DCIT CEN CIR 1(2), MUMBAI V. HIRANANDNANI PALACE GARDENS P.LTD, MUMBAI

ITA 4392/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1209 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DECIDED
• Keywords: Business income; Depreciation; Competent authority; Revenue expenditure; TDS; Set aside
• Section: 143(3); 2(14); 40(a)(ia); 201; 192; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 4392/MUM/16 2008-09 DCIT, CENTRAL CIRCLE-1(2), MUMBAI M/S. HIRANANDANI PALACE GARDENS PVT. LTD., 514, DALAMAL TOWERS, FPJ MARG, NARIMAN POINT, MUMBAI [PAN: AACCC8862H] 4393/MUM/16 2010-11 4394/MUM/16 2011-12 APPELLANT B Y : SHRI B. SRINIVAS , CIT - D R RESPONDENT B Y : SHRI CHETAN KARIA & SMT. SWATI H. PATRAWALA, ARS DATE OF HEARING : 12 - 0 7 - 201 9 DATE OF PRONOUNCEMENT : 03 - 1 0 - 201 9 O R D E R PER RAJESH KUMAR, A.M: THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGA INST THE ORDER(S) OF THE COMMISSIONER OF INCOME TAX(APPE ALS)-8, MUMBAI FOR THE AYS.2008-09, 2010-11 AND 2011-12. SI NCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, EX CEPT THE AMOUNTS MENTIONED THEREIN, THESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, APPEAL IN ITA NO.4392/MUM/2016 IS DISC USSED HERE UNDER: ITA NOS. 4392, 4393 & 4394/MUM/2016 : 2 : 2. THE GROUND NO.1 RAISED BY THE REVENUE IS REPRODU CED AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), HAS ERRED BY GIVING RELIEF OF RS.27,32, 03,702/- OUT OF THE W.I.P. TREATED BY ASSESSING OFFICER INTEREST OF BUSINESS E XPENDITURE. 2.1. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS RE-OPENED IN THE CURRENT YEAR ON THE BASIS OF THE ASSESSMENT ORDER FOR THE AY.2009-10 WHICH NOW STANDS DECIDED BY THE TRI BUNAL. THE SAID DISALLOWANCE WAS MADE BY THE AO OUT OF CER TAIN EXPENSES, WHICH WERE DEBITED IN THE PROFIT & LOSS A /C BY HOLDING THE SAID EXPENSES TO BE RELATING TO PROJEC T WORK AND CAPITALIZED THE SAME UNDER THE HEAD WORK-IN-PROGRE SS CONSEQUENTLY RESULTING INTO ADDITION OF THE SAID AM OUNT. 2.2. AT THE OUTSET, LD.AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.4579/MUM/ 2013 (AY.2009-10), VIDE ORDER DT.30-12-2015, WHEREIN THE HON'BLE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSE E AND THE LD.CIT(A) HAS ONLY ALLOWED THE APPEAL OF ASSESSEE, AFTER FOLLOWING THE DECISION OF THE ASSESSEES OWN CASE. 2.3. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER S OF LD.CIT(A) AND AO. 2.4. AFTER HEARING RIVAL PARTIES AND PERUSING THE M ATERIAL ON RECORD INCLUDING THE DECISION OF THE CO-ORDINATE BE NCH IN ASSESSEES OWN CASE IN ITA NO.4579/MUM/2013 (AY.200 9-10), DT.30-12-2015, WE OBSERVE THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH IN FAVOUR OF ASSES SEE BY ITA NOS. 4392, 4393 & 4394/MUM/2016 : 3 : FOLLOWING THE EARLIER YEARS ORDER. THE OPERATIVE P ORTION OF THE SAID ORDER IS AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HA VE GONE THROUGH THE RECORDS AND ALSO THE DECISION OF THE CO-ORDINATE BE NCH OF THE TRIBUNAL IN THE CASE OF M/S. LODHA PALAZZO VS. ACIT (SUPRA) ( ONE OF US I.E. JUDICIAL MEMBER, BEING PARTY TO THE SAID DECISION), WHEREIN THE TRIBUNAL AFTER DELIBERATING UPON THE VARIOUS CLAUSES OF ACCOUNTING STANDARD AS-2 AND AS- 7 AND THE PROVISIONS OF SECTION 145A OF THE ACT HAS HELD THAT AS PER THE ACCOUNTING METHOD CONSISTENTLY FOLLOWED BY THE ASSE SSEE AND THEREBY EXCLUDING THE INDIRECT EXPENSES SUCH AS OFFICE EMPL OYEES SALARY, ADMINISTRATIVE EXPENSES AND MARKETING & SELLING EXP ENSES WAS AS PER THE RECOGNIZED PRINCIPLES OF ACCOUNTINGS AND AS SUCH TH E CLAIM OF THE ASSESSEE DESERVED TO BE ALLOWED. THE RELEVANT FINDINGS OF TH E TRIBUNAL FOR THE SAKE OF COMPLETENESS ARE REPRODUCED AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORDS. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON TH E EXPERT ADVISORY COMMITTEES REPORT (EAC) ON APPLICABILITY OF REVISED AS 7 TO ENTERPRISES UNDERTAKING THE CONSTRUCTION ACTIVITIES ON THEIR OW N ACCOUNT AS A VENTURE OF COMMERCIAL NATURE (COPY PLACED AT PAGE 49 & 50 OF PAPER BOOK) WHEREIN IT HAS BEEN STATED THAT REVISED AS -7 SHALL NOT BE APPLICABLE TO THE BUILDERS UNDERTAKING THE COMMERCIAL ACTIVITY ON THE IR OWN AND IT WAS ALSO STATED THAT THE WORK IN PROGRESS SHALL CONSTITUTE I NVENTORY FOR THE BUILDERS AND SHALL BE VALUED AS PER AS-2 ISSUED BY THE INSTI TUTE OF CHARTERED ACCOUNTANT OF INDIA (ICAI). THE LD. COUNSEL HAS FUR THER SUBMITTED THAT THE ASSESSEE HAS ACCORDINGLY FOLLOWED THE ACCOUNTING ST ANDARD -2 FOR DETERMINING THE WORK IN PROGRESS. HE HAS FURTHER BR OUGHT OUR ATTENTION TO PARA 13 OF AS-2, WHEREIN IT HAS BEEN MENTIONED THAT THE FOLLOWING EXPENSES HAVE TO BE EXCLUDED FROM THE COST OF INVEN TORIES BEING WORK-IN- PROGRESS: (A) ABNORMAL AMOUNTS OF WASTED MATERIALS, LABOUR O R OTHER PRODUCTION COSTS; (B) STORAGE COSTS, UNLESS THOSE COSTS ARE NECESSARY IN THE PRODUCTION PROCESS BEFORE A FURTHER PRODUCTION STAGE; (C) ADMINISTRATIVE OVERHEADS THAT DO NOT CONTRIBUTE TO BRINGING INVENTORIES TO THEIR PRESENT LOCATION AND CONDITION; AND (D) SELLING COSTS. ITA NOS. 4392, 4393 & 4394/MUM/2016 : 4 : 7. THE LD. COUNSEL HAS FURTHER RELIED UPON PARA 2.4 OF THE GUIDANCE NOTE ON ACCOUNTING FOR REAL ESTATE TRANSACTION ISSUED B Y THE INSTITUTE OF THE CHARTERED ACCOUNTANTS WHEREIN IT HAS BEEN STATED TH AT: THE FOLLOWING COST SHOULD NOT BE CONSIDERED PART O F CONSTRUCTION COST AND DEVELOPMENT COST IF THEY ARE MATERIAL: (A) GENERAL ADMINISTRATION COSTS; SELLING COST; (B) RESEARCH AND DEVELOPMENT COST; (C) DEPRECIATION OF IDLE PLANT AND EQUIPMENT; (E) COST OF UNCONSUMED OR UNINSTALLED MATERIAL DELI VERED AT SITE; AND (F) PAYMENT MADE TO SUB-CONTRACTORS IN ADVANCE OF W ORK PERFORMED. 8. THE LD. COUNSEL THEREFORE HAS STATED THAT AS PER THE ABOVE GUIDELINES, THE ADMINISTRATIVE AND SELLING EXPENSES HAVE BEEN S PECIFICALLY EXCLUDED FROM THE COST OF INVENTORY FOR WORK FOR CLOSING WIP . THE LD. COUNSEL HAS FURTHER SUBMITTED THAT EVEN AS PER AS -7 VIDE PARAG RAPH 19 IT HAS BEEN MENTIONED THAT THE GENERAL ADMINISTRATIVE COST AND SELLING COST DOES NOT CONSTITUTE THE COST OF THE PROJECT. HE, THEREFORE, HAS SUBMITTED THAT AS PER GUIDANCE NOTE, AS 2 AND EVEN AS 7, THE GENERAL ADMI NISTRATIVE EXPENSES AND SELLING EXPENSES ARE NOT PROJECT COST AND ARE T O BE CHARGED TO THE PROFIT & LOSS ACCOUNT IN THE VERY SAME YEAR IN WHIC H THEY ARE INCURRED. IN VIEW OF THE ABOVE FACTS AND FOLLOWING THE GUIDANCE NOTES AND ACCOUNTING STANDARDS, THE ASSESSEE HAS INDIVIDUALLY WORKED OUT THE EXPENSES DIRECTLY RELATED TO WORK IN PROGRESS AND EXPENSES NOT RELATE D TO WORK IN PROGRESS AND ACCORDINGLY DEBITED IN RESPECTIVE HEADS. THE LD . COUNSEL HAS FURTHER RELIED UPON SECTION 145A OF THE ACT, WHICH READ AS UNDER: [METHOD OF ACCOUNTING IN CERTAIN CASES. 