PALM GROVE BEACH HOTELS PVT. LTD., MUMBAI V. DCIT CENT. CIR. 4(1), MUMBAI

ITA 5062/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4273 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 26-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Business income; Deemed to accrue or arise in india; Set aside
• Section: 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , A M AND SHRI AMARJIT SINGH, J M / I.T.A. NO. 5062 /MUM/201 7 ( / ASSESSMENT YEARS: 2013 - 14 ) PALM GROVE BEACH HOTELS PVT. LTD. CONSTRUCTION HOUSE B, 2 ND FLOOR, 623, LINKING ROAD, KHAR (W), MUMBAI - 400052 . / VS. DCIT CENTRAL CIRCLE - 4(1) 19 TH FLOOR, AIR INDIA BLDG, NARIMAN POINT, MUMBAI - 400021. ./ ./ PAN/GIR NO. : AAACP2735J ( / APPELLANT ) .. ( / RESPONDENT ) / DAT E OF HEARING: 07 .0 3 .2019 /DATE OF PRONOUNCEMENT: 13. 03 .2019 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 30 . 05 .2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 52 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y . 20 13 - 1 4 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN CHARGING NOTIONAL INCOME CONSIDERING ANNUAL LETTING VALUE OF UNSOLD FLATS WHICH IS CLOSING STOCK OF THE APPELLANT, TREATED AS INCOME FROM HOUSE PROPERTY AND MADE ADDITION OF RS.39,75,545/ - UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT FOLLOWING THE JURISDICTIONAL INCOME - TAX APPELLATE TRIBUNAL DECISION IN THE CASE OF M/S. C.R. DEVELOPMENTS PVT. LTD. V/S. JCIT - 8(1)(OSD), MUMBAI ITA. NO. 4277/M/2012 DECIDED ON 13 TH MAY, 2015. REVENUE BY: SHRI ABIRAMA KARTIKIYEN (DR) ASSESSEE BY : SHRI SANJAY SAWANE (AR) ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2013 - 14 ON 30 .0 9 .201 3 DECLARING TOTAL INCOME TO THE TUNE OF RS. 9,72,43,120 / - . THE CASE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE S U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS HAVING UNSOLD UNIT THE DETAILS OF WHICH IS HEREBY GIVEN AS UNDER.: - S. NO. PARTICULARS NO OF FLATS AMOUNT 1 WANWADI PROJECT - PUNE 77 6,97,95,580/ - 2 VAKOLA PROJECT - SANTACRUZ (E) 1 43,01,115/ - 3 RADHANARAYAN BANDRA (E) 2 1,13,38,000/ - 8,54,34,695/ - THEREAFTER, THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, T HE NOTIONAL VALUE OF THE UNSOLD UNIT WAS ASSESSED AFTER THE DEDUCTION U/S 24 OF THE ACT IN SUM OF RS.39,75,545/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BE FORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 & 2 : - 4. ISSUE NOS. 1 & 2 ARE INTER - CONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES THE ASS ESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION IN SUM OF RS. 39,75,545/ - UNDER THE HEAD OF INCOME FORM HOUSE PROPERTY ON ACCOUNT OF DEEMED INCOME FROM UNSOLD UNIT/FLATS WHICH WAS THE CLOSING STOCK OF THE ASSESSEE UNDER THE YEAR OF CONSIDERATION IN VI EW OF THE PROVISIONS U/S 22 & 23 OF THE ACT. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE WAS CARRYING THE BUSINESS OF CONSTRUCTION AND BUILDER AND DEVELOPMENT OF PROJECT AND WAS HAVING FINISHED UNIT IN THREE PROJ ECT NAMELY WANWADI PROJECT - PUNE IN SUM OF RS.6,97,95,580/ - , VAKOLA PROJECT IN SUM OF RS.43,01,115/ - & RADHANARAYA N IN SUM OF RS.1,13,38,000/ - , THE TOTAL IN ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 3 SUM OF RS.8,54,34,695/ - BUT THE AO HAS WRONGLY ASSESSED THE NOTIONAL INCOME AND ASSESSED THE TAX I N VIEW OF THE PROVISIONS U/S 23/ 24 OF THE ACT AND ADDED IN SUM OF RS. 39,75,545/ - TO THE INCOME OF THE ASSESSEE, HENCE, THE FIN DING OF THE CIT(A) CONFIRMING THE ORDER OF THE AO IS WRONG AGAINST LAW AND FACTS AND ARE LIABLE TO BE SET ASIDE. THE LD. REPRESEN TATIVE OF THE ASSESSEE HAS ARGUED THAT THE CASE OF THE ASSESSEE HAS DULY BEING COVERED BY THE DECISION OF THE HONBLE ITAT IN THE CASE OF FERANI HOTELS PVT. LTD. VS. ACIT CENTRAL CIRCLE 4(1) IN ITA. NO. 6332/M/2016 DATED 21.12.2018 , THEREFORE, THE CLAIM O F THE ASSESSEE IS LIABLE TO BE ALLOWED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE RECOR D AND CONSIDERING THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES , WE OBSE RVED THAT THE ASSESSEE IS CARRYING THE BUSINESS OF CONSTR UCTION AND BUILDER AND DEVELOPING THE PROJECT. HE WAS HAVING THE FINISHED UNIT OF THREE PROJECT SITUATED AT WANWADI PROJECT - PUNE IN SUM OF RS.6,97,95,580/ - , VAKOLA PROJECT IN SUM OF RS.43,01,115/ - & RADHANARAYAN IN SUM OF RS.1,13,38,000/ - , THE TOTAL IN SUM OF RS.8,54,34,695/ - THE NOTIONAL INCOME WAS ASSESSED IN SUM OF RS. 39,75,545/ - AND ADDED TO THE INCOME OF THE ASSESSEE. BEFORE GOING FURTHER, WE DEEM IT NECESS ARY TO ADVERT THE FINDING OF THE H ONBLE ITAT IN ITA. NO.6332/M/2016 DATED 21.12.2018 TITLED AS FERANI HOTELS PVT. LTD. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 6 TO 8 WHICH ARE HEREBY REPRODUCED AS UNDER .: - UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDI TION OF RS.13,22,90,044/ - UNDER THE HEAD OF INCOME FROM HOUSE PROPERTY ON ACCOUNT OF DEEMED INCOME FROM UNSOLD UNIT/ FLAT WHICH WAS CLOSING STOCK OF THE APPELLANT AS PER PROVISIONS OF SECTIONS 22 AND 23 OF THE ACT. AT THE VERY OUTSET, THE LD. REPRESENTATIV E OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE IS DERIVING ITS INCOME FROM HOTEL BUSINESS AND CONSTRUCTION. THE ASSESSEE WAS ALSO DERIVING INCOME FROM DIVIDEND, SHARE OF PROFIT AND SALE OF FLATS AND DUE TO THE RECESSION, THE ASSESSEE FAILED TO SOLD OUT ALL THE FLATS, THEREFORE, SOME FLATS REMAIN VACANT WHICH WAS BEING TREATED AS STOCK IN TRADE. THE AO HAS WRONGLY ASSESSED THE NOTIONAL RENT AND ASSESSED THE RENT IN VIEW OF THE PROVISION U/S 24 OF THE ACT WRONGLY WHICH CAN ONLY BE TREATED UNDER THE HEAD OF IN COME FROM ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 4 BUSINESS, THEREFORE, THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT THE CASE OF THE ASSESSEE HAS DULY BEEN COVERED IN CASE OF RUNWAL CONSTRUCTION VS. ACIT IN ITA. NO. 5408/M/2016 & C .R. DEVELOPMENTS VS. JCIT IN ITA. NO. 4277/M/2012 DATED 13.05.2015. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE FACTS OF THE CASE AND RELEVANT RECORD ON THE FILE, WE NOTICED THAT THE OBJECT OF THE ASSESSEE IS DERIVING OF INCOME FROM HOTEL BUSINESS AND CONSTRUCTION. THE ASSESSEE COMPANY IS RUNNING A FIVE STAR HOTEL IN THE NAME AND STYLE OF THE CARLTON AT KODAIKANNAL, TAMIL NADU, HAVING ROOMS AND OTHER FACILITIES. THE ASSESSEE ALSO DERIVED INCOME FROM DIVIDEND, SHARE OF PROFIT FROM PARTNERSHIP FIRM AND PROFIT FROM SALE OF FLATS. THE ASSESSEE FAILED TO SOLD THE FLAT WHICH WAS BEING TREATED BY HIM AS STOCK IN TRADE. THE AO ASSESSED THE NOTIONAL INCOME AND BROUGHT TO TAX AS INCOME AS HO USE PROPERTY WHICH HAS NO DOUBT CONFIRMED BY CIT(A). IT IS TO BE SEEN WHETHER THE INCOME OF THE ASSESSEE IS LIABLE TO BE TREATED AS HOUSE PROPERTY OR BUSINESS INCOME. IT IS NECESSARY TO DISCUSS THE FINDING IN THE CASE OF M/S. RUNWAL CONSTRUCTIONS VS. ACIT IN ITA. NO.5409/M/2016 DATED 22.02.2018 WHICH HAS BEEN GIVEN IN PARA NO. 7 TO 10 AND ARE HEREBY REPRODUCED AS UNDER.: - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED UPON. IT IS AN UNDISPU TED FACT THAT THE ASSESSEES ARE IN THE BUSINESS OF BUILDERS, DEVELOPERS AND CONSTRUCTION. BOTH THE ASSESSEES HAVE CONSTRUCTED VARIOUS PROJECTS AND THE PROJECTS WERE TREATED AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT. FLATS SOLD BY THE ASSESSEES WERE ASSESSE D 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 INCOME FROM HOUSE PROPERTY AND COMPUTED NOTIONAL ANNUAL LETTING VALUE ON SUCH UNSOLD FLATS PLACING RELIA NCE ON THE DECISION IN THE CASE OF ANSAL 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 NEHA BUILDERS PVT. LTD. (SUPRA) CONSIDERED THE QUESTION WHETHER THE RENTAL INCOME RECEIVED FROM ANY PROPERTY IN THE CONSTRUCTION BUSINESS CAN BE CLAIMED UNDER THE HEAD INCOME FROM PROPERTY EVEN THOUGH THE SAID PROPERTY WAS INCLUDED IN THE CLOSING STOCK. THE HON'BLE GUJARAT HIGH COURT HELD THAT IF THE BUSINESS OF THE ASS ESSEE 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 STOC KS 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 PROPERTY WOULD ALWAYS BE TERMED AS 'INCOME' FROM THE PROPERTY, BUT IF THE PROPERTY IS USED AS 'STO CK - 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 PROPE RTY 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 - ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 5 IN - TRADE', AND ANY INCOME DERIVED FROM SUCH STOCKS CANNOT BE TERMED AS 'IN COME FROM PROPERTY'. EVEN OTHERWISE, IT IS TO BE SEEN THAT ITA. NO.6332/M/2016 A.Y.2012 - 13 10 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 CONSIDE RED 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 - INTRADE'. 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 - IN - TRADE'. 9. SIMILARLY THE COORDINATE BENCH HAS CONSIDERED SIMILAR ISSUE AS TO WHETHER THE UNSOLD P ROPERTY WHICH IS HELD AS STOCK IN TRADE BY THE ASSESSEE CAN BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY NOTIONALLY COMPUTING THE ANNUAL LETTING VALUE FROM SUCH PROPERTY AND THE COORDINATE BENCH CONSIDERING THE DECISION OF THE HON'BLE DELHI H IGH COURT IN THE CASE OF ANSAL HOUSING FINANCE & LEASING CO. LTD. (SUPRA) WHICH THE AO RELIED UPON AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT REPORTED IN 373 ITR 673, HELD THAT UNSOLD FLATS WH ICH ARE IN STOCK IN TRADE SHOULD BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND THERE IS NO JUSTIFICATION IN ESTIMATING RENTAL INCOME FROM THOSE FLATS AND NOTIONALLY COMPUTING ANNUAL LETTING VALUE UNDER SECTION 23 OF THE ACT. WHILE HOLDING SO THE COORDIN ATE 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 TO 3234/MUM/2013, ORDER DATED 6 - 9 - 2013, WHEREIN IT WAS HELD THAT IN RESPECT OF ASSETS HELD AS BUSINESS, INCO ME 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 F ITA. NO.6332/M/2016 A.Y.2012 - 13 11 SUPREME COURT HELD THAT SINCE THE ASSESSEE COMPANYS MAIN OBJECT, IS TO ACQUIRE AND HELD PROPERTIES AND TO LET OUT THESE PROPERTIES, THE INCOME EARNED BY LETTING OUT THESE PROPERTIES IS MAIN OBJECTIVE OF THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. 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 THREE FLATS WHICH COULD NOT BE SOLD AT THE END OF THE YEAR WAS SHOWN AS STOCK - IN - TRA DE. ESTIMATING RENTAL INCOME BY THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPERTY WAS NOT JUSTIFIED INSOFAR AS THESE FLATS WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAS INTENTION TO EARN RENT BY LETTING OUT THE FLATS. THE FLATS NOT SOLD WAS ITS STOCK - IN - TRADE AND INCOME ARISING ON ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF AO FOR ESTIMATING RENTAL INCOME FROM THESE VACANT FLATS U/S.23 WHICH IS ASSESSEES STOCK IN TRADE AS AT TH E END OF THE YEAR. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY ESTIMATING LETTING VALUE OF THE ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 6 FLATS U/S.23 OF THE I.T. ACT. 10. IN THE CASE ON HAND BEFORE US IT IS AN UNDISPUTED FACT THAT BOTH ASSESSEES HAVE TREATED THE UNSOLD FLATS AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT AND THE FLATS SOLD BY THEM WERE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THUS, RESPECTFULLY FOLLOWING THE ABOVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE STOCK IN TRADE WHEN THEY WERE SOLD THEY AR E ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS WHEN THEY ARE SOLD AND THEREFORE THE AO IS NOT CORRECT IN BRINGING TO TAX NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF THOSE UNSOLD FLATS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THUS, WE DIRECT THE AO TO DELETE THE ADDITION MADE UNDER SECTION 23 OF THE ACT AS INCOME FROM HOUSE PROPERTY. 7. IN THE CASE OF TITLED AS M/S. C.R. DEVELOPMENTS P. LTD. VS. JCIT. THE RELEVANT PARA IN 5 IS HEREBY REPRODUCED AS UNDER.: - 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE UNDER CONSIDERATION HAS BEEN RESTORED BY THE CIT(A) TO THE FILE OF AO TO COMPUTE THE ANNUAL VALUE. RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF M/S CHENNAI PROPERTIES & INVESTMENTS LTD. VS. 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 PROPE RTY IN PLACE OF INCOME FROM BUSINESS SHOWN BY THE ASSESSEE WAS HELD TO BE NOT JUSTIFIED. THE HONBLE SUPREME COURT HELD THAT SINCE THE ASSESSEE COMPANYS MAIN OBJECT, IS TO ACQUIRE AND HELD PROPERTIES AND TO LET OUT THESE PROPERTIES, THE INCOME EARNED BY L ETTING OUT THESE PROPERTIES IS MAIN OBJECTIVE OF THE COMPANY, THEREFORE, RENT RECEIVED FROM THE LETTING OUT OF THE PROPERTIES IS ASSESSABLE AS INCOME FROM BUSINESS. ON THE VERY SAME ANALOGY IN THE INSTANT CASE, ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCTI ON AND DEVELOPMENT, WHICH IS MAIN OBJECT OF THE ASSESSEE COMPANY. THE THREE FLATS WHICH COULD NOT BE SOLD AT THE END OF THE YEAR WAS SHOWN AS STOCK - IN - TRADE. ESTIMATING RENTAL INCOME BY THE AO FOR THESE THREE FLATS AS INCOME FROM HOUSE PROPERTY WAS NOT JUS TIFIED INSOFAR AS THESE FLATS WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAS INTENTION TO EARN RENT BY LETTING OUT THE FLATS. THE FLATS NOT SOLD WAS ITS STOCK - IN - TRADE AND INCOME ARISING ON ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME. ACCORDINGLY, W E DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF AO FOR ESTIMATING RENTAL 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 V ALUE OF THE FLATS U/S.23 OF THE I.T. ACT. 8. IN THE FACTUAL POSITION OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE MENTIONED ABOVE. IN VIEW OF THE LAW RELIED UPON THE LAW REPRESENTATIVE OF THE ASSESSEE I.E. M/S. RUNWAL CONSTRUCTIONS VS. A CIT AND M/S. C.R. DEVELOPMENTS P. LTD. VS. JCIT (SUPRA), WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) ON THIS ISSUE IS WRONG AGAINST LAW AND FACTS WHEREAS THE CASE OF THE ASSESSEE HAS DULY BEEN COVERED BY THE LAW MENTIONED ABOVE, THEREFORE, BY HONORIN G THE ORDERS MENTIONED ABOVE. WE DELETED THE ADDITION RAISED BY ASSESSEE ON ACCOUNT OF NOTIONAL INCOME OF VACANT FLATS. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA NO. 5062 /M/201 7 A. Y. 2 013 - 14 7 5 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE N OTICED THAT THE FACTUAL POSITION OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTUAL POSITION OF DECISION OF THE HONBLE ITAT IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA). SINCE THE CASE OF THE ASSESSEE HAS DULY BEEN COVERED BY THE DECISION OF THE HONBL E ITAT IN THE CASE OF FERANI HOTELS PVT. LTD, THEREFORE, IN THE SAID CIRCUMSTANCES BY HONORING THE SAID DECISION , WE DELETED THE ADDITION RAISED BY AO ON ACCOUNT OF NOTIONAL INCOME OF THE VACANT FLATS. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEA L OF THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 .0 3 .2019 . SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 13. 03 .2019 V IJAY COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//