M/S. TRICON BUILDERS,PUNE vs. INCOME-TAX OFFICER, WARD - 7(3), PUNE

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ITA 475/PUN/2018Status: DisposedITAT Pune04 December 2018AY 2014-154 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no rental income can be computed when flats are held as stock-in-trade. Following a precedent, the addition made by the AO was directed to be deleted.

What were the facts?

The assessee, a builder, declared five flats in its closing stock. The AO computed deemed rent on these unsold flats as stock-in-trade, which was confirmed by the CIT(A).

What were the issues?

Whether deemed rent can be computed on flats held as stock-in-trade.

Which sections of the Income-tax Act were involved?

Section 23

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri V.L. Jain
For Respondent: Shri M.K. Verma

PER R.S.SYAL, VP :

This appeal by the assessee arises out of the order passed by the CIT(A)-5, Pune on 18-12-2017 in relation to the assessment year 2014-15. 2. The only issue raised in this appeal is against the confirmation of addition of Rs.1,68,000/- as deemed rent on unsold flats shown as stock in trade.

2 M/s. Tricon Builders

3.

Briefly stated, the facts of the case are that the assessee-

AOP is a Builder which declared five flats in its closing stock.

The AO, applying the provisions of section 23 of the Income-

tax Act, 1961 (hereinafter also called `the Act), computed the income under the head `Income from house property’ at Rs.1,68,000/- at the rate of Rs.4,000/- per month per flat. No relief was allowed in the first appeal.

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 Bench of the Tribunal in M/s. Cosmopolis Construction vs. ITO. Vide its order dated

12-09-2018, the Tribunal 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 fact, 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.

3 M/s. Tricon Builders

5.

In the result, the appeal is allowed.

Order pronounced in the Open Court on 04th December, 2018. (R.S.SYAL) उपा"य" उपा"य"/ VICE PRESIDENT उपा"य" उपा"य"

पुणे Pune; "दनांक Dated : 04th December, 2018 सतीश

आदेश क" क" क" "ितिलिप क" "ितिलिप "ितिलिप अ"ेिषत "ितिलिप अ"ेिषत अ"ेिषत / Copy of the Order is forwarded अ"ेिषत आदेश आदेश आदेश to : 1. अपीलाथ" / The Appellant;

2.

""यथ" / The Respondent; 3. आयकर आयु"(अपील) / The CIT (Appeals)-5, Pune 4. आयकर आयु" / The Pr. CIT-4, Pune 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड" फाईल / Guard file. //// आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

//// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

4 M/s. Tricon Builders

Date

1.

Draft dictated on 04-12-18 Sr.PS

2.

Draft placed before author 04-12-18 Sr.PS

3.

Draft proposed & placed before the JM second member

4.

Draft discussed/approved by Second JM Member.

5.

Approved Draft comes to the Sr.PS/PS Sr.PS

6.

Kept for pronouncement on Sr.PS

7.

Date of uploading order Sr.PS

8.

File sent to the Bench Clerk Sr.PS

9.

Date on which file goes to the Head Clerk

10.

Date on which file goes to the A.R.

11.

Date of dispatch of Order. *

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