSOLD UNIT AS STOCK IN TRADE AND HENCE, AS THESE UNITS WERE OCCUPIED ITA NO.327/PUN/2018 - 2 - BY THE ASSESSEE FOR ITS BUSINESS PURPOSE, THERE WAS NO REASON TO TAX THE ANNUAL VALUE OF SUCH UNSOLD UNITS U/S 22 OF THE ACT. 3] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT ASSUMING WITHOUT ADMITTING THAT THE INCOME OF SUCH UNSOLD UNITS WAS TAXABLE AS INCOME FROM HOUSE PROPERTY U/S 22, IT IS SUBMITTED THAT THE UNSOLD UNITS WERE VACANT FOR THE ENTIRE YEAR AND ACCORDINGLY, THE INCOME THEREON WAS TO BE CONSIDERED AT RS.NIL IN VIEW OF THE PROVISIONS OF SECTION 23(1)(C) AND HENCE, THE ENTIRE ADDITION MADE BY THE LEARNED CIT(A) MAY KINDLY BE DELETED. 4] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT THE NET ANNUAL RETABLE VALUE ADOPTED BY THE A.O. IS ON AN ADHOC BASIS AND THE SAME SHOULD BE SUBSTITUTED BY THE MUNICIPAL RETABLE VALUE DETERMINED FOR THE VARIOUS UNITS BY THE LOCAL AUTHORITIES. 5] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. BRIEFLY STATED THE RELEVANT FACTS INCLUDED THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND LAND DEVELOPERS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.12,89,939/-. AT THE END OF THE ASSESSMENT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.5,84,136/- ON ACCOUNT OF DEEMED RENT AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IN EFFECT, ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 23 OF THE ACT. AGGRIEVED WITH THIS ACTION OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) SUSTAINED THE ADDITION AS MADE BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 6. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT THIS IS A CASE WHERE THE FLATS HELD AS STOCK-IN-TRADE WERE NEVER LET OUT FOR EARNING RENT. RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S. ANSAL HOUSING FINANCE & LEASING CO. LTD. [2013] 29 TAXMANN.COM 303 (DELHI), THE ASSESSING OFFICER WORKED OUT THE DEEMED RENT. IN THE ASSESSMENT, THE ASSESSING OFFICER ASSESSED THE INCOME OF RS.18.74 LAKHS AND ADDED A SUM ITA NO.327/PUN/2018 - 3 - OF RS.5,84,136/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SAID DEEMED RENT. THE CIT(A) CONFIRMED THE SAME IGNORING THE VARIOUS OTHER DECISIONS INCLUDING THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192. 7. BEFORE ME, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE FAVOURABLE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEHA BUILDERS (P.) LTD., 296 ITR 661 (GUJ.). THE RATIO OF THE SAID JUDGEMENT IS THAT THE DEEMED RENTED INCOME EARNED OUT OF THE FLATS HELD AS STOCK-IN- TRADE IS NOT TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FOR THIS PROPOSITION, HE RELIED ON PUNE BENCH DECISION IN THE CASE OF M/S. COSMOPOLIS CONSTRUCTION VS. ITO VIDE ITA NO.230 & 231/PUN/2018, ORDER DATED 12.09.2018. FURTHER, LD. AR SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL CONSIDERED THE HONBLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE AND LEASING CO. LTD., 354 ITR 180 (DELHI) WHICH IS A CASE OF ACTUAL LET OUT FLATS OF THE UNSOLD PROPERTY I.E. STOCK-IN- TRADE. THE TRIBUNAL DISTINGUISHED THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SANE & DOSHI ENTERPRISES, 377 ITR 165 (BOM.) WHICH IS AGAIN A CASE OF ACTUAL LET OUT . FURTHER, AS PER LD. AR, IN OTHER CASES, THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192 WAS INVOLVED AND DEEMED RENTED INCOME WAS NOT DELETED. FURTHER, LD. AR READ OUT AT PARA 5 ONWARDS OF THE SAID ORDER OF THE TRIBUNAL IN THE CASE OF M/S. COSMOPOLIS CONSTRUCTION (SUPRA). ITA NO.327/PUN/2018 - 4 - 8. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS CIT(A) AND ALSO THE HONBLE DELHI HIGH COURTS JUDGEMENT IN THE CASE OF ANSAL HOUSING FINANCE & LEASING CO. LTD. (SUPRA). 9. ON HEARING BOTH THE SIDES AND PERUSED THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. COSMOPOLIS CONSTRUCTION (SUPRA), I PROCEED TO EXTRACT THE RELEVANT PARAS OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) AS UNDER :- 5. THE LD. AR CONTROVERTING THE SUBMISSIONS OF THE DR SUBMITTED THAT THE CASE LAWS RELIED UPON BY THE DEPARTMENT IS DISTINGUISHABLE. THE LD. AR POINTED THAT IN THE INSTANT CASE THE ADDITION HAS BEEN MADE BY DETERMINING NOTIONAL ANNUAL RENTAL VALUE ON UNSOLD UNITS. WHEREAS, IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SANE & DOSHI ENTERPRISES (SUPRA) THE ASSESSEE HAD ACTUALLY RENTED OUT THE FLATS AND HAD OFFERED THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE DEPARTMENT INTENDED TO TAX THE AMOUNT UNDER THE HEAD BUSINESS INCOME. THE TRIBUNAL RULED IN FAVOUR OF THE ASSESSEE. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HON BLE HIGH COURT, THE HON BLE HIGH COURT UPHELD THE FINDINGS OF TRIBUNAL. IN THE PRESENT CASE, THE ASSESSEE HAS NOT RENTED OUT THE FLATS . THE ASSESSING OFFICER HAS DETERMINED NOTIONAL ANNUAL RENTAL VALUE. IN RESPECT OF DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL HOUSING FINANCE AND LEASING CO. LTD. (SUPRA) THE LD. AR FAIRLY ADMITTED THAT THE DECISION IS AGAINST THE ASSESSEE. HOWEVER, THE LD. AR SUBMITTED THAT IN VIEW OF THE DECISION OF HON BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VEGETABLE PRODUCTS LTD. REPORTED AS 88 ITR 192 THE RATIO LAID DOWN BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NEHA BUILDERS (P.) LTD. (SUPRA) HAS TO BE FOLLOWED. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY ISSUE IN THE APPEAL BY ASSESSEE IS AGAINST THE ADDITION OF RS.75,50,995/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF NOTIONAL RENTAL INCOME ON THE FLATS HELD AS STOCK-IN-TRADE. IN SO FAR AS THE FACTS NARRATED BY THE LD. AR OF THE ASSESSEE, THERE IS NO DISPUTE. 7. THE ISSUE BEFORE US FOR ADJUDICATION IS WHETHER THE NOTIONAL ANNUAL RENTAL VALUE ON UNSOLD FLATS HELD AS STOCK-IN-TRADE BY THE ASSESSEE IS TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME OR UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE HON BLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NEHA BUILDERS (P.) LTD. (SUPRA) HAS HELD THAT WHERE THE PROPERTY IS HELD AS STOCK-IN-TRADE ANY INCOME DERIVED FROM STOCK WOULD BE INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY . THE RELEVANT EXTRACT OF THE FINDINGS OF HON BLE HIGH COURT ARE AS UNDER : 7. FROM THE ORDER PASSED BY THE LEARNED CIT(A), IT WOULD CLEARLY APPEAR THAT THE CASE OF THE ASSESSEE WAS THAT THE COMPANY WAS INCORPORATED WITH THE MAIN OBJECT OF PURCHASE, TAKE ON LEASE, OR ACQUIRE BY SALE, OR LET OUT THE BUILDINGS CONSTRUCTED BY THE ASSESSEE. ITA NO.327/PUN/2018 - 5 - DEVELOPMENT OF LAND OR PROPERTY WOULD ALSO BE ONE OF THE BUSINESSES FOR WHICH THE COMPANY WAS INCORPORATED. 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 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 INCOME 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 SUDDEN, THE TRIBUNAL STARTED APPLYING THE ANALOGY. 9. FROM THE STATEMENT OF THE ASSESSEE, IT WOULD CLEARLY APPEAR THAT IT WAS TREATING THE PROPERTY AS 'STOCK-IN-TRADE. NOT ONLY THIS, IT WILL ALSO BE CLEAR FROM THE RECORDS THAT, EXCEPT FOR 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-INTRADE. 8. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL HOUSING FINANCE AND LEASING CO. LTD. (SUPRA) THE HON BLE DELHI HIGH COURT TAKING A CONTRARY VIEW HAS HELD THAT ANNUAL RENTAL VALUE ON UNSOLD FLATS BUILT BY ASSESSEE ENGAGED IN CONSTRUCTION BUSINESS IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. IT IS A WELL SETTLED LAW THAT WHEN TWO DIVERGENT VIEWS OF NON-JURISDICTIONAL HIGH COURTS ARE AVAILABLE AND THERE IS NO DECISION ON THE ISSUE FROM THE JURISDICTIONAL HIGH COURT, THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED [COMMISSIONER OF INCOME TAX VS. VEGETABLE PRODUCTS LTD.(SUPRA)]. 9. IN SO FAR AS THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SANE & DOSHI ENTERPRISES (SUPRA) IS CONCERNED WE FIND THAT THE FACTS IN THE SAID CASE ARE AT VARIANCE. IN THE SAID CASE THE ASSESSEE WAS ENGAGED IN CONSTRUCTION BUSINESS. THE ASSESSEE RENTED OUT UNSOLD FLATS AND SUO-MOTU OFFERED RENTAL INCOME FROM THE FLATS UNDER THE HEAD INCOME FROM HOUSE PROPERTY . ON THE CONTRARY THE REVENUE WANTED TO TAX RENTAL INCOME UNDER THE HEAD BUSINESS INCOME. THE MATTER TRAVELLED TO THE TRIBUNAL. THE TRIBUNAL HELD THAT THE INCOME EARNED BY THE ASSESSEE FROM RENTING OF FLATS IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HON BLE HIGH COURT. THE HON BLE HIGH COURT CONFIRMED THE FINDINGS OF TRIBUNAL AND HELD THAT RENTAL INCOME RECEIVED FROM UNSOLD PORTION OF PROPERTY CONSTRUCTED BY THE ASSESSEE, IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. THE CORE DIFFERENCE BETWEEN THE CASE OF THE ASSESSEE AND IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SANE & DOSHI ENTERPRISES (SUPRA) IS THAT IN THE CASE OF ASSESSEE, IT IS NOTIONAL ANNUAL RENTAL INCOME ON FLATS HELD AS STOCK WHICH IS SOUGHT TO BE TAXED, WHEREAS IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SANE & DOSHI ENTERPRISES (SUPRA) IT WAS THE CASE OF ACTUAL RENTAL INCOME EARNED BY THE ASSESSEE FROM RENTING OF FLATS CONSTRUCTED BY IT. HENCE, THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SANE & DOSHI ENTERPRISES (SUPRA) WOULD NOT APPLY IN THE FACTS OF THE PRESENT CASE. ITA NO.327/PUN/2018 - 6 - 10. WE FURTHER FIND THAT MUMBAI BENCH OF THE TRIBUNAL IN M/S. C.R. DEVELOPMENTS PVT. LTD. VS. JCIT (SUPRA), M/S. RUNWAL CONSTRUCTIONS VS. ACIT (SUPRA) AND SHRI GIRDHARILAL K. LULLA VS. DCIT (SUPRA) UNDER SIMILAR SET OF FACTS HAVE TAKEN A CONSISTENT VIEW IN HOLDING NOTIONAL ANNUAL RENTAL VALUE ON UNSOLD FLATS HELD AS STOCK-IN-TRADE BY THE ASSESSEE ENGAGED IN CONSTRUCTION AND DEVELOPMENT ACTIVITIES AS BUSINESS INCOME. 11. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NEHA BUILDERS (P.) LTD. (SUPRA) WE FIND MERIT IN THE SUBMISSIONS OF ASSESSEE AND ALLOW THE APPEAL. 12. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 10. FROM THE ABOVE EXTRACTS, IT IS EVIDENT THAT THE TAXATION OF RENTAL INCOME EARNED OUT OF STOCK-IN-TRADE I.E. UNSOLD FLATS OF THE CONSTRUCTION COMPANY, DEPENDS ON VARIOUS FACTS SUCH AS IF THE FLATS ARE RENTED OUT ACTUALLY OR NOT. AS HELD BY VARIOUS DECISIONS, THE RENTAL INCOME CAN BE ACTUAL RENT RECEIVED BY THE ASSESSEE OUT OF RENTING OF THE UNSOLD FLATS OR DEEMED RENTAL/NOTIONAL RENTAL INCOME CALCULATED BY THE ASSESSING OFFICER ATTRIBUTABLE TO SUCH UNSOLD FLATS WHICH WERE NOT ACTUALLY RENTED OUT. FROM THE JUDGEMENTS IN THE CASE OF CIT VS. SANE & DOSHI ENTERPRISES, 377 ITR 165 (BOM) AND IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE AND LEASING CO. LTD., 354 ITR 180 (DELHI), THE CASES WHERE THE UNSOLD FLATS ARE ACTUALLY LET OUT FOR EARNING SUCH RENT INCOME, IT IS HELD THAT THE RENTAL INCOME IS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THESE CASES, THE REVENUES ARGUMENT IS THAT SUCH INCOME SHOULD BE TAXABLE UNDER THE HEAD BUSINESS INCOME. THIS ARGUMENT OF THE REVENUE STANDS REJECTED BY THE HONBLE BOMBAY HIGH COURT (SUPRA). 11. FLAT NOT ACTUALLY RENTED OUT: IN CASE OF NOTIONAL/DEEMED RENTAL INCOME CALCULATED BY THE ASSESSING OFFICERS IN VARIOUS CASES, THE TRIBUNAL TOOK A CONSISTENT VIEW THAT SUCH NOTIONAL/DEEMED RENTAL INCOME IS TAXABLE UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE DECISION OF THE TRIBUNAL IN THE CASES OF (I) M/S. C. R. ITA NO.327/PUN/2018 - 7 - DEVELOPMENTS PVT. LTD. VS. JCIT IN ITA NO.4277/MUM/2012 FOR THE ASSESSMENT YEAR 2009-10, ORDER DATED 13.05.2015 (MUM.-TRIB.); (II) M/S. RUNWAL CONSTRUCTIONS VS. ACIT IN ITA NO.5408/MUM/2016 FOR THE ASSESSMENT YEAR 2012-13, ORDER DATED 22.02.2018 (MUM.-TRIB.); AND, (III) SHRI GIRDHARILAL K. LULLA VS. DCIT IN ITA NO.1604/MUM/2016 FOR THE ASSESSMENT YEAR 2011-12, ORDER DATED 17.11.2017 (MUM.-TRIB.) SUPPORT THE TAXATION OF SUCH NOTIONAL RENTAL INCOME UNDER THE HEAD BUSINESS INCOME. THE UNDERSIGNED ARE PARTY TO THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. COSMOPOLIS CONSTRUCTION (SUPRA). 12. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE NEVER LET OUT THE UNSOLD FLATS HELD AS STOCK-IN-TRADE. FURTHER, IT IS THE CASE OF THE ASSESSING OFFICER THAT THE PROVISIONS OF SECTIONS 22 TO 23 OF THE ACT SHOULD BE INVOKED FOR TAXING THE NOTIONAL INCOME ON SUCH FLATS. I ALSO PERUSED ALL THE FOUR GROUNDS REVOLVED AROUND THE PROVISIONS OF SECTIONS 22 TO 23 OF THE ACT RELATING TO THE HEAD OF INCOME I.E. INCOME FROM HOUSE PROPERTY. FURTHER, IT IS AN UNDISPUTED FACT THE PROVISIONS OF SECTION 23(5) OF THE ACT WAS AMENDED BY THE FINANCE ACT, 2017 W.E.F. 01.04.2018 AND, THEREFORE, THESE PROVISIONS WILL NOT COME TO THE RESCUE OF THE ASSESSING OFFICER FOR BRINGING THE DEEMED INCOME ON SUCH UNSOLD FLATS TO TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN ABSENCE OF ENABLING THE PROVISIONS OF THE INCOME TAX ACT, I AM OF THE OPINION THAT CALCULATING THE NOTIONAL INCOME IN RESPECT OF THE PROPERTIES WHICH WERE NOT RENTED OUT AND RENTAL INCOME WAS NEVER EARNED ACTUALLY, THE ASSESSING OFFICERS POLICY TO TAX SUCH INCOME IS UNSUSTAINABLE IN LAW IN VIEW OF THE VARIOUS DECISIONS CITED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.327/PUN/2018 - 8 - 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 03 RD DAY OF APRIL, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 03 RD APRIL, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-5, PUNE; 4. THE CCIT, PUNE; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE