“Section 23(5)”

Section References (mined)Section 23Section 23(5)87 judgments

The decision most relied on for Section 23(5) is CIT v. Ansal Housing Finance & Leasing Co. Ltd. (354 ITR 180), cited in 208 judgments on BharatTax.

Leading authorities on Section 23(5)

CIT v. Ansal Housing Finance & Leasing Co. Ltd.

354 ITR 180 · 2013 · High Court

208

citing judgments

Annual Letting Value (ALV) of unsold stock-in-trade flats/shops held by a real estate developer can be assessed under Section 22 of the Income Tax Act, 1961, as income from house property. This approach was followed by the Assessing Officer (AO) based on this decision.

CIT v. Tip Top Typography

368 ITR 330 · 2014 · High Court

161

citing judgments

For computing income from house property, the Annual Letting Value (ALV) cannot be arbitrarily estimated by the Assessing Officer, but must be determined based on the Municipal ratable value of the property.

CIT v. Neha Builders Pvt. Ltd.

296 ITR 661 · 2008 · High Court

129

citing judgments

Income from unsold flats held as stock-in-trade by a builder or developer is assessable as business income, not income from house property, for assessment years prior to the insertion of Section 23(5) of the Income-tax Act.

CIT v. Oswal Agro Mills Ltd.

341 ITR 467 · 2012 · High Court

108

citing judgments

The Legislature abolished terminal depreciation under section 32(1)(iii) and the taxing of balancing charge under section 41(2), replacing these provisions with the requirement to reduce sale proceeds of depreciable assets from the block of assets.

Keshav Mills Ltd. v. CIT

23 ITR 230 · 1953 · Supreme Court

citing judgments

Income taxability depends on the real nature of the receipt and actual or constructive receipt of income, not merely on book entries. An amount is only "deemed to be received" if explicitly provided by the Income Tax Act, not by an assessee's unilateral intention.

CIT v. Gujarat Power Corporation Ltd.

352 ITR 583 · 2013 · High Court

citing judgments

Disallowance under Section 14A for interest expenditure is not justified if an assessee uses its own interest-free funds for investments generating exempt income, and borrowed funds are entirely utilized for business purposes, without evidence of diversion to earn tax-free income.

Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd.

114 Taxmann.com 545 · 2020 · Supreme Court

citing judgments

Property held as stock-in-trade is not assessable under the head 'Income from House Property' (Section 23). An Assessing Officer's decision not to tax such income, when supported by inquiry, typically cannot be considered erroneous and prejudicial under Section 263.

CIT v. Sane & Doshi Enterprises

377 ITR 165 · 2015 · High Court

citing judgments

Rental income from unsold property held by a real-estate developer is assessable under the head 'Income from House Property' and not as 'Business Income'. The treatment in books of account as stock-in-trade does not alter the income's character for tax purposes.

Judgments citing Section 23(5)

Shree Infra, Surat vs. Pr. CIT-1, Surat

In the result, the appeal of the assessee is dismissed

ITA 601/SRT/2024[2018-19]Status: DisposedITAT Surat22 Jul 2025AY 2018-19

Bench: Shri Siddhartha Nautiyal & Shri Bijayananda Pruseth

For Appellant: Shri Suresh K Kabra, CAFor Respondent: Shri Aashish Pophare, CIT DR

Section 143(3)Section 23(1)Section 23(5)Section 263

assessment proceedings, no inquiry or verification was made regarding the applicability of notional rent on unsold flats under the amended provisions of section 23(5), which came into effect from 01.04.2018. According to PCIT, this failure to examine and apply the correct provisions of law was considered as an omission ... going through the rival contention of the instant case, we note that firstly, no specific inquiry relating to applicability of Section 23(5) of the Act was made by the Assessing Officer. From the assessment records we note that neither any specific query regarding the deeming provisions of Section 23

Sh. Ranu Gupta, Delhi vs. Assistant Commissioner of Income Tax, New Delhi

Appeal are dismissed

ITA 2224/DEL/2025[2018-2019]Status: DisposedITAT Delhi02 Jun 2025AY 2018-2019

Bench: Sh. Satbeer Singh Godaraita No. 2224/Del/2025 : Asstt. Year : 2018-19 Sh. Ranu Gupta, Vs Acit, C-43, Ground Floor, National E-Assessment Centre, Soami Nagar, Mayur Bhawan, Connaught Lane, New Delhi-110017 Barakhamba, New Delhi-110001 (Appellant) (Respondent) Pan No. Arcpg2103M Assessee By: None Revenue By : Sh. Akhilesh Kumar Yadav, Sr. Dr Date Of Hearing: 02.06.2025 Date Of Pronouncement: 02.06.2025 Order

For Appellant: NoneFor Respondent: Sh. Akhilesh Kumar Yadav, Sr. DR

Section 143(3)Section 40Section 44A

Madras High Court has distinguished the decision of the Hon'ble Supreme Court in the case of Ramnik Lal Kothari by observing that section 23(5) of Income Tax Act of 1922 is not in pari materia with Section 44AD which is a special provision intended to help small businesses

Galaxy Developers, Ahmedabad vs. The ACIT., Circle-7(2), Ahmedabad

In the result, the Appeal of the assessee is allowed

ITA 1445/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad26 May 2025AY 2017-18

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokar

For Appellant: Shri Karan Shah, ARFor Respondent: Shri B.P. Srivastava, Sr.DR

Section 142(1)Section 143(2)Section 143(3)Section 22Section 23(5)Section 250Section 270A

Supreme Court in the case of Chennai Properties & Investments Ltd. v. CIT (2015) 373 ITR 673 (SC), and further argued that section 23(5), which specifically brings such notional rent within the tax net, was inserted only with effect from A.Y. 2018-19 and is prospective in nature ... assessee, and (iii) was not put to use for business or profession. 5. | The AO observed that prior to insertion of section 23(5), there was no express exclusion for stock-in-trade and the notional income from unsold flats had always been chargeable as income from house property

Ramesh Dungarshi Shah, Mumbai vs. Deputy Commissioner of Inocme Tax, Circle-3, Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 1220/MUM/2024[2015-16]Status: DisposedITAT Mumbai14 May 2025AY 2015-16

Bench: Ms. Kavitha Rajagopal, Jm & Shri. Girish Agarwal, Am Ramesh Dungarshi Shah Deputy Commissioner Of Income 108, Shreedhar Apartment, Maulana Tax, Circle – 3, Kalyan Vs. 2Nd Floor, Rani Mansion, Murbad Azad Road, Dombivali, East, Thane – 421201. Road, Kalyan West – 421301. Pan/Gir No. Aavps0931K (Assessee) : (Respondent) Assessee By : Shri. Devendra Jain, Adv. (Virtually) : Shri. Asif Karmali (Sr. Dr) Respondent By : 14.02.2025 Date Of Hearing Date Of Pronouncement : 14.05.2025 O R D E R Per Kavitha Rajagopal, J M: This Appeal Has Been Filed By The Assessee, Challenging The Order Of The Learned Commissioner Of Income Tax (Appeals), Delhi (‘Ld. Cit(A)’ For Short), National Faceless Appeal Centre (‘Nfac’ For Short) Passed U/S.250 Of The Income Tax Act, 1961 (‘The Act'), Pertaining To The Assessment Year (‘A.Y.’ For Short) 2015-16. 2. It Is Observed That The Assessee Has Filed This Present Appeal With A Delay Of 47 Days Beyond The Period Of Limitation For Which The Assessee Has Filed An Application For Condoning The Delay Along With The Reasons Specified For The Delay. After Hearing The Rival Contentions, We Deem It Fit To Condone The Delay In Filing The Appeal For The Reason That There Was ‘Sufficient Cause’ & Bonafide Reasons For The Delay. Delay Condoned.

For Appellant: Shri. Devendra Jain, Adv. (Virtually)For Respondent: 14.02.2025

Section 143(1)Section 143(3)Section 23(1)(a)Section 23(4)(b)Section 23(5)Section 250

whether the same has to be determined as per the Municipal Rentable Value. Also, whether the amendment brought to the provisions of Section 23(5) would be applicable for impugned year or prospectively from A.Y. 2018-19 onwards. It is observed that the assessee being proprietor of Advance Home Makers ... Municipal Rentable Value and that the same is to be determined not for assessment years prior to 2018-19 onwards as per Section 23(5) of the Act. Though the assessee has raised only one effective ground of appeal challenging the addition made, the reliance placed by counsels

Shamdarshan Properties Private Limited, Nariman Point Mumbai vs. DCIT Circle 3(3)(1), Aaykar Bhavan Mumbai

In the result, the grounds of appeal raised by

ITA 2798/MUM/2023[2013-14]Status: DisposedITAT Mumbai08 May 2025AY 2013-14

Bench: Shri Pawan Singh, Hon’Bleshri Girish Agrawal, Hon’Ble(Physical Hearing) Shyamdarshan Properties Pvt Limited, Dcit Circle 3(3)(1), Aayakar Bhawan, M.K. Road, 11/113, Mittal Towers, B-Wing, Mumbai-400020 Nariman Point, Mumbai-400021 Vs

Section 22Section 254(1)

Gujarat High Court in Neha Builder (supra) has taken a view in favour of the assessee. It was also held by Tribunal that section 23(5) cannot be applied for the year under consideration as its application is applicable from AY 2017-18. The ld AR of the assessee

Pramukh Aranya Developers, Junagadh vs. Pr. CIT, Rajkot-1, Rajkot

In the result, the appeal of the assessee (in ITA No

ITA 372/RJT/2024[2018-19]Status: DisposedITAT Rajkot28 Apr 2025AY 2018-19

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं./Ita No.372 /Rjt/2024 (निर्धारण वर्ष/Assessment Year: (2018-19) M/S. Pramukh Aranya Developers Office No. 5, First Floor, Cit Centre, Opp. New Collector Officer, B/H. Sardar Baug, Junagadh - 362001 The Pr. Cit-1, Vs. Aayakar Bhawan, Race Course Ring Road, Rajkot - 360001 स्थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaofp3393F (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) निर्धारिती की ओर से/Appellant By राजस्व की प्रत्यर्थी ओर से/Respondent By : Shri Mehul Ranpura, Ld. Ar : Shri Sanjay Punglia, Ld.Cit (Dr) सुनवाई की तारीख / Date Of Hearing घोषणा की तारीख/Date Of Pronouncement Per Dr. A. L. Saini, Am: : 04/02/2025 : 28/04/2025 आदेश / Order By Way Of This Appeal, The Assessee Has Challenged The Correctness Of The Order Dated 30.03.2024, Passed By The Learned Principal Commissioner Of Income- Tax (In Short “Ld Pcit"), Under Section 263 Of The Income-Tax Act, 1961 (Hereinafter Referred To As 'The Act'), For The Assessment Year2018-19.Grievances Raised By The Assessee, Which, Being Interconnected, Will Be Taken Up Together, Are As Follows: M/S. Pramukh Aranya Developers V. Pcit

For Respondent: Shri Mehul Ranpura, Ld. AR

Section 143(3)Section 22Section 23(5)Section 263

theassessment order passed by the assessing officer has not applied his mind and not conducted any inquiry /verification in respect (1) applicability of section 23(5) of the Act and there by not offeringnotional rental income on\ unsold flats and(2) payment of interest on negative capital ofpartner

DCIT, Range-3, Lucknow vs. M/S Welldone Infrastructure Pvt. Ltd., Lucknow

In the result, the appeal of the Revenue is dismissed

ITA 406/LKW/2020[2017-18]Status: DisposedITAT Lucknow22 Apr 2025AY 2017-18

Bench: Sh.Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y.2017-18 Dy. Commissioner Of Income Tax, Vs. M/S Welldone Infrastructure Range-3, Lucknow Private Limited, Lucknow Pan:Aaacw6354Q (Appellant) (Respondent) Assessee By: Sh. B.P. Yadav, Advocate Revenue By: Sh. Amit Singh Chauhan, Addl (Cit) & Sh. Sunil Kumar Rajwanshi, Addl Cit (Dr) Date Of Hearing: 10.02.2025 Date Of Pronouncement: 22.04.2025 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Revenue Against The Order Of The Ld. Cit(A)-2, Lucknow Under Section 250 Of The Income Tax Act, 1961 Allowing The Appeal Of The Assessee Against The Order Passed By The Ld. Ao Under Section 143(3) On 19.12.2019. The Grounds Of Appeal Are As Under:- “1. That The Ld. Cit(A)-2, Lucknow Has Erred In Law & On Facts In Deleting The Addition Of Rs.2,26,72,571/- Without Appreciate The Fact That The Assessee Is Involved In The Business Of Developing Properties & Selling It & Is Earning Rental Income Which Is Incidental To The "Revenue From Business Operations" Of The Assessee. 2. Ld. Cit(A) Had Erred In Law & On Facts Ignoring The Fact That The Assessee, While Filing Original Return Of Income Had Itself Considered That Rental Are In The Nature Of Revenue From Business Operations.

For Appellant: Sh. B.P. Yadav, AdvocateFor Respondent: Sh. Amit Singh Chauhan, Addl (CIT) & Sh

Section 143(3)Section 22Section 250

rental income had shown a progressive decline in subsequent years, as the units came to be sold. It was further submitted that section 23(5) of the Income Tax Act, 1961 did not differentiate between residential and commercial properties and income from both types of properties were assessable under ... contention of the appellant that the dominant objective of the appellant was not to earn rental income from the T5 properties. (vii) Section 23(5) of the I.T. Act provides no difference in Residential and commercial properties and incomes from both type of properties are taxed as Income from House

R G Developers, Pune vs. Commissioner Income Tax Officer, Circle 7, Pune

In the result, both the appeals filed by the assessee are allowed for statistical purposes

ITA 184/PUN/2025[2018-19]Status: DisposedITAT Pune20 Mar 2025AY 2018-19

Bench: Shri R. K. Panda & Ms. Astha Chandra

For Appellant: Shri Sharad ShahFor Respondent: Shri Arvind Desai, CIT-DR

Section 143(3)Section 40A(3)

account of deemed rent (notional income) for the remaining 43 flats which are held in stock in trade by applying the provision of section 23(5). 2. The Ld. AO and CIT-A erred in making addition of Rs. 40,93,600/- ignoring theory of Real Income. 3. On without ... erred in making addition of Deemed Rent in the AY 2018-19, whereas the amended provision of section 23(5) talks about taxability of Notional Rent Income after expiry of period of 2 years from the date of completion of building. 4. The appellant craves for to leave, add, alter

R G Developers, Pune vs. Commissioner Income Tax Officer, Circle 7, Pune

In the result, both the appeals filed by the assessee are allowed for statistical purposes

ITA 183/PUN/2025[2017-18]Status: DisposedITAT Pune20 Mar 2025AY 2017-18

Bench: Shri R. K. Panda & Ms. Astha Chandra

For Appellant: Shri Sharad ShahFor Respondent: Shri Arvind Desai, CIT-DR

Section 143(3)Section 40A(3)

DCIT Central Circle-4 (1), Mumbai vs. Oberoi Realty Limited, Mumbai

In the result, the appeals of the assessee in ITA No

ITA 5128/MUM/2024[2016-17]Status: DisposedITAT Mumbai10 Mar 2025AY 2016-17

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

For Appellant: Shri Yogesh Thar,ARFor Respondent: Shri Mahesh Pamnani (Sr. DR)

Section 143(3)Section 22Section 23Section 23(5)

5130/Mum/2024 A.Y. 2015-16, 2016-17, 2017-18 Oberoi Realty Limited, Mumbai Income-tax (Appeals) have ignored the facts that Section 23(5) of the Act came into effect from Assessment Year 2018-19. 3. Facts in brief are that the assessee is in the business of construction

Oberoi Realty Limited, Mumbai vs. Deputy Commissioner of Income Tax, Central Circle -4(1), Mumbai

In the result, the appeals of the assessee in ITA No

ITA 4803/MUM/2024[2017-18]Status: DisposedITAT Mumbai10 Mar 2025AY 2017-18

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

For Appellant: Shri Yogesh Thar,ARFor Respondent: Shri Mahesh Pamnani (Sr. DR)

Section 143(3)Section 22Section 23Section 23(5)

Oberoi Realty Limited, Mumbai vs. Deputy Commissioner of Income Tax, Central Circle -4(1), Mumbai

In the result, the appeals of the assessee in ITA No

ITA 4802/MUM/2024[2015-16]Status: DisposedITAT Mumbai10 Mar 2025AY 2015-16

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

For Appellant: Shri Yogesh Thar,ARFor Respondent: Shri Mahesh Pamnani (Sr. DR)

Section 143(3)Section 22Section 23Section 23(5)

Late Mahesh Ramanlal Modi L/H Manish Mahesh Modi, Bharuch vs. ACIT Circle-1, Bharuch

In the result, ground No. VII of appeal raised by the assessee is also allowed for statistical purposes

ITA 999/SRT/2024[2017-18]Status: DisposedITAT Surat04 Mar 2025AY 2017-18

Bench: Shri Pawan Singh & Shri Bijayananda Pruseth(Physical Hearing) Late Mahesh Ramanlal Modi, A.C.I.T., Through L-H Manish Mahesh Modi, Circle-1, Vs. Near Shakuntal Apartment, Dahej Bharuch. Bypass Road At Nandelav, Bharuch-392001 (Gujarat) Pan No. Adfpm 4030 N Appellant/ Assessee Respondent/ Revenue

Section 115BSection 23(5)Section 24Section 254(1)Section 40Section 69A

year. The Assessing Officer further held that reference made by assessee about the Finance Act, 2018 wherein concept of deemed rental income under Section 23(5) was inserted from 01/04/2018, the Assessing Officer was of the view that such amendment is not applicable for the year under consideration. 6 Late

Ambika Trading Corporation, Mumbai vs. DCIT 24(1), Mumbai

In the result the appeals filed by the assessee for both assessment years stands partly allowed

ITA 6058/MUM/2024[2015-16]Status: DisposedITAT Mumbai28 Feb 2025AY 2015-16

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 139(1)Section 147Section 148

23 and 24 should be 10 ITA No. 6057/Mum/2024; A.Y. 2014-15 Ambika Trading Corporation interpreted keeping in mind the subsequent introduction of section 23(5). The Ld.AR also submitted that sections 22 & 23 have to be interpreted reasonably and in a manner that it cause no hardship

Ambika Trading Corporation, Mumbai vs. DCIT 24(1), Mumbai

In the result the appeals filed by the assessee for both assessment years stands partly allowed

ITA 6057/MUM/2024[2014-15]Status: DisposedITAT Mumbai28 Feb 2025AY 2014-15

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 139(1)Section 147Section 148

ACIT - 14(1)(2), Mumbai vs. Sabarmati Capital One Limited, Mumbai

In the result, appeal of the assessee is partly allowed and that of

ITA 3687/MUM/2023[2015-16]Status: DisposedITAT Mumbai25 Feb 2025AY 2015-16

Bench: Shri Saktijit Dey, Hon'Ble & Shri Narendra Kumar Billaiya, Hon'Ble

For Appellant: Ms. Fereshte Sethna - AdvocateFor Respondent: Shri Dr. Kishor Dhule, CIT D/R

Section 143(3)Section 22Section 23(4)Section 23(5)Section 24Section 263

only and the single activity which the assessee is carrying on. It was pointed out to the AO that the impugned amendment in Section 23(5) of the Act has been brought into the statute from AY 2018-19 and prior to AY 2018-19, there is no provision provided ... have given a thoughtful consideration to the orders of the authorities below. It is true that provisions of Section 23(5) of the Act are effective from 01/04/2018 whereby notional annual value of property/part of the property held as stock-in-trade has been brought to tax subject to conditions

Sabarmati Capital One Ltd., Mumbai vs. DCIT, Ward-14(1)(2), Mumbai

In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed

ITA 3633/MUM/2023[2015-16]Status: DisposedITAT Mumbai25 Feb 2025AY 2015-16

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Ms. Fereshte Sethna – AdvocateFor Respondent: Shri Dr. Kishor Dhule, CIT D/R

Section 143(3)Section 22Section 23(4)Section 23(5)Section 24Section 263

Ferani Hotels Pvt Ltd, Mumbai vs. The Deputy Commissioner of Income Tax Circle -4(2)(1), Mumbai

In the result, appeal of the assessee bearing ITA No

ITA 3859/MUM/2024[2016-17]Status: DisposedITAT Mumbai26 Dec 2024AY 2016-17

Bench: Shri B.R. Baskaran & Shri Anikesh Banerjee

For Appellant: Shri Sanjay SawantFor Respondent: Shri Ashish Heliwal, CIT DR

Section 143(3)Section 24Section 250Section 80

Ld.CIT(A) upheld the view of the Ld.AO. Related to calculation of Annual Letting Value (ALV) on unsold stock of immovable propertiesby invoking section 23(5) of the Act, the Ld.AO has determined @7% ALP on unsold and unoccupied property amount to Rs. 307,67,62,578/- which works ... unsold flat and treated the income under the head “Income from house property”. The Ld.CIT(A) further stated that the amendment brought in section 23(5) of the Act w.e.f. 01/04/2018 and the Parliament in its wisdom allowed the relaxation for one year for holding the stock

Makewaves Sea Resorts Pvt Ