Pride Purple Properties, Mumbai V. Assistant Commissioner of Income Tax, Central Circle- 1(!), Pune, Pune

ITA 777/PUN/2022

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The case involves Pride Purple Properties, a partnership firm engaged in developing housing and commercial projects, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of deemed rent for unsold flats under section 23(4) of the Income Tax Act, 1961. The firm argued that the flats were stock-in-trade and not meant for self-occupation, thus not liable for tax under the head 'Income from house property'. However, the Tribunal noted that the amendment effective from April 1, 2017, specifically includes such properties under taxable assets. The Tribunal also dismissed the firm's contention regarding the excessive fair market value adopted for these flats, as no substantial evidence was provided to counter the Assessing Officer's findings based on market enquiries.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137453 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.777/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2018-19 Pride Purple Properties, 601, Orbit Plaza, New Prabhadevi Road, Prabhadevi, Mumbai- 400025. PAN : AAIFP0363M Vs. ACIT, Central Circle-1(1), Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 11, Pune [‘the CIT(A)’] dated 25.08.2022 for the assessment year 2018-19. 2. The appellant raised the following grounds of appeal :- “The following grounds are taken without prejudice to each other – On facts and in law: 1. The order of the ld CIT (A) -11, Pune in the case of the appellant is opposed to established law and the judicial pronouncement. The judicial discipline demands, that the decision of the jurisdictional Tribunal be followed. Assessee by : Shri Manoj Jain Revenue by : Shri M. G. Jasnani Date of hearing : 16.01.2023 Date of pronouncement : 19.01.2023 ITA No.777/PUN/2022 2 2. The ld CIT(A) erred both on facts as well as in law in confirming the addition of Rs.7,30,800/- as deemed rent u/sec 23(4) of the Act without considering the following important facts that : (a) All the unsold flats are stock in trade of the appellant firm and therefore the income from the same is not assessable u/s 23(1) of the Act. (b) The flats were never meant for self-occupation and cannot be referred to as residential units as envisaged in section 23(2) of the Act. (c) The appellant is not an occupier of the property as it holds the property till it is sold. 3. The ld CIT (Appeals) has erred in rejecting the alternate contention of the appellant that even if deemed rent is to be assessed u/s 23(4) of the Act it is to be assessed on the basis of fair value adopted by Municipal Corporation and not on the estimated basis, on the ground that the ALV suggested by the appellant as Fair Rental Vale for the purpose of determining the income from House Property are on a much lower side. 4. The appellant may kindly be permitted to add to our alter any of grounds of appeal, if deemed necessary.” 3. Briefly, the facts of the case are as under :- The appellant is a partnership firm engaged in the business of developer of housing and commercial project. The Return of Income for the assessment year 2018-19 was filed on 29.10.2018 declaring total income of Rs.4,68,12,000/- and the same was revised on 22.01.2019 at total income of Rs.4,68,12,000/-. Against the said return of income the assessment was completed by the Asstt. Commissioner of Income Tax, Central Circle-1(1), Pune (‘the Assessing Officer’) vide order dated 26.02.2021 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of ITA No.777/PUN/2022 3 Rs.4,75,42,800/-. While doing so, the Assessing Officer brought to tax the deemed annual value of 5 unsold flats under the provisions of section 23(4) under the head “Income from house property”. 4. Being aggrieved, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer. The ld. CIT(A) also confirmed the annual value of the properties as adopted by the Assessing Officer. 5. Being aggrieved, the appellant is in appeal before us in the present appeal. 6. The ld. AR submits that unsold flats in question are held as stock-in-trade and, therefore, same cannot be assessed under the head “Income from house property”. Without prejudice to the above, it is contended that the fair market value adopted by the Assessing Officer as confirmed by the ld. CIT(A), is excessive and exceeds the fair rental value as per the municipal records. 7. On the other hand, ld. Sr. DR submits that in view of the amendment brought into sub-section (4) of section 23 by the Finance Act, 2017 w.e.f. 1.4.2017 the annual value of unsold flats is liable to tax. ITA No.777/PUN/2022 4 8. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the taxability of the annual value of unsold flats under the head “Income from house property”. It is undisputed fact that 5 unsold flats were held as stock-in-trade. The Finance Act, 2017 has specifically brought amendment under the provisions of sub-section (4) of section 23, whereby it is specified that the annual value of unsold flats is liable to tax. The fact that the unsold flats are held as stock-in-trade has no relevance w.e.f. the assessment year 2018-19. As regards to the other contentions of the appellant that the annual value of unsold flats adopted by the Assessing Officer as confirmed the ld. CIT(A), is excessive, cannot be accepted as the Assessing Officer had brought on record annual rental value of the properties, based on the enquiry conducted by him in the market. The appellant had not brought any material rebutting that the material gathered by the Assessing Officer as a result of enquiries made by him, is wrong. In the circumstances, we are of the considered opinion that the order of the Assessing Officer as confirmed by the ld. CIT(A) is correct and reasonable in accordance ITA No.777/PUN/2022 5 with law. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A). 9. In the result, the appeal filed by the assessee stands dismissed. Order pronounced on this 19 th day of January, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 19 th January, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-11, Pune. 4. The Pr. CIT (Central), Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.