145A. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN SECTION 145, (A) THE VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSES OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' SHALL BE (I) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REG ULARLY EMPLOYED BY THE ASSESSEE; AND (II) FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) ACTUALL Y PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. ITA NOS. 4392, 4393 & 4394/MUM/2016 : 5 : 9. THE LD. COUNSEL, THEREFORE, HAS CONTENDED THAT T HE ASSESSEE HAS BEEN REGULARLY FOLLOWING THE METHOD OF ACCOUNTING RECOGN IZED BY THE ACCOUNTING PRINCIPLES TO VALUE THE INVENTORY. THE A SSESSEE HAD FOLLOWED THE SAME METHOD OF VALUING THE INVENTORY IN PRECEDI NG YEAR AS WELL AS IN SUCCEEDING YEARS. EVEN IN THE ASSESSMENT YEAR 2010- 11, IT HAS DEBITED AND CLAIMED THE IDENTICAL NATURE OF EXPENSES WHICH HAD BEEN ACCEPTED AS DEDUCTIBLE EXPENSES IN ASSESSMENT ORDER PASSED U/S 143(3) OF THE I.T. ACT. THE ASSESSEE BEING REGULARLY FOLLOWING THE ACCOUNTI NG METHOD DULY RECOGNIZED BY THE ACCOUNTING PRINCIPLES AND GUIDELI NES AS STATED ABOVE AND IN VIEW OF THE PROVISIONS OF SECTION 145A HAS R IGHTLY CLAIMED THE PROPORTIONATE SALARY EXPENSES, ADMINISTRATIVE EXPEN SES AND SELLING EXPENSES AS REVENUE EXPENDITURE. THE LD. COUNSEL HA S FURTHER CONTENDED THAT THE SPECIAL BENCH DECISION OF THE TRIBUNAL REL IED UPON BY THE LOWER AUTHORITIES IN THE CASE OF WALL STREET CONSTRUCTIO N LTD. VS JCIT [101 ITD 156] IS RELATING TO INTEREST EXPENDITURE IDENTIFIAB LE WITH THE PROJECT. IN ASSESSEES CASE, DISPUTE IS NOT WITH RESPECT TO INT EREST AS THE ASSESSEE ITSELF HAS ADDED THE INTEREST COST TO THE WORK-IN-P ROGRESS AND CLAIMED IT IN SUBSEQUENT YEAR IN THE PROPORTION OF REVENUE OFFERE D. THUS, THE FACTS IN ASSESSEES CASE ARE QUITE DISTINGUISHABLE AND THE D ECISION OF SPECIAL BENCH (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE ASSES SEES CASE. 10. THE LD. DR ON THE OTHER HAND HAS RELIED UPON TH E FINDINGS OF THE LOWER AUTHORITIES. HE HAS STRESSED THAT THE LD. CIT(A) HA S RIGHTLY APPROPRIATED THE INDIRECT EXPENSES TO THE WIP IN PROPORTION TO T HE PERCENTAGE OF COMPLETION IN RESPECT OF THE AREA SOLD. 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE PERCENTAGE COM PLETION METHOD OF ACCOUNTING HAS BEEN REGULARLY FOLLOWED BY THE ASSES SEE. IN THE SUCCEEDING ASSESSMENT YEAR 2010- 11, THE AO HAS ACCEPTED THE D EDUCTIBILITY OF THE IDENTICAL NATURE OF EXPENSES IN THE ASSESSMENT ORDE R PASSED U/S 143(3) OF THE I.T. ACT. WE AGREE WITH CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT THE EMPLOYEE COST REFERS TO SALARY PAID TO THE EMPLOYEES WHO ARE LOOKING AFTER THE ADMINISTRATION OF OFFICE AND NOT DIRECTLY RELATED TO CONSTRUCTION OF THE PROJECT BUT IS PART OF THE ADMI NISTRATIVE EXPENSES. SIMILARLY, THE OFFICE AND ADMINISTRATIVE EXPENSES A ND SELLING AND MARKETING EXPENSES ARE TO BE CHARGED TO THE PROFIT & LOSS ACC OUNT IN THE VERY SAME YEAR IN WHICH THEY ARE INCURRED AND HAVE TO BE EXCL UDED FROM THE COST OF INVENTORIES FOR WORKING OUT CLOSING WIP AS PER THE GUIDELINES ISSUED BY THE ICAI, ACCOUNTING STANDARD AS-2 AND AS-7. THE ASSESS EE HAS REGULARLY AND CONSISTENTLY BEEN FOLLOWING THE SAID METHOD OF ACCO UNTING AS PER THE PROVISIONS OF SECTION 145A OF THE I.T. ACT. THE AO HAS NOT ASSIGNED ANY COGENT REASON AS TO WHY THE METHOD, WHICH HAS BEEN CONSISTENTLY FOLLOWED BY ASSESSEE AND ACCEPTED BY THE DEPARTMENT IN PAST AS WELL IN SUCCEEDING ASSESSMENT YEARS AND WHICH IS IN ACCORDA NCE WITH THE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 6 : RECOGNIZED PRINCIPLES OF ACCOUNTING BY ICAI, IS BEI NG REJECTED. IN OUR VIEW, THE ACTION OF THE REVENUE AUTHORITIES IN REJECTING THE ASSESSEE'S ACCOUNTING METHOD, WITHOUT ASSIGNING ANY REASON IS NOT JUSTIFIED. THE ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE AND THER EBY EXCLUDING THE INDIRECT EXPENSES SUCH AS OFFICE EMPLOYEES SALARY, ADMINISTRATIVE EXPENSES AND MARKETING & SELLING EXPENSES IS AS PER THE RECOGNIZED PRINCIPLES OF ACCOUNTINGS AND AS SUCH THE CLAIM OF THE ASSESSEE DESERVES TO BE ALLOWED. WE HOLD ACCORDINGLY. THE ADDITIONS MADE BY THE LOWER AUTHORITIES ON THIS ISSUE ARE HEREBY ORDERED TO BE DELETED. 6. BOTH THE LD. REPRESENTATIVES OF THE PARTIES HAVE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ABOVE DECISION OF THE TRIBUNAL. WE FIND THAT RATHER THE CASE OF THE ASSESSEE IS ON BETTER F OOTING AS THE ASSESSEE WAS CARRYING OUT DIFFERENT PROJECTS THOUGH AT THE S AME LOCATION, HENCE IT WAS NOT A CASE OF SINGLE PROJECT. EVEN OTHERWISE TH E RESULTANT INCOME FROM THE PROJECT IS A LOSS EVEN AFTER CAPITALISATION OF EXPENDITURE BY THE AO TO WORK IN PROGRESS. HENCE, THERE IS NO TAX IMPLICATIO N, SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED AND THE LOSS OTHER WISE ALSO HAS TO BE CARRIED FORWARD. UNDER SUCH CIRCUMSTANCES, IT CANNO T BE SAID THAT THE ASSESSEE HAS ADOPTED THE ABOVE STATED ACCOUNTING ME THOD TO AVOID TAX ON INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESS EE, THUS, HAS FOLLOWED THE ACCOUNTING METHOD WHICH HAS BEEN CONSISTENTLY F OLLOWED BY IT AND WHICH IS AS PER THE RECOGNIZED PRINCIPLES OF ACCOUN TING. IN VIEW OF THE ABOVE DISCUSSION OF THE MATTER AND FOLLOWING THE AB OVE DECISION OF THE TRIBUNAL FOR THE SAKE OF CONSISTENCY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. SINCE THE FACTS IN THE INSTANT CASE ARE IDENTICAL T O ONES AS DECIDED BY THE COORDINATE BENCH, WE, THEREFORE R ESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO-ORDINATE BENC H, AFFIRM THE ORDER OF LD CIT(A) AND DISMISS THIS GROUND, RA ISED BY REVENUE. 3. THE ISSUE RAISED IN GROUND NO.2 BY THE REVENUE I S AGAINST THE CIT(A)S ORDER DIRECTING THE AO TO AS SESS THE INTEREST INCOME OF RS.1,65,18,814/-, BEING INTEREST EARNED ON FIXED DEPOSITS, AS BUSINESS INCOME, INSTEAD OF I NCOME FROM OTHER SOURCES. ITA NOS. 4392, 4393 & 4394/MUM/2016 : 7 : 3.1. THE FACTS IN BRIEF ARE THAT THE ASSESSEE TREAT ED THE INTEREST INCOME OF RS.1,65,18,814/- ON FIXED DEPOSI TS AS BUSINESS INCOME, WHEREAS THE AO HAS TREATED THE S AME AS INCOME FROM OTHER SOURCES. THE SAID FIXED DEPOSIT S WERE MADE IN THE ORDINARY COURSE OF BUSINESS OF THE ASSE SSEE. 3.2. LD.AR AT THE OUTSET, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.4579/MUM/ 2013 (AY.2009-10), DT.30-12-2015, WHEREIN THE HON'BLE TR IBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND AGA INST REVENUE, WHICH HAS BEEN FOLLOWED BY THE LD.CIT(A) A ND ALLOWED THE APPEAL OF ASSESSEE. HENCE, LD.AR PRAYE D BEFORE THE BENCH THAT BY FOLLOWING THE SAID DECISION OF TH E CO- ORDINATE BENCH, THE GROUND RAISED BY THE REVENUE MA Y BE DISMISSED. 3.3. LD. DR, ON THE OTHER HAND, RELIED ON THE GROUN DS OF APPEAL AND THE ORDER OF AO. 3.4. AFTER HEARING RIVAL PARTIES AND PERUSING THE M ATERIAL ON RECORD INCLUDING THE DECISION OF THE CO-ORDINATE BE NCH IN ASSESSEES OWN CASE IN ITA NO.4579/MUM/2013 (AY.200 9-10), DT.30-12-2015, WE OBSERVE THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH IN FAVOUR OF ASSES SEE. THE OPERATIVE PORTION OF THE SAID ORDER IS AS UNDER: 10. WE FIND THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND, THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. LOK HOLDINGS (SUPRA) IS SQUARELY APPLICABLE. IN THAT C ASE THE ASSESSEE WAS ENGAGED IN DEVELOPMENT OF PROPERTIES. ADVANCE FROM CUSTOMERS INTENDING TO PURCHASE FLATS WAS DEPOSITED WITH THE BANKS IN T HE COURSE OF BUSINESS. THE INTEREST INCOME WAS HELD TO BE ASSESSABLE AS BU SINESS INCOME AND NOT ITA NOS. 4392, 4393 & 4394/MUM/2016 : 8 : AS INCOME FROM OTHER SOURCES. FOLLOWING THE DECISIO N OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF LOK HOLDINGS (SUPRA) TH E INTEREST INCOME EARNED FROM TEMPORARY DEPOSITS PENDING THEIR UTILIZ ATION OUT OF CUSTOMER ADVANCES ON THE BOOKING OF FLATS RELATED TO THE PRO JECT OF THE ASSESSEE IS ASSESSABLE AS BUSINESS INCOME. THE A.O. IS ACCORDIN GLY DIRECTED TO ASSESS THE SAME AS BUSINESS INCOME. THIS GROUND OF APPEAL IS ALSO ALLOWED. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO- ORDINATE BENCH, WE DISMISS THIS GROUND RAISED BY RE VENUE. 3.5. IN THE RESULT, THIS APPEAL OF REVENUE IS DISMI SSED. ITA NO.4393/MUM/2016 (AY.2010-11): 4. AS FAR AS THIS APPEAL OF REVENUE IS CONCERNED, THE FACTS AND ISSUES ARE COMMON VIS--VIS THE APPEAL AS DECI DED BY US IN ITA NO. ITA NO.4392/MUM/2016 AY 2008-09 (SUPRA). ACCORDINGLY, OUR DECISIONS ON BOTH THE GROUNDS IN THE EARLIER PARAGRAPHS FOR THE AY.2008-09, WOULD , MUTATIS MUTA NDIS APPLY TO THIS APPEAL OF REVENUE AS WELL. HENCE, THI S APPEAL OF REVENUE IS DISMISSED. ITA NO.4394/MUM/2016 (AY.2011-12): 5. AS FAR AS GROUND NOS.1 & 3 OF THIS APPEAL OF REV ENUE ARE CONCERNED, THE SAME ARE COMMON VIS--VIS THE APPEA L AS DECIDED BY US IN ITA NO. ITA NO.4392/MUM/2016 AY 20 08-09 (SUPRA). ACCORDINGLY, OUR DECISIONS ON BOTH THE GRO UNDS IN THE EARLIER PARAGRAPHS FOR THE AY.2008-09, WOULD, MUTAT IS MUTANDIS APPLY TO THESE GROUNDS RAISED BY THE REVEN UE AS WELL. HENCE, THE GROUND NO. 1 AND 3 ARE DISMISSED. 6. THE ISSUE RAISED IN THE 2 ND GROUND OF APPEAL IS AGAINST THE ORDER OF LD CIT(A) CHALLENGING THE OBSERVATION OF LD CIT(A) STATING THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUC T THE TDS ITA NOS. 4392, 4393 & 4394/MUM/2016 : 9 : ON THE PAYMENT OF RS.6,44,55,090/- BY RELYING ON TH E DOCUMENTS SUBMITTED BY THE ASSESSEE IN THE APPELLAT E PROCEEDINGS IN CONTRAVENTION OF RULE 46A. 6.1. THE FACTS IN BRIEF ARE THAT THE AO UPON PERUSA L OF ANNEXURE 2 IN LETTER DATED 26.02.2014 FURNISHED BY THE ASSESSEE PROVIDING THEREIN PARTYWISE DETAILS OF P ROFESSIONAL CHARGES ALONG WITH DETAILS OF TDS DEDUCTED. THE DET AILS FILED ARE REPRODUCED AS UNDER:- SR. NO. NAME OF THE PARTY AMOUNT PAID TDS REQUIRED @10/O TDS DEDUCTED SHORTAGE 1. H. HORIZON SUPPORT & SERVICES PVT. LTD. 10,00,00,00 0 1,00,00,000 62,00,000 38,00,000 2. JAMES D. ROSENER 23,34,870 2,33,487 NIL 2,33,487 3. PEPPER HAMILTON 2,40,71,045 24,07,105 NIL ?4,07,105 4. SARGAM LABORATORY PVT. LTD. 49,173 4,917 NIL 4,917 TOTAL 64,45,509 THE AO, WITHOUT CALLING FOR THE EXPLANATION OF THE ASSESSEE, CAME TO THE CONCLUSION THAT TDS HAS EITHER BEEN SHO RT DEDUCTED OR NOT DEDUCTED AND DISALLOWED A SUM OF RS . 6,44,55,090 U/S 40(A)(IA) OF THE ACT. 6.2. THE LD CIT ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE REPLIES OF THE ASSESSEE WHICH IS RE PRODUCED AS UNDER:- ITA NOS. 4392, 4393 & 4394/MUM/2016 : 10 : 5.3.2. I HAVE GONE THROUGH THE CONTENTION OF THE APPELLANT O N THIS ISSUE AS REPRODUCED ABOVE AND ALSO COPIES OF TDS CE RTIFICATES, CAS CERTIFICATE IN FORM 15CB AND TDS CERTIFICATE IN FORM 16 A, WHICH ARE FACTS VERIFIABLE FROM RECORDS THAT THE APPELLANT HAS S UBMITTED IN SUPPORT OF THEIR CONTENTION. I AM IN AGREEMENT WITH THE C ONTENTION OF THE APPELLANT THAT THERE WAS NO NEED TO DEDUCT TDS AN D, HENCE, DISALLOWANCE U/S 40(A)(IA) WAS NOT WARRANTED. ACCOR DINGLY, THE SAME IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 6.3 AFTER HEARING THE RIVAL PARTIES AND PERUSING TH E RECORDS AS PLACE BEFORE US WE FIND NO INFIRMITY IN THE ORDER O F LD CIT(A) WHO HAS HELD THAT THERE WAS NO NEED FOR DEDUCTION O F TDS AFTER TAKING INTO CONSIDERATION THE TDS CERTIFICATE S, C.A CERTIFICATES AND FORM 15CB . THE LD. CIT(A) HAS CO NSIDERED THE DETAIL ARGUMENTS AS REPRODUCED IN APPELLATE ORD ER IN PARA 5(A) OF PAGE NO.14 ONWARDS IN THE APPELLATE ORDER. WE HAVE ALSO EXAMINED THE EXPLANATION OFFERED BY THE ASSESS EE AND ARE OF THE OPINION THAT ASSESSEE IS NOT LIABLE TO DEDUC T TAX SOURCE AS OBSERVED BY THE LD. A.O. THE GROUND NO. 2 IS DI SMISSED BY UPHOLDING THE ORDER OF CIT(A) ON THIS ISSUE. 7. THE GROUND NOS.4 & 5, RAISED BY THE REVENUE ARE AS UNDER: 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED, IN NOT UPHOLDING THE AOS FINDI NGS THAT THE INCOME DERIVED BY THE ASSESSEE FROM LETTING OUT OF ITS PRO PERTIES, HELD AS STOCK-IN- TRADE, REPRESENTS INCOME FROM HOUSE PROPERTY, BY RE LYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES PVT. LTD., WITHOUT APPRECIATING THE FACTS OF THE CASE OF M/S.C HENNAI PROPERTIES PVT. LTD., ARE DISTINGUISHABLE IN SO FAR AS THE MAIN OBJ ECT OF CHENNAI PROPERTIES PVT. LTD., WAS TO ACQUIRE AND GIVE PROPERTIES ON RE NT, WHEREAS THE ASSESSEE FIRM IS ENGAGED IN DEVELOPMENT AND CONSTRUCTION OF PROPERTIES? 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A), FAILED TO APPRECIATE THE RATIO OF DECISI ON IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE & LEASING CO. LTD., (2013) [2 9 TAXMANN.COM 303] (DELHI) WHEREIN IT WAS HELD THAT THE ASSESSEE WOULD BE LIABLE TO PAY THE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 11 : ANNUAL LETTING VALUE OF FINISHED FLATS OWNED BY IT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 7.1. THE ISSUE RAISED BY REVENUE IN THESE GROUNDS I S AGAINST THE DELETION OF ADDITION BY CIT(A) AS MADE BY THE A O BY ESTIMATING ALV ON CLOSING STOCKS OF FLATS COMPLETE D IN RESPECT OF WHICH AGREEMENTS FOR SALE HAD NOT BEEN ENTERED I NTO. IN OTHER WORDS, THE SAID UN-SOLD FLATS REPRESENTED THE STOCK- IN-TRADE OF THE ASSESSEE, FOR WHICH NO PURCHASERS H AD BEEN FOUND TILL THE YEAR END. AO ESTIMATED THE ALV ON TH E COST OF THE SAID STOCK IN HAND @8% AND TREATED THE SAME AS INCOME U/S.22 OF THE ACT BY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL HOUSING FIN ANCE AND LEASING CO. LTD., (2013) [354 ITR 180] (DEL). 7.2. IN THE APPELLATE PROCEEDINGS, LD.CIT(A) DELETE D THE ADDITION ON THE GROUND THAT THE DEVELOPMENT OF PROP ERTY AND SALES THEREOF OR LEASING OUT THE PROPERTY IS THE BU SINESS OF THE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTM ENTS LTD., VS. CIT (2015) [373 ITR 673] (SC) WHEREIN IT WAS HELD THAT NO ALV CAN BE ASSESSED ON ESTIMATED BASIS ON THE STOCK IN TRADE HELD BY THE ASSESSEE BY OBSERVING AND HOLDING AS UN DER: 5.5.9. READING THE DECISION OF HON'BLE GUJARAT HIG H COURT IN NEHA BUILDERS (SUPRA) AND IN SUPREME COURTS DECISION IN CHENNAI PROPERTIES, AND ALSO APPLYING THE RATIO OF TEST OF DETERMINATIO N IN SANE & DOSHI ENTERPRISES, IT HAS TO BE CONCLUDED THAT THE ASSESS ING OFFICER WAS NOT CORRECT IN DECIDING THAT SECTION 22 OF THE ACT APPL IES TO THE FINISHED FLATS REFLECTING IN THE INVENTORIES OF THE APPELLANT WITH OUT PERFORMING THE TEST OF DETERMINATION ON FACTS AND CIRCUMSTANCES OF THE CASE. THE FACT THAT THE APPELLANT HAD NOT EVEN LET OUT THE VACANT FLATS WHE N IT COULD HAVE AND THE ASSESSING OFFICER HAD TO ESTIMATE THE ALV CLEARLY I NDICATES THAT IN THE POINT OF VIEW OF THE APPELLANT THE FLATS WERE BEING HELD AS STOCK IN TRADE AND THE INTENTION WAS TO REMAIN IN THE BUSINESS OF DEVELOPMENT AND ITA NOS. 4392, 4393 & 4394/MUM/2016 : 12 : CONSTRUCTION AND NOT ACT AS A LANDLORD. IN ANY CAS E, AS PER ITS MEMORANDUM OF ASSOCIATION, EVEN LETTING OUT/LEASE O F PROPERTY WAS ONE OF THE MAIN OBJECTIVES OF BUSINESS. THUS, THE TEST OF DETERMINATION AS SUGGESTED IN SANE & DOSHI CASE (SUPRA) WOULD REVEAL THAT DEEMED ALV ON VACANT FLATS UNDER SECTION 23(1) CANNOT BE APPLIED. ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO OF DETERMINATION L AID DOWN BY HIGHER JUDICIAL AUTHORITIES, INCLUDING HON'BLE SUPREME COU RT, THE ADDITION OF RS.24,55,403/- BEING ANNUAL VALUE OF THE FINISHED F LATS IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 7.3. LD.AR VEHEMENTLY SUBMITTED BEFORE THE BENCH TH AT THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF PU RCHASE, SALE, CONSTRUCTION AND LEASING OF THE PROPERTIES IN REAL ESTATE AND IS A LEADING BUILDER OF MUMBAI DURING THE YEAR WHEN THE AO FOUND THAT HUGE INVENTORY OF FLATS LYING UNSOLD IN THE BALANCE SHEET AS STOCK IN TRADE. THE LD AR CONTENDE D THAT THE AOS CONCLUSION, THAT THE ALV ON ESTIMATED BASIS H AS TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY, IS PATEN TLY WRONG AND AGAINST THE PROVISIONS OF THE ACT. IN THIS REG ARD, LD.AR TOOK US THROUGH THE MAIN OBJECT CLAUSE OF THE ASSES SEE. LD.AR ALSO SUBMITTED THAT DURING THE YEAR THE DEVELOPMENT OF SOME BUILDING WORKS WERE COMPLETED AND THAT IS THE REASO N, THIS IS THE FIRST YEAR IN WHICH ASSESSEE HAS FINISHED AND C OMPLETED STOCKS IN HAND. THE LD AR SUBMITTED THAT THE BOOKS HAVE BEEN PREPARED ON GOING CONCERN BASIS. LD.AR SUBMITTED TH AT CONSTRUCTION, DEVELOPMENT AND SALE ACTIVITIES CONTI NUED ON DAILY BASIS AND THUS, SOME FLATS WHICH WERE LYING U N-SOLD ON 31-03-2011 DUE TO SCARCITY OF BUYERS IN THE MARKET WERE SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET. THE ASSESSEE SUBMITTED THAT THE STOCK IN TRADE WAS HELD BY THE A SSESSEE, NOT AS A LAND OWNER BUT AS A BUSINESS MAN. LD.AR A LSO REFERRED TO THE PROVISIONS OF SECTION 22, 28, 45 AN D 14 AND ITA NOS. 4392, 4393 & 4394/MUM/2016 : 13 : ALSO 2(14) OF THE ACT AND TRIED TO EXPLAIN THAT WHE N THE ASSESSEE DEVELOPS LAND, BUILDING OR SELL THEM, INCO ME IS OFFERED BY THE ASSESSEE AND ASSESSED BY THE AO AS BUSINESS INCOME. LD.AR SUBMITTED THAT ASSESSEE HAS NOT AT ALL LET OUT THESE FLATS AND CONSEQUENTLY THERE WAS NO INCOME AC CRUED FROM LETTING OUT OF THESE UN-SOLD STOCKS OF FLATS. LD.AR WHILE DISTINGUISHING THE DECISION FOLLOWED BY THE LD.AO I N THE CASE OF CIT VS. ANSAL HOUSING FINANCE AND LEASING CO. LT D., (2013) [354 ITR 180] (DELHI) BY REFERRING TO THE DECISION IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD., VS . CIT (2015) [373 ITR 673] (SC) THAT IF THE LETTING OUT OF THE PROPERTY IS ONE OF THE OBJECTS OF THE COMPANY AND THE BUSINE SS IS FACTUALLY CARRIED ON, THEN INCOME IS ASSESSABLE UND ER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD HOUSE PRO PERTY. LD.AR SUBMITTED THAT IN THE PRESENT CASE ALSO THE M AIN OBJECT OF THE ASSESSEE IS TO CONSTRUCT, SELL OR LEASE OUT THE PROPERTY AND THEREFORE IT IS THE DAY-TO-DAY BUSINESS OF THE ASSESSEE AND IT WAS HELD THAT INCOME WAS ASSESSABLE UNDER TH E HEAD BUSINESS INCOME AND NOT UNDER THE HEAD HOUSE PRO PERTY. LD.AR ALSO REFERRED TO THE DECISION IN THE CASE OF CIT VS. NEHA BUILDERS P. LTD., (2008) [296 ITR 661] (GUJ), WHERE IN IT HAS BEEN HELD THAT THE COMPANY WAS INCORPORATED WITH TH E MAIN OBJECT OF PURCHASE, TAKING ON LEASE OR ACQUIRE BY S ALE OR LET- OUT THE BUILDINGS CONSTRUCTED BY THE ASSESSEE, THE INCOME DERIVED FROM THE PROPERTY WOULD ALSO BE TERMED AS INCOME OF BUSINESS, AS THE SAME IS DERIVED FROM THE STOCK-IN -TRADE, HELD BY THE ASSESSEE AND NOT FROM THE PROPERTY. LD.AR S UBMITTED THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CI T VS. ANSAL HOUSING AND CONSTRUCTION (2016) [389 ITR 373] (DELH I) HAS ITA NOS. 4392, 4393 & 4394/MUM/2016 : 14 : DISTINGUISHED THE FACTS OF THE CASE OF CIT VS. ANS AL HOUSING FINANCE AND LEASING CO. LTD., (2013) [354 ITR 180] (DEL), WHICH HAS BEEN RELIED UPON BY THE AO. THE ASSESSEE ALSO SUBMITTED THAT STOCK-IN-TRADE LYING UNSOLD AND VACA NT IN ITS HANDS IS HELD BY THE ASSESSEE AS A BUSINESSMAN AND NOT AS A LAND OWNER. THE ASSESSEE THEREFORE SUBMITS THAT SE CTION 22 OF THE ACT IS NOT APPLICABLE AND THEREFORE ANNUAL LETT ING VALUE OF UNSOLD FLATS AND SHOPS CANNOT BE SUBJECTED TO TAX. THE ASSESSEE SUBMITS THAT RATIO OF JUDGMENT IN THE CASE OF ANSAL HOUSING [354 ITR 180] (DEL) IS NOT APPLICABLE TO TH E CASE OF THE ASSESSEE DUE TO FOLLOWING REASONS: I. AS HELD BY THE HON'BLE DELHI HIGH COURT IN SUBSEQUENT JUDGMENT REPORTED IN 389 ITR 373 (DEL), THE RATIO WOULD NOT APPLY TO AN ASSESSEE DEVELOPER WHOSE BUSINESS CONSISTS OF DEVELOPMENT AND SALE OR LEASE. IN THE CASE OF THE ASSESSEE, BUSINESS IS TO DEVELOP AND TO SELL OR TO LEASE AND THEREFORE FACTS ARE CLEARLY DISTINGUISHABLE. II. IN THE SAID JUDGMENT REPORTED IN 354 ITR 180, THE REJECTION OF ALTERNATIVE PLEA BY THE HON'BLE SUPREM E COURT IN THE CASE OF NATIONAL STORAGE [66 ITR 596] (SC) HAS NOT BEEN CONSIDERED. THE SAID PART OF THE JUDGMENT, EXTRACTED EARLIER SHOWS THAT INCOME CANNO T BE PARTLY ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND PARTLY UNDER THE HEAD BUSINESS . IN THE PRESENT CASE, THE TREATMENT GIVEN THAT IF ST OCK IS SOLD IT IS ASSESSED UNDER THE HEAD BUSINESS INCOME AND IF IT IS UNSOLD IT IS ASSESSED UNDER TH E ITA NOS. 4392, 4393 & 4394/MUM/2016 : 15 : HEAD HOUSE PROPERTY, RUNS CONTRARY TO THE JUDGMEN T OF THE HON'BLE SUPREME COURT. TO THE EXTENT IT IS CONTRARY TO RATIO OF JUDGMENT OF THE HON'BLE SUPREM E COURT, THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IS NOT BINDING. III. IN THE SAID JUDGMENT, THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN UNIVERSAL PLAST [237 ITR 454] (SC) HAS NOT BEEN CONSIDERED. THE ASSESSEE SUBMITS THAT AS PER THE JUDGMENT, IF BUSINESS ASSET IS TEMPORARILY LET OUT WITHOUT INTENTION TO GO OUT OF BUSINESS, INCOME IS ASSESSABLE UNDER THE HEAD BUSINESS INCOME, AND NOT HOUSE PROPERTY. IN TH E PRESENT CASE, THE AO HAS TREATED HOLDING OF PROPERT Y VACANT AS STOCK IN TRADE AWAITING CUSTOMER AS NOT BEING BUSINESS. THE ASSESSEE SUBMITS THAT THERE IS NO INTENTION TO GO OUT OF BUSINESS AND RATHER FACTS SHOW THAT BUSINESS IS CONTINUING WITHOUT ANY BREAK AND FACTUM OF HOLDING STOCK VACANT IS IN COURSE OF BUSINESS AWAITING CUSTOMER AT RIGHT PRICE. SUCH A TREATMENT BY THE AO RUNS CONTRARY TO RATIO OF JUDGMENT OF THE HON'BLE SUPREME COURT. TO THE EXTENT, IT IS CONTRARY TO RATIO OF JUDGMENT OF THE HON'BLE SUPREME COURT, THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IS NOT BINDING. IV. THE ASSESSEE SUBMITS THAT ON THE ISSUE OF STOCK IN TRADE, THERE IS ANOTHER JUDGMENT OF A HIGH COURT AT GUJARAT WHICH IS FAVOURABLE TO THE ASSESSEE. THE ASSESSEE SUBMITS THAT THERE ARE TWO JUDGMENTS OF DIFFERENT HIGH COURTS AND NEITHER IS A JUDGMENT OF ITA NOS. 4392, 4393 & 4394/MUM/2016 : 16 : JURISDICTIONAL HIGH COURT AND THEREFORE, THE JUDGME NT FAVOURING THE ASSESSEE MAY BE FOLLOWED. 7.4. LD.AR SUBMITTED THAT THE HON'BLE BENCH AT MUMB AI HAS TAKEN A CONSISTENT VIEW THAT ALV OF STOCK-IN-TRADE IN CASE OF BUILDER IS NOT ASSESSABLE U/S.22 OF THE ACT. THE AS SESSEE RELIES ON THE FOLLOWING JUDGMENTS: A) CR DEVELOPMENT P LTD., IN ITA NO.4277/M/12, DT.13-05-2015; B) RUNWAL CONSTRUCTIONS, IN ITA NO.5408/M/16, DT.22-02-2018; C) ARIHANT ESTATES P. LTD., IN ITA NO.6037/M/16, DT.27-06-2018; D) M/S.SHIVSHANKAR SINGH AND OTHERS IN ITA NO.5236/M/16, DT.23-05-2018; E) HAWARE CONSTRUCTION P. LTD., IN ITA NO.3321/M/16, DT.31-08-2018; 8. LD. DR, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AO AND GROUNDS OF APPEAL, BY SUBMITTING THAT THOUGH THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE AND PUR CHASE OF LAND, BUILDINGS, DEVELOPMENT AND SELLING THEREOF ON DAY-TO-DAY BASIS, WHATEVER STOCK IS HELD AT THE YEAR END BECOM ES THE PROPERTY OF THE ASSESSEE AND THE DEEMED RENT HAS RI GHTLY BEEN ASSESSED BY THE AO AND BROUGHT TO TAX. LD. DR RELI ED HEAVILY ON THE ORDER OF AO, PRAYED FOR THE BENCH THAT THE O RDER OF CIT(A) MAY KINDLY BE SET ASIDE AND THAT OF AO BE RE STORED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE OBSERVE THAT IN THIS CASE, THE ASSESSEE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 17 : HAS UN-SOLD FLATS AT THE YEAR END, WHICH WERE SHOWN AS STOCK- IN-TRADE. UNDISPUTEDLY, THE BUSINESS OF ASSESSEE WA S TO PURCHASE THE LAND , TO CONSTRUCT BUILDINGS/FLATS AN D TO SELL THE SAME OR TO LEASE OUT THE SAME. THIS WAS ALSO UNDIS PUTED THAT THESE ACTIVITIES WERE ENSHRINED IN THE MAIN OBJECTS OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPA NY AS PLACED BEFORE US. THEREFORE, THE ISSUE BEFORE US FO R ADJUDICATION IS WHETHER THE ALV COULD BE ESTIMATED BY APPLYING PERCENTAGE AS COST OF UN-SOLD FLATS LYING AS STOCK IN TRADE AND SUBJECTED TO TAX. WE FIND THAT IN THIS C ASE, THE DECISION RELIED ON BY THE AO IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE AND LEASING CO. LTD., (2013) [354 I TR 180] (DEL) AS REFERRED TO ABOVE IS NOT APPLICABLE AS THE HON'BLE DELHI HIGH COURT IN THE SUBSEQUENT DECISION REPORTED IN [ 389 ITR 373] (DEL) HAS CATEGORICALLY HELD THAT RATIO WOULD NOT APPLY T O ASSESSEE, WHO IS A DEVELOPER AND WHOSE BUSINESS CON SISTS OF DEVELOPMENT AND SALE OR LEASE. IN THIS CASE, ASSES SEES BUSINESS IS THE DEVELOPMENT AND TO SELL OR TO LEASE THE PROPERTIES AND THEREFORE, THE FACTS ARE DISTINGUIS HABLE. IN THE CASE OF CIT VS. NEHA BUILDERS P. LTD., (2008) [296 ITR 661] (GUJ), THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT ANY INCOME REALIZED BY WAY OF LETTING OUT BY THE ASSESS EE FROM THE PROPERTY, WHICH IS HELD AS STOCK-IN-TRADE HAS TO BE ASSESSED AS BUSINESS INCOME. BUT IN THE PRESENT CASE BEFORE US, THE FACTS ARE SLIGHTLY DIFFERENT AND ON BETTER FOOTING AS IN THIS CASE, PROPERTY WAS HELD AS STOCK-IN-TRADE AND THE ASSESS EE HAS NOT LET OUT ANY PART OF THAT PROPERTY I.E. STOCK-IN-TRA DE. ITA NOS. 4392, 4393 & 4394/MUM/2016 : 18 : 9.1. WE FURTHER FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED IN SERIES OF DECISIONS BY THE CO-ORDINATE BENCHES WITH SAME FACTS. IN THE CASE OF M/S.RUNWAL CONSTRUCTIONS VS. ACIT IN ITA NO.5408/MUM/2016, DT.22-02-2018, THE CO-ORDINAT E BENCH HAS HELD AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED UPON. IT IS AN UNDISPUTED FACT THAT THE ASSESSEES ARE IN THE BUSINESS OF BUILDERS, DEVELOPERS AND CONSTRUCTION. BOTH THE ASSESSEES HAVE CONSTRUCTED V ARIOUS PROJECTS AND THE PROJECTS WERE TREATED AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT. 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 UNDER THE HEAD INCO ME FROM HOUSE PROPERTY AND COMPUTED NOTIONAL ANNUAL LETTING VALU E ON SUCH UNSOLD FLATS PLACING RELIANCE ON THE DECISION IN THE CASE OF ANS AL HOUSING FINANCE & LEASING CO. LTD. (SUPRA). THE ACTION OF THE AO WAS UPHELD BY THE LEARNED CIT(A). 8. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NE HA BUILDERS PVT. LTD. (SUPRA) CONSIDERED THE QUESTION WHETHER THE RENTAL INCOME RECEIVED FROM ANY PROPERTY IN THE CONSTRUCTION BUSINESS CAN BE CL AIMED UNDER THE HEAD INCOME FROM PROPERTY EVEN THOUGH THE SAID PROPERT Y WAS INCLUDED IN THE CLOSING STOCK. THE HON'BLE GUJARAT HIGH COURT HELD THAT 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 T HE BUSINESS STOCKS, WHICH MAY INCLUDE MOVABLE AND IMMOVABLE, WOULD BE T AKEN TO BE STOCK IN TRADE AND ANY INCOME DERIVED FROM SUCH STOCKS CANNO T BE TERMED AS INCOME FROM HOUSE PROPERTY. WHILE HOLDING SO THE HO N'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 PROPERTY, BUT IF THE PROPERTY IS USED AS 'STOCK-IN-TRADE', THEN THE SAID PROPERTY WO ULD 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 OU T THE SAME, THEN THAT WOULD BE THE 'BUSINESS' AND THE BUSINESS STOCK S, WHICH MAY INCLUDE 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, IT IS TO BE SEEN THAT THERE WAS DISTINCTION BETWEEN THE 'INCOME FROM BUSI NESS' AND ITA NOS. 4392, 4393 & 4394/MUM/2016 : 19 : '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 DEPO SITS. 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 CLE ARLY APPEAR THAT IT WAS TREATING THE PROPERTY AS 'STOCK-IN-TRADE'. N OT 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 P ORTIONS 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 SI MILAR ISSUE AS TO WHETHER THE UNSOLD PROPERTY WHICH IS HELD AS STOCK IN TRADE BY THE ASSESSEE CAN BE ASSESSED UNDER THE HEAD INCOME FRO M HOUSE PROPERTY BY NOTIONALLY COMPUTING THE ANNUAL LETTING VALUE FR OM SUCH PROPERTY AND THE COORDINATE BENCH CONSIDERING THE DECISION OF TH E HON'BLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE & LEASIN G CO. LTD. (SUPRA) WHICH THE AO RELIED UPON AND THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD . VS. CIT REPORTED IN 373 ITR 673, HELD THAT UNSOLD FLATS WHICH ARE IN ST OCK IN TRADE SHOULD BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND THERE IS NO JUSTIFICATION IN ESTIMATING RENTAL INCOME FROM THOSE FLATS AND NOTIO NALLY COMPUTING ANNUAL LETTING VALUE UNDER SECTION 23 OF THE ACT. W HILE HOLDING SO THE COORDINATE BENCH OBSERVED AS UNDER: - 3. THE LD. AR PLACED THE ORDER OF BOMBAY TRIBUNAL IN THE CASE OF M/S PERFECT SCALE COMPANY PVT. LTD., ITA NOS.3228 T O 3234/MUM/2013, ORDER DATED 6-9-2013, WHEREIN IT WAS HELD THAT IN RESPECT OF ASSETS HELD AS BUSINESS, 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 HOUSING FINANCE & L EASING CO. LTD., 354 ITR 180 (DELHI) IN SUPPORT OF THE PROPOSITION T HAT EVEN IN RESPECT OF UNSOLD FLATS BY THE DEVELOPER IS LIABLE TO BE TAXED AS INCOME FROM HOUSE 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. RECENTL Y THE HONBLE SUPREME COURT IN THE CASE OF M/S CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT, REPORTED IN (2015) 42 SCD 651, VIDE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 20 : JUDGMENT DATED 9-4-2015 HAS HELD THAT WHERE ASSESSE E COMPANY ENGAGED IN THE ACTIVITY OF LETTING OUT PROPERTIES A ND THE RENTAL INCOME RECEIVED WAS SHOWN AS BUSINESS INCOME, THE A CTION OF AO TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PRO PERTY IN PLACE OF INCOME FROM BUSINESS SHOWN BY THE ASSESSEE WAS H ELD TO BE NOT JUSTIFIED. THE HONBLE SUPREME COURT HELD THAT SINC E THE ASSESSEE COMPANYS MAIN OBJECT, IS TO ACQUIRE AND HELD PROPE RTIES AND TO LET OUT THESE PROPERTIES, THE INCOME EARNED BY LETTING OUT THESE PROPERTIES IS MAIN OBJECTIVE OF THE COMPANY, THEREF ORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. ON THE VERY SAME ANALOGY IN T HE INSTANT CASE, ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCTI ON AND DEVELOPMENT, WHICH IS MAIN OBJECT OF THE ASSESSEE C OMPANY. THE THREE FLATS WHICH COULD NOT BE SOLD AT THE END OF T HE YEAR WAS SHOWN AS STOCK-IN-TRADE. ESTIMATING RENTAL INCOME B Y THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPERTY WAS NOT JUSTIFIED INSOFAR AS THESE FLATS WERE NEITHER GIVEN ON RENT N OR 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 SA LE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDINGLY, WE DO NOT FI ND 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 FL ATS U/S.23 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 UN DER THE HEAD INCOME FROM BUSINESS. THUS, RESPECTFULLY FOLLOWING THE AB OVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE STOCK IN TRADE WHEN THEY WERE SOLD THEY ARE ASSESSABLE UNDER THE HEAD INCOME FROM BUS INESS WHEN THEY ARE SOLD AND THEREFORE THE AO IS NOT CORRECT IN BRINGIN G TO TAX NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF THOSE UNSOLD FLATS UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. THUS, WE DIRECT THE AO TO DELETE T HE ADDITION MADE UNDER SECTION 23 OF THE ACT AS INCOME FROM HOUSE PR OPERTY. 9.2. IN THE CASE OF M/S. C.R. DEVELOPMENTS PVT. LTD ., VS. JCIT IN ITA NO.4277/MUM/2012, DT.13-05-2015, THE CO - ORDINATE BENCH HAS HELD AS 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 ITA NOS. 4392, 4393 & 4394/MUM/2016 : 21 : TO COMPUTE THE ANNUAL VALUE. RECENTLY THE HONBLE S UPREME COURT IN THE CASE OF M/S CHENNAI PROPERTIES & INVESTMENTS LTD. V S. CIT, REPORTED 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 RECEIVED WAS SHOWN AS BUSINESS INCOME , THE ACTION OF AO TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PRO PERTY IN PLACE OF INCOME FROM BUSINESS SHOWN BY THE ASSESSEE WAS HELD TO BE NOT JUSTIFIED. THE HONBLE SUPREME COURT HELD THAT SINCE THE ASSES SEE COMPANYS MAIN OBJECT, IS TO ACQUIRE AND HELD PROPERTIES AND TO LE T OUT THESE PROPERTIES, THE INCOME EARNED BY LETTING OUT THESE PROPERTIES I S MAIN OBJECTIVE OF THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. ON THE VERY SAM E ANALOGY IN THE INSTANT CASE, ASSESSEE IS ENGAGED IN BUSINESS OF CO NSTRUCTION AND DEVELOPMENT, WHICH IS MAIN OBJECT OF THE ASSESSEE C OMPANY. THE THREE FLATS WHICH COULD NOT BE SOLD AT THE END OF THE YEA R WAS SHOWN AS STOCK-IN- TRADE. ESTIMATING RENTAL INCOME BY THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPERTY WAS NOT JUSTIFIED INSOFAR AS TH ESE FLATS WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAS INTENTION TO EAR N RENT BY LETTING OUT THE FLATS. THE FLATS NOT SOLD WAS ITS STOCK-IN-TRADE AN D INCOME ARISING ON ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDING LY, 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 TR ADE 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.23 OF THE I.T.ACT. 9.3. IN THE CASE OF ITO VS. M/S.ARIHANT ESTATES PVT . LTD., (AY.2012-13), DT.27-06-2018, THE CO-ORDINATE BENCH HAS HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE ORDERS OF THE AUTHORITIES BELOW. IDENTICAL ISSUE HAS COME UP BEFO RE THE COORDINATE BENCH IN THE CASE OF THE M/S. RUNWAL CONSTRUCTIONS V. ACIT (SUPRA) AND THE TRIBUNAL HELD AS UNDER: - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EES, ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, FILED RETU RN OF INCOME FOR A.Y. 2012- 13. THE ASSESSMENT WAS COMPLETED UNDER S ECTION 143(3) OF INCOME TAX ACT, 1961 (HEREINAFTER THE AC T) AND WHILE COMPLETING THE ASSESSMENT THE AO COMPUTED THE ANNUA L LETTING VALUE IN RESPECT OF UNSOLD FLATS HELD AS STOCK IN T RADE BY THE ASSESSEES. THE ASSESSEES CONTENDED BEFORE THE AO TH AT THEY ARE ENGAGED IN THE BUSINESS OF BUILDER, DEVELOPERS AND CONSTRUCTION AND THE PROPERTY THEY PURCHASED IS STOCK IN TRADE A ND THE INCOME ITA NOS. 4392, 4393 & 4394/MUM/2016 : 22 : FROM SALE OF SUCH DEVELOPED PROPERTY INTO FLATS IS ASSESSABLE AS BUSINESS INCOME. THEREFORE, THE UNSOLD FLATS WHICH ARE IN THE STOCK IN TRADE CANNOT BE BROUGHT TO TAX UNDER THE HEAD I NCOME FROM HOUSE PROPERTY SIMPLY BECAUSE THE FLATS REMAIN UNS OLD AT THE END OF THE YEAR. THE ASSESSEES ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. NEHA BUILDERS PVT. LTD. (296 ITR 661) IN SUPPORT OF THEIR CONTENT IONS. HOWEVER, THE AO REFERRING TO THE DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE & LEASING CO. LTD . (354 ITR 180) COMPUTED THE NOTIONAL ANNUAL LETTING VALUE ON THE U NSOLD FLATS AND BROUGHT TO TAX UNDER SECTION 23 OF THE ACT AS INCOM E FROM HOUSE PROPERTY. 4. ON APPEAL THE LEARNED CIT(A) SUSTAINED THE ACTIO N OF THE AO IN BRINGING TO TAX THE NOTIONAL ANNUAL LETTING VALUE U NDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF THE UNSO LD FLATS. AGGRIEVED, ASSESSEES ARE IN APPEAL BEFORE US. 5. THE LEARNED A.R. BEFORE US STRONGLY PLACING RELI ANCE ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF NEHA BUILDERS PVT. LTD. (SUPRA) SUBMITTED THAT IF THE PR OPERTY IS USED AS STOCK IN TRADE THEN SUCH PROPERTY WOULD BECOME OR P ARTAKE THE CHARACTER OF STOCK AND ANY INCOME DERIVED FROM SUCH STOCK IN TRADE WOULD BE INCOME FROM BUSINESS AND NOT INCOME FROM H OUSE PROPERTY. THE LEARNED COUNSEL ALSO PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF C.R. DEVELOP ERS PVT. LTD. VS. JCIT IN ITA NO. 4277/MUM/2013 DATED 13.05.2015 AND SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDI NATE BENCH HOLDING THAT IN THE CASE OF PROPERTY HELD AS STOCK IN TRADE THE INCOME SHOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND NO INCOME SHALL BE BROUGHT TO TAX AS NOTIONAL ANNUAL LETTING VALUE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. 6. THE LEARNED D.R., ON THE OTHER HAND, VEHEMENTLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE ALSO PLACED RELIANC E DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSI NG FINANCE & LEASING CO. LTD. (SUPRA) 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED UPON . IT IS AN UNDISPUTED FACT THAT THE ASSESSEES ARE IN THE BUSIN ESS OF BUILDERS, DEVELOPERS AND CONSTRUCTION. BOTH THE ASSESSEES HAV E CONSTRUCTED VARIOUS PROJECTS AND THE PROJECTS WERE TREATED AS S TOCK IN TRADE IN THE BOOKS OF ACCOUNT. FLATS SOLD BY THE ASSESSEES W ERE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THERE WERE C ERTAIN UNSOLD FLATS IN STOCK IN TRADE WHICH THE AO TREATED AS PRO PERTY ASSESSABLE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 23 : UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND COM PUTED NOTIONAL ANNUAL LETTING VALUE ON SUCH UNSOLD FLATS PLACING RELIANCE ON THE DECISION IN THE CASE OF ANSAL HOUSING FINANC E & LEASING CO. LTD. (SUPRA). THE ACTION OF THE AO WAS UPHELD BY TH E LEARNED CIT(A). 8. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NE HA BUILDERS PVT. LTD. (SUPRA) CONSIDERED THE QUESTION WHETHER THE RE NTAL INCOME RECEIVED FROM ANY PROPERTY IN THE CONSTRUCTION BUSI NESS CAN BE CLAIMED UNDER THE HEAD INCOME FROM PROPERTY EVEN THOUGH THE SAID PROPERTY WAS INCLUDED IN THE CLOSING STOCK. TH E HON'BLE GUJARAT HIGH COURT HELD THAT 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 BUSIN ESS STOCKS, WHICH MAY INCLUDE MOVABLE AND IMMOVABLE, WOULD BE T AKEN TO BE STOCK IN TRADE AND ANY INCOME DERIVED FROM SUCH STO CKS CANNOT BE TERMED 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 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 PROPER TY AND SELL IT OR TO CONSTRUCT AND LET OUT THE SAME, THEN THAT WOULD BE THE 'BUSINESS' AND THE BUSINESS STOCKS, WHICH MA Y INCLUDE MOVABLE AND IMMOVABLE, WOULD BE TAKEN TO BE 'STOCK-INTRADE', AND ANY INCOME DERIVED FROM SUCH S TOCKS CANNOT BE TERMED AS 'INCOME FROM PROPERTY'. EVEN OTHERWISE, IT IS TO BE SEEN THAT THERE WAS DISTINCT ION BETWEEN THE 'INCOME FROM BUSINESS' AND 'INCOME FROM PROPERTY' ON ONE SIDE, AND 'ANY INCOME FROM OTHER S OURCES'. THE TRIBUNAL, IN OUR CONSIDERED OPINION, WAS ABSOLU TELY 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 RAI SED BEFORE THE SUBORDINATE TRIBUNALS AND, ALL OF SUDDEN , THE TRIBUNAL STARTED APPLYING THE ANALOGY. 9. FROM THE STATEMENT OF THE ASSESSEE, IT WOULD CLE ARLY APPEAR THAT IT WAS TREATING THE PROPERTY AS 'STOCK- IN-TRADE'. NOT ONLY THIS, IT WILL ALSO BE CLEAR FROM THE RECOR DS THAT, EXCEPT FOR THE GROUND FLOOR, WHICH HAS BEEN LET OUT BY THE ITA NOS. 4392, 4393 & 4394/MUM/2016 : 24 : ASSESSEE, ALL OTHER PORTIONS OF THE PROPERTY CONSTR UCTED HAVE BEEN SOLD OUT. IF THAT BE SO, THE PROPERTY, RI GHT FROM THE BEGINNING WAS A 'STOCK-IN-TRADE'. 9. SIMILARLY THE COORDINATE BENCH HAS CONSIDERED SI MILAR ISSUE AS TO WHETHER THE UNSOLD PROPERTY WHICH IS HELD AS STOCK IN TRADE BY THE ASSESSEE CAN BE ASSESSED UNDER THE HEAD INCOME FRO M HOUSE PROPERTY BY NOTIONALLY COMPUTING THE ANNUAL LETTIN G VALUE FROM SUCH PROPERTY AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANSA L HOUSING FINANCE & LEASING CO. LTD. (SUPRA) WHICH THE AO REL IED UPON AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT REPORTED IN 3 73 ITR 673, HELD THAT UNSOLD FLATS WHICH ARE IN STOCK IN TRADE SHOUL D BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND THERE IS NO JU STIFICATION IN ESTIMATING RENTAL INCOME FROM THOSE FLATS AND NOTIO NALLY COMPUTING ANNUAL LETTING VALUE UNDER SECTION 23 OF THE ACT. WHILE HOLDING SO THE COORDINATE BENCH OBSERVED AS UNDER: - 3. THE LD. AR PLACED THE ORDER OF BOMBAY TRIBUNAL IN THE CASE OF M/S PERFECT SCALE COMPANY PVT. LTD., ITA NO S.3228 TO 3234/MUM/2013, ORDER DATED 6-9-2013, WHEREIN IT WAS HELD THAT IN RESPECT OF ASSETS HELD AS BUSINESS, IN COME 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 HOUSING FINAN CE & LEASING CO. LTD., 354 ITR 180 (DELHI) IN SUPPORT OF THE PROPOSITION THAT EVEN IN RESPECT OF UNSOLD FLATS 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 REST ORED BY THE CIT(A) TO THE FILE OF AO TO COMPUTE THE ANNUAL 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 TH AT SINCE THE ASSESSEE COMPANYS MAIN OBJECT, IS TO ACQUIRE A ND HELD PROPERTIES AND TO LET OUT THESE PROPERTIES, THE INC OME ITA NOS. 4392, 4393 & 4394/MUM/2016 : 25 : EARNED BY LETTING OUT THESE PROPERTIES IS MAIN OBJE CTIVE OF THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETT ING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSI NESS. ON 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 T HREE FLATS WHICH COULD NOT BE SOLD AT THE END OF THE YEA R WAS SHOWN AS STOCK-IN-TRADE. ESTIMATING RENTAL INCOME B Y THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPE RTY WAS NOT JUSTIFIED INSOFAR AS THESE FLATS WERE NEITH ER GIVEN ON RENT NOR THE ASSESSEE HAS INTENTION TO EARN RENT BY LETTING OUT THE FLATS. THE FLATS NOT SOLD WAS ITS S TOCK-IN-TRADE AND INCOME ARISING ON ITS SALE IS LIABLE TO BE TAXE D 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 A O IS DIRECTED TO DELETE THE ADDITION MADE BY ESTIMATING LETTING VALUE OF THE FLATS U/S.23 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 AS SESSED UNDER THE HEAD INCOME FROM BUSINESS. THUS, RESPECTFULLY FOLLOWING THE ABOVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE STOCK IN TRADE WHEN THEY WERE SOLD THEY ARE ASSESSABLE UN DER THE HEAD INCOME FROM BUSINESS WHEN THEY ARE SOLD AND THERE FORE THE AO IS NOT CORRECT IN BRINGING TO TAX NOTIONAL ANNUAL LETT ING VALUE IN RESPECT OF THOSE UNSOLD FLATS UNDER THE HEAD INCOM E FROM HOUSE PROPERTY. THUS, WE DIRECT THE AO TO DELETE THE ADD ITION MADE UNDER SECTION 23 OF THE ACT AS INCOME FROM HOUSE PR OPERTY. 9.4. IN THE CASE OF ACIT VS. M/S.HAWARE CONSTRUCTIO N PVT. LTD., IN ITA NOS.3321/MUM/2016 & 3172/MUM/2016 (AYS.2009-10 & 2011-12), DT.31-08-2018, THE CO-ORDI NATE BENCH HAS HELD AS UNDER: 4.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIALS ON RECORD. ON THE ABOVE ISSUE, WE COME AC ROSS ONE DECISION FOR THE ASSESSEE AND ANOTHER DECISION FOR THE REVENUE. THE DECISION IN NEHA BUILDERS PVT.LTD.(SUPRA) IS FOR THE ASSESSEE, WHERE AS THE DECISION IN ANSAL HSG. FINANCE & LEASING CO. LTD., (SUPRA) IS FOR THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PROD UCTS 88 ITR 192 (SC) ITA NOS. 4392, 4393 & 4394/MUM/2016 : 26 : HAS HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE TAX P AYER MUST BE ADOPTED. IN VIEW OF THE ABOVE POSITION OF LAW, WE SHALL FOLL OW THE DECISION IN NEHA BUILDERS PVT.LTD.(SUPRA). 4.5.1. WE NOW COME TO THE RELEVANT PROVISIONS IN TH E ACT. THE FOLLOWING SUB-SECTION (5) HAS BEEN INSERTED AFTER SUB-SECTION (4) OF SECTION 23 BY THE FINANCE ACT, 2017, W.E.F. 01.04.2018: (5) WHERE THE PROPERTY CONSISTING ANY BUILDING OR LAND APPURTENANT THERETO IS HELD AS STOCK-IN-TRADE AND T HE PROPERTY OR ANY PART OF THE PROPERTY IS NOT LET DURING THE W HOLE OR ANY PART OF THE PREVIOUS YEAR, THE ANNUAL VALUE OF SUCH PROPERTY OR PART OF THE PROPERTY, FOR THE PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETION OF CONSTRUCTION OF THE PROPERTY IS OBTAINED FROM TH E COMPETENT AUTHORITY, SHALL BE TAKEN TO NIL. THUS, IN ORDER TO GIVE RELIEF TO REAL ESTATE DEVELO PERS, SECTION 23 HAS BEEN AMENDED W.E.F. AY 2018-19 (FY 2017-18). BY THIS AME NDMENT, IT IS PROVIDED THAT IF THE ASSESSEE IS HOLDING ANY HOUSE PROPERTY AS HIS STOCK-IN- TRADE WHICH IS NOT LET OUT FOR THE WHOLE OR PART OF THE YEAR, THE ANNUAL VALUE OF SUCH PROPERTY WILL BE CONSIDERED AS NIL FO R A PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH A COMPL ETION CERTIFICATE IS OBTAINED FROM THE COMPETENT AUTHORITY. IN VIEW OF THE ABOVE AMENDMENT TO SECTION 23, WE AR E NOT ADVERTING TO THE OTHER CASE LAWS RELIED ON BY THE LD. COUNSEL. IN THE INSTANT CASE, THE ASSESSEE IS A BUILDER AND DEVELOPER. THE ISSUE OF TAXABILITY IS WITH REGARD TO UNSOLD FLATS. THE AY I S 2009-10. IN VIEW OF THE INSERTION OF SUB-SECTION (5) IN SECTION 23 BY THE F INANCE ACT, 2017, W.E.F. 01.04.2018 NARRATED HEREINBEFORE, WE UPHOLD THE ORD ER OF THE LD. CIT(A) AND DISMISS THE 2ND GROUND OF APPEAL FILED BY THE R EVENUE. 9.5. IT IS AMPLY CLEAR FROM THE DISCUSSION AND DECI SIONS AS HAVE BEEN MADE ABOVE THAT THE NOTIONAL ALV CANNOT B E DETERMINED ON THE COST OF STOCK-IN-TRADE IN ORDER T O MAKE ADDITION UNDER THE HEAD HOUSE PROPERTY QUA THE UN-SOLD STOCK LYING WITH THE ASSESSEE. ACCORDINGLY, WE DIS MISS THE GROUNDS RAISED BY REVENUE AND THE ORDER OF LD.CIT(A ) IS AFFIRMED ON THIS ISSUE. ITA NOS. 4392, 4393 & 4394/MUM/2016 : 27 : 9.6. IN THE RESULT, THIS APPEAL OF REVENUE IS DISMI SSED. 10. TO SUM-UP, ALL THE APPEALS OF REVENUE ARE DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-10-2019 SD/- SD/- (RAM LAL NEGI) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 03-10-2019 TNMM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A), MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI