SARANGA ESTATES PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(4), MUMBAI

ITA 4420/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4268 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Competent authority; Set aside
• Section: 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ITA NO. 4420/ MUM/20 1 7 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. SARANGA ESTATES PVT. LTD., 6 TH FLOOR, RNA CORPORATE PARK NEAR COLLECTORS OFFICE, KALANAGAR, BANDRA EAST, MUMBAI 400 051 VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3(4), MUMBAI PAN/GIR NO. AAFCS8401H ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI J.P. BAIRAGRA REVENUE BY SHRI CHAUDHARY ARUNKUMAR SINGH DATE OF HEARING 06 / 03 /201 9 DATE OF PRONOUNCEMENT 13 / 03 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX 51 [HEREINAFTER REFERRED TO AS THE LD CITA] , MUMBA I DATED 20/03/2017 FOR A.Y.2012 - 13 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. AO FOR COMPUTING DEEME D RENTAL INCOME OF RS.8,71,200/ - AND RS.15,00,000/ - IN RESPECT OF ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 2 CERTAIN UNSOLD FLATS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE INTERCONNECTED ISSUE INVOLVED THEREON IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN NOT ALLOWING STATUTORY DEDUCTION U/S. 24(A) OF THE ACT AT 30% OF GROSS ANNUAL VALUE COMPUTED AS ABOVE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND IS A BUILDER AND DEVELOPER OF HOUSING PROJECTS. IT FILED ITS RETURN OF INC OME FOR THE A.Y.2012 - 13 ON 29/09/2012 DECLARING TOTAL INCOME OF RS.9,79,23,426/ - . THE ASSESSEE HAD THE FOLLOWING FLATS AS UNSOLD IN ITS PROJECT AS AT THE END OF THE FINANCIAL YEAR : - A. FLAT AT JOLLY BHAVAN HAVING TOTAL AREA OF 1815 SQ.FT AT KHAR, MUMBAI B. FLAT AT AUROVILLA HAVING TOTAL AREA OF 3125 SQ.FT AT SANTACRUZ, MUMBAI. 3.1. THE LD. AO SHOW - CAUSED THE ASSESSEE TO EXPLAIN AS TO WHY THE ANNUAL LETTING VALUE OF THESE TWO UNSOLD UNITS SHOULD NOT BE ASSESSED IN ITS HANDS AS INCOME FROM HOUSE PROPERTY. I N RESPONSE, THE ASSESSEE SUBMITTED THAT IT IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT ACTIVITY AND HAD NEVER CONTEMPLATED INTO LEASING OR RENTING OF FLATS. FURTHER, IT WAS STATED THAT THE ASSESSEE CONTINUED TO OCCUPY THE SAID FLATS FOR THE PURPOSE OF IT S BUSINESS AND THAT THE SAME ARE OUTSIDE THE PURVIEW OF SECTION 22 OF THE ACT. FURTHER, IT WAS PLEADED THAT THESE UNSOLD FLATS ARE PAR T OF ITS INVENTORY OF STOCK IN TRADE AND HENCE , INCOME DERIVED FROM ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 3 SUCH PROPERTY, IF ANY , CANNOT BE ASSESSED AS INCOME F ROM HOUSE PROPERTY. 4. THE LD. AO HOWEVER, DISREGARDED THE AFORESAID CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT ASSESSEE BEING THE OWNER OF THE AFORESAID TWO FLATS AND THAT THE DEEMED RENTAL INCOME NEED TO BE ASSESSED IN TERMS OF THE SECTION 22 OF TH E ACT. THE LD. AO PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE AND LEASING COMPANY LTD., REPORTED IN 354 ITR 180 (DEL) IN SUPPORT OF HIS CONTENTIONS. ACCORDINGLY, THE LD. AO OBSERVED THAT SINCE NO DETAILS REGARDING RENT PREVALENT IN THE AREA WERE AVAILABLE IN RESPECT OF THE AFORESAID TWO FLATS FOR WORKING OUT THE ANNUAL VALUE OF THE PROPERTY, THE LD. AO ADOPTED THE ANNUAL RENTAL VALUE AT RS.40/ - PER SQ.FT IN RESPECT OF THE AFORESAID TWO PROPERTIES AND MADE ADDITION TOWARDS DEEMED RENTAL INCOME FOR FLAT AT JOLLY BHAVAN TO THE TUNE OF RS.8,71,200/ - AND FOR THE FLAT AT AUROVILLA TO THE TUNE OF RS.15 ,00,000/ - . ACCORDINGLY, HE ADDED THE SUM OF RS.23,71,200/ - TOWARDS DEEMED RENTAL INCOME FROM HOUSE PROPERTY. THE LD. AO DID NOT GRANT ANY STATUTORY DEDUCTION @30% OF THE GROSS ANNUAL VALUE COMPUTED HEREINABOVE WHILE COMPLETING THE ASSESSMENT. 5. THE LD. CIT(A) PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT REFERRED TO SUPRA AND OBSERVED THAT THE FA CTS OF THE ASSESSEE ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 4 ARE SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT SUPRA. THE LD. CIT(A) ALSO OBSERVED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD., VS. CIT IN CIVIL APPEAL NO.4494/ 2004 IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE IN AS MUCH AS IN THAT CASE, THE RENTAL INCOME WAS RECEIVED FROM LETTING OUT THE PROPERTIES WHICH WAS THE MAIN BUSINESS OF THE ASSESSEE. IN THE INSTANT CASE, THE LD. CIT(A) OBSERVED THAT ASSESSEE IS NO T ENGAGED IN THE BUSINESS OF LETTING OUT THE PROPERTIES AND HENCE, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES WOULD NOT APPLY TO THE CASE OF THE ASSESSEE. THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT ASSESSEE HAD A LSO ADMITTED THAT IT WAS NEVER ITS INTENTION TO EARN INCOME BY LETTING OUT THE FLATS. WITH THESE OBSERVATIONS, THE LD. CIT(A) UPHELD THE ACTION OF THE LD. AO. 6 . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD . AR AT THE OUTSET PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEHA BUILDERS PVT. LTD., REPORTED IN 296 ITR 661 (GUJ) WHICH HAD HELD THAT WHERE THE PROPERTY WAS HELD AS STOCK IN TRADE OF THE ASSESSEE, THEN THE SAID PROPERTY WOULD PARTAKE CHARACTER OF STOCK AND ANY INCOME DERIVED FROM STOCK WOULD BE INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY. IN THE INSTANT CASE, ADMITTEDLY, THE ASSESSEE HAD TREATED THE UNSOLD FLATS AT JOLLY BHAVAN AND AUROVILLA AS ITS ST OCK IN TRADE. IT IS NOT IN DISPUTE BEFORE US THAT THE ASSESSEE HAD NOT LET OUT ITS ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 5 UNSOLD FLATS AT JOLLY BHAVAN AND AUROVILLA TO ANY PERSON AND HAD RATHER ACTUALLY OCCUPIED THE SAME FOR THE PURPOSE OF ITS BUSINESS. HENCE, THERE CANNOT BE ANY ASSESSMENT OF NOTIONAL RENTAL INCOME OR DEEMED RENTAL INCOME UNDER THE HEAD INCOME FROM BUSINESS IN THE ABSENCE OF SPECIFIC PROVISIONS CONTAINED IN THE STATUTE. A T THIS JUNCTURE, IT WOULD BE PERTINENT TO NOTE THAT THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2017 W.E. F. 01/04/2018 WHEREIN A NEW SUB - SECTION (5) HAS BEEN INSERTED IN SECTION 23 OF THE ACT WHEREIN THE PROPERTIES HELD AS STOCK IN TRADE WHICH ARE NOT LET OUT DURING THE PREVIOUS YEAR, THE ANNUAL VALUE OF THE SAID PROPERTY , FOR A PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETION OF CONSTRUCTION AND PROPERTY IS OBTAINED FROM THE COMPETENT AUTHORITY , SHALL BE TAKEN TO BE NIL. THIS AMENDMENT BROUGHT IN SECTION 23 SUB - SECTION(5) OF THE ACT IS EFFECTIVE ONLY FROM A.Y.20 18 - 19 ONWARDS AND CANNOT BE APPLIED RETROSPECTIVELY. HENCE, THERE CANNOT BE ANY ADDITION THAT COULD BE MADE BASED ON NOTIONAL RENTAL INCOME OR DEEMED RENTAL INCOME IN THE HANDS OF THE ASSESSEE IN RESPECT OF UNSOLD FLATS HELD AS STOCK IN TRADE BY THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION UNDER THE HEAD INCOME FROM BUSINESS ALSO. WE HAVE ALREADY HELD THAT THE RENTAL INCOME , IF ANY , DERIVED FROM PROPERTIES HELD AS STOCK IN TRADE CANNOT BE ASSESSED AS INCOME FROM HOUSE PROPERTY BY PLACING RELIANCE ON T HE DECISION OF HONBLE GUJARAT HIGH COURT REFERRED TO SUPRA. WE FIND THAT THE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE REFERRED TO SUPRA HAD HELD THE DECISION IN FAVOUR OF THE REVENUE ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 6 WHICH ARE ON THE VERY SAME SET OF FACTS. WE FIND WHEN THER E ARE DIVERGENT VIEWS GIVEN BY TWO NON - JUSIDRICTIONAL HIGH COURTS B Y INTERPRETING THE PROVISIONS OF THE ACT , THEN THE CONSTRUCTION THAT IS FAVOURABLE TO THE ASSESSEE SHOULD HAVE TO BE CONSTRUED . RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS REPORTED IN 88 ITR 192 (SC) . 7.1. IN ANY CASE, THIS ISSUE HAD BEEN DULY ADJUDICATED BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHAMBER CONSTRUCTION PVT. LTD., VS. DCIT IN ITA NO.4418/M UM/2017 FOR A.Y.2012 - 13 DATED 30/11/2018 WHEREIN IT HAS BEEN HELD AS UNDER: - 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENC E HAS BEEN SOUGHT BY THE ASSESSEE BY PREFERRING THE PRESENT APPEAL, FOR ADJUDICATING AS TO WHETHER THE CIT(A) IS RIGHT IN LAW AND FACTS OF THE CASE IN CONCLUDING THAT THE DEEMED NOTIONAL LETTABLE VALUE OF THE COMPLETED UNSOLD FLATS HELD BY THE ASSESSEE COM PANY AS STOCK - IN - TRADE WAS LIABLE TO BE DETERMINED AND BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE FIND FROM A PERUSAL OF SEC. 22 OF THE ACT THAT THE ANNUAL VALUE OF ANY PROPERTY CONSISTING OF ANY BUILDING OR LAND APPURTENANT THERETO O F WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX, SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HE AD INCOME FROM HOUSE PROPERTY . FURTHER, THE DETERMINATION OF THE ANNUAL VALUE OF THE PROPERTY IS ENVISAGED IN SEC. 23 OF THE ACT. SEC. 23(1)(A) CONTEMPLATES THAT THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR IS TO BE DEEMED AS THE ANNUAL VALUE OF THE PROPERTY WHICH THOUGH MIGHT NOT HAVE BEEN LET OUT BY THE ASSESSEE. 8. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF THE AFORESAID STATUTORY PROVISIONS, AND ARE OF THE CONSIDERED VIEW THAT THOUGH THE ANNUAL VALUE OF A PROPERTY SIMPLICITER OWNED BY AN ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 7 ASSESSEE WOULD BE LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , HOWEVER A SIMILAR TREATMENT CANNOT BE ACCORDED TO A PROPERTY WHICH IS HELD BY THE ASSESSEE AS STO CK - IN - TRADE OF HIS BUSINESS. IN OUR CONSIDERED VIEW A PROPERTY WHICH IS HELD BY AN ASSESSEE AS STOCK - IN - TRADE OF HIS BUSINESS AS THAT OF A DEVELOPER WOULD LOOSE ITS COLOR AND CHARACTER AS THAT OF A PROPERTY SIMPLICITER OWNED BY HIM. OUR AFORESAID VIEW IS F ORTIFIED BY THE JUDGMENT OF THE HON BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NEHA BUILDERS (P) LTD. (2008) 296 ITR 661 (GUJ). THE HON BLE HIGH COURT WHILE DISPOSING OFF THE APPEAL FILED BY THE REVENUE IN THE CASE OF AN ASSESSEE COMPANY WHICH WAS EN GAGED IN THE BUSINESS OF CONSTRUCTION OF PROPERTY, HAD OBSERVED THAT WHERE A PROPERTY IS HELD AS STOCK - IN - TRADE, THEN THE SAME WOULD BECOME OR PARTAKE THE CHARACTER OF THE STOCK, AND ANY INCOME DERIVED THEREFROM WOULD BE INCOME FROM BUSINESS AND CANNOT BE HELD AS INCOME FROM PROPERTY. THE HON BLE HIGH COURT WHILE CONCLUDING AS HEREINABOVE HAD OBSERVED 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. DEVELOPMENT OF LAND OR PROPERTY WOULD ALSO BE ONE OF THE BUSINESSES FOR WHICH THE COMPANY WAS INCORPORATED. 8. TRUE IT IS, THAT INCOME D ERIVED 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 INCO ME FROM 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 IMM OVABLE, 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 N OT RAISED BEFORE THE SUBORDINATE TRIBUNALS AND, ALL OF SUDDEN, THE TRIBUNAL STARTED APPLYING THE ANALOGY. 9. ADMITTEDLY, THE LOWER AUTHORITIES HAD RELIED ON THE JUDGEMENT OF THE HON BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE & LEASING COMPANY LTD. (2013) 354 ITR 180 (DELHI) AND HAD THEREIN CONCLUDED THAT THE NOTIONAL LETTABLE VALUE OF THE UNSOLD FLATS HELD BY THE ASSESSEE WAS LIABLE TO BE DETERMINED AND BROUGHT TO TAX UNDER THE ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 8 HEAD INCOME FROM HOUSE PROPERTY . WE FIND THAT THE ISSUE UNDER CONSIDERATION BEFORE US I.E WHETHER THE NOTIONAL LETTABLE VALUE OF THE PROPERTY HELD BY AN ASSESSEE AS STOCK - IN - TRADE IN ITS BUSINESS AS THAT OF A DEVELOPER IS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , HAS BEEN DIFFERE NTLY ANSWERED BY THE HON BLE HIGH COURT OF GUJARAT IN CIT VS. NEHA BUILDERS PVT. LTD. (2008) 296 ITR 661 (GUJ) AND THE HON BLE HIGH COURT OF DELHI IN CIT VS. ANSAL HOUSING FINANCE AND LEASING LTD. (2013) 354 ITR 186 (DEL). WE ARE OF THE CONSIDERED VIEW THA T IN THE BACKDROP OF THE AFORESAID CONFLICTING VIEWS OF THE AFORESAID NON - JURISDICTIONAL HIGH COURTS, THE VIEW IN FAVOUR OF THE ASSESSEE AS HAD BEEN ARRIVED AT BY THE HON BLE HIGH COURT OF GUJARAT IS TO BE PREFERRED. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS (1973) 88 ITR 192 (SC), WHEREIN THE HON BLE APEX COURT HAD OBSERVED THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION IS POSSIBLE, THEN THAT CONSTRUCTION WHICH FAVOURS THE TAX PAYER MUST BE ADOPTED. FURTHER, WE FIND THAT ITAT, MUMBAI IN THE CASE OF ACIT - 15(2)(1) VS. M/S HAWARE CONSTRUCTION PVT. LTD. [ITA NO. 3321 & 3172/MUM/2016; DATED 31.08.2018] HAD AFTER DELIBERATING ON THE AFORESAID JUDGMENTS OF THE HON BLE HIGH COU RT OF GUJARAT IN NEHA BUILDERS (P) LTD.(SUPRA) AND THAT OF THE HON BLE HIGH COURT OF DELHI IN ANSAL HOUSING FINANCE & LEASING COMPANY LTD.(SUPRA), HAD BY TAKING SUPPORT OF THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192 (SC), HAD FOLLOWED THE DECISION OF THE HON BLE HIGH COURT OF GUJARAT IN NEHA BUILDERS (P) LTD. (SUPRA), AND HAD CONCLUDED THAT THE NOTIONAL LETTABLE VALUE OF THE UNSOLD FLATS HELD BY THE ASSESSEE CANNOT BE DETERMINED AND BROUGHT TO T AX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. STILL FURTHER, A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF M/S C.R DEVELOPMENT PVT. LTD. VS. JCIT - 8(1)(OSD), MUMBAI [ITA NO. 4277/ MUM/2012; DATED 13.05.2015]. IT WAS OBSERVED BY THE TRI BUNAL THAT ESTIMATING OF THE RENTAL INCOME OF THE FLATS HELD BY THE ASSESSES AS STOCK - IN - TRADE WAS NOT JUSTIFIED, AS THE SAID FLATS WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAD ANY INTENTION TO EARN RENT BY LETTING OUT THE SAME. WE FURTHER FIND THAT ANO THER COORDINATE BENCH OF THE TRIBUNAL I.E. ITAT, MUMBAI BENCH G, MUMBAI IN ITO - 2(1)(1), MUMBAI VS. M/S ARIHANT ESTATES PVT. LTD. [ITA NO. 6037/MUM/2016; DATED 27.06.2018] HAD RELIED ON AN EARLIER VIEW TAKEN BY THE TRIBUNAL IN THE CASE OF M/S RUNWAL CONST RUCTIONS VS. ACIT IN [ITA NO. 5408 & 5409/MUM/2016; DATED 22.02.2018], AND AFTER DELIBERATING ON THE JUDGMENT OF THE HON BLE HIGH COURT OF GUJARAT IN CIT VS. NEHA BUILDERS PVT. LTD. (2008) 296 ITR 661 (GUJ) AND THAT OF THE HON BLE HIGH COURT OF DELHI IN AN SAL HOUSING FINANCE & LEASING COMPANY LTD. (2013) 354 ITR 186 (DEL), HAS HELD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN BRINGING TO TAX THE NOTIONAL ANNUAL LETTABLE VALUE OF THE UNSOLD FLATS WHICH WERE HELD BY THE ASSESSEE AS STOCK - IN - TRADE. ON A SIMIL AR FOOTING A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE ITAT, MUMBAI BENCH G, MUMBAI IN THE CASE OF PROGRESSIVE HOMES, MUMBAI VS. ACIT - CIRCLE 4(4), MUMBAI [ITA NO. 5082/MUM/2016; DATED 16.05.2018) ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 9 AND ITAT H BENCH, MUMBAI IN HAWARE ENGINEERS & BUILDERS PV T. LTD. VS. DCIT, CENTRAL CIRCLE - 4(2), MUMBAI [ITA NO. 7155/MUM/2016; DATED 10.10.2018]. 10. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NEHA BUILDERS (P) LTD. (2008) 296 ITR 661 (GUJ) AND THE AFORESAID ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES HAD ERRED IN DETERMINING THE NOTIONAL LETTABLE VALUE OF THE UNSOLD FLATS HELD BY THE ASSESSEE COMPANY AS STOCK - IN - TRADE OF ITS BUSINESS OF BUILDERS AND PROPERTY DEVELOPERS, AND BRINGING THE SAME TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A). 11. THE APPEAL OF THE ASSESSEE IS ALLOWED. 7.2 . IN VIEW OF THE AFORESAID OBSERVATIONS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE DIRECT THE LD. AO TO DELETE THE ADDITION MADE TOWARDS ANNUAL LETTING VALUE OF RS.23,71, 200/ - IN RESPECT OF TWO UNSOLD FLATS. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN COURT ON 13/03/2019 SD/ - ( MAHAVIR SINGH ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI; DATED 13 / 03 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI ITA NO.4420/MUM/2017 M/S. SARANGA ESTATES PVT. LTD., 10 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//