Rafiahamad Rasul Patel, Sangli V. Income-tax Officer, Ward - 1 (5), Sangli

ITA 898/PUN/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0582 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-12-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 11-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY KAKNE
• Keywords: Competent authority
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL , VICE PRESIDENT . / ITA NO. 898 /PUN/20 1 9 / ASSESSMENT YEA R : 20 15 - 16 MR. RAFIAHAMAD RASUL PATEL PLOT NO.60/5, KHATUN VILLA, SHIVAJI NAGAR, MIRAJ, DIST. SANGLI - 416410 PAN : ABPPP5774L .... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 1(5), SANGLI / RESPONDENT A SSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI UDAY KAKNE / DATE OF HEARING : 23 .12.201 9 / DATE OF PRONOUNCEMENT : 23 .12.201 9 / ORDER PER R.S. SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(APPEALS) - 1 , KOLHAPUR ON 1 0 .0 4 .201 9 IN RELATION TO T HE ASSESSMENT YEAR 20 15 - 16 . 2. THE ONLY ISSUE RAISED IN TH IS APPEAL IS AGAINST THE TAXATION OF NOTIONAL RENTAL INCOME OF RS.5,54,400/ - ON UNSOLD STOCK - IN - TRADE AS B USINESS INCOME. 2 ITA NO. 898 /PUN/20 1 9 A.Y. 20 15 - 16 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BUILDER AND DEVELOPER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE WAS HAVING UNSOL D FLATS /SHOPS. THE ASSESSING OFFICER COMPUTED NOTIONAL RENTAL ON SUCH STOCK - IN - TRADE UNDER THE HEAD ` INCOME FROM HOUSE PROPERTY AT RS.5,54,400/ - . THE ASSESSEE PRAYED BEFORE THE CIT(A) THAT THE INCOME OUGHT TO HAVE BEEN CONSIDERED UNDER THE HEAD P ROFITS AND GAINS OF BUSINESS AND PROFESSION. THE LD. CIT(A) , RELYING ON AN ORDER PASSED BY PUNE BENCH TRIBUNAL IN THE CASE OF M/S. COSMOPOLIS CONSTRUCTION VS. ITO IN ITA NOS.230 & 231/PUN/2018, UPHELD THE CONTENTION OF ASSESSEE IN TAXING THE INCOME AS IN COME FROM BUSINESS . THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER ON THE GROUND THAT EVEN IF THE AMOUNT IS TAKEN AS CHARGEABLE TO TAX AS INCOME FROM BUSINESS, STILL THE SAME SHOULD NOT BE INCLUDED IN THE TOTAL INCOME. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE PUNE BENCHES OF THE TRIBUNAL IN M/S. COSMOPOLIS CONSTRUCTION VS. ITO. VIDE ITS ORDER DATED 12 - 09 - 2018, THE TR IBUNAL IN ITA NOS. 230 & 231/PUN/2018 HAS HELD THAT NO RENTAL INCOME CAN BE COMPUTED WHEN FLATS ARE HELD AS STOCK IN TRADE. IN REACHING THIS CONCLUSION, THE TRIBUNAL RELIED ON CERTAIN OTHER JUDGMENTS AND THE ORDERS. IN THE ABSENCE OF ANY DISTINGUISHING F ACT HAVING BEEN BROUGHT TO MY NOTICE BY THE LD. DR AND RESPECTFULLY FOLLOWING THE PRECEDENT, I OVERTURN THE IMPUGNED ORDER ON THIS SCORE AND DIRECT TO DELETE THE ADDITION. SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BENCHES OF THE TRIBUNAL IN M/S. TRICON 3 ITA NO. 898 /PUN/20 1 9 A.Y. 20 15 - 16 BUILD ERS VS. ITO / ITA NO.475/PUN/2018 VIDE ITS ORDER DATED 4.12.2018. 5. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT THE FINANCE ACT, 2017, W.E.F. 1.4.2018 HAS INSERTED SUB - SECTION (5) O F SECTION 23 PROVIDING THAT : ` WHERE THE PROPERTY CONSISTING OF ANY BUILDING OR LAND APPURTENANT THERETO IS HELD AS STOCK - IN - TRADE AND THE PROPERTY OR ANY PART OF THE PROPERTY IS NOT LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR, THE ANNUAL VALUE OF SUCH PROPERTY OR PART OF THE PROPERTY, FOR THE PERIOD UP TO TWO YE ARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETION OF CONSTRUCTION OF THE PROPERTY IS OBTAINED FROM THE COMPETENT AUTHORITY, SHALL BE TAKEN TO BE NIL. THIS AMENDMENT HAS THE EFFECT OF PROVIDING THAT FROM THE A.Y. 2018 - 19, STOC K IN TRADE OF BUILDING S ETC. SHALL BE LIABLE TO BE CONSIDERED FOR COMPUTATION O F ANNUAL VALUE UNDER THE HEAD ` INCOME FROM HOUSE PROPERTY AFTER TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETION OF CONSTRUCT ION OF THE PROPE RTY IS OBTAINED. AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2015 - 16, THE AMENDED SECTION 23 WILL NOT APPLY AND THE CASE WILL BE GOVERNED BY THE DECISIONS AS DISCUSSED ABOVE. 6 . IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRO NOUNCED ON 23 RD DAY OF DECEMBER , 201 9 . SD/ - R.S. SYAL /VICE - PRESIDENT / PUNE; / DATED : 23 RD DECEMBER, 201 9 . GCVSR 4 ITA NO. 898 /PUN/20 1 9 A.Y. 20 15 - 16 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT 3. THE CIT (APPEALS) - 1 , KOLHAPUR. 4. THE PR. CIT - 1 , KOLHAPUR. 5. , , - , / DR, ITAT, SMC BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE 5 ITA NO. 898 /PUN/20 1 9 A.Y. 20 15 - 16 * DATE 1 DRAFT DICTATED ON 23 .12.201 9 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23 .12.201 9 SR. PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR. PS/PS 7 DATE OF UPLOADING OF ORDER SR. PS/PS 8 FILE SENT TO BENCH CLERK SR. PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER