DCIT-CC-8(4), MUMBAI, MUMBAI vs. PRASHASTI ENTERPRISE, MUMBAI

ITA 6718/MUM/2025Status: DisposedITAT Mumbai15 September 2026AY 2021-2224 pages
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What were the facts?

The assessee converted stock-in-trade into investment. The Revenue disputed the tax treatment of capital gains arising from the sale of these converted assets, arguing for taxation under both business and capital gains heads. The assessee also claimed that vacant flats should not be taxed as deemed rental income.

What did the Tribunal hold?

The Tribunal held that Section 28(via) of the Income Tax Act is not applicable for conversions prior to April 1, 2019. The issue of deemed rental income for vacant flats was restored to the Assessing Officer for fresh adjudication due to lack of evidence of bona fide efforts to let them out.

What were the issues?

Whether conversion of stock-in-trade to investment prior to April 1, 2019, attracts tax under Section 28(via), and whether vacant flats can be taxed as deemed rental income without proof of efforts to let them out.

Which sections of the Income-tax Act were involved?

Section 28(via),Section 23(1)(c),Section 45(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM

For Appellant: Shri Akshay Jain
For Respondent: Shri A.R. Dhyani, CIT DR
Hearing: 15.09.2026

Per Bench: The captioned cross-appeals are filed by the Revenue as well as the assessee against the order of the Commissioner of Income Tax Appeals – 50, Mumbai [in short, “the Ld. CIT(A)”], dated 04.08.2025 for the Assessment Years (AYs) 2021-22 and 2022-23. ITA Nos. 6

The order continues below.

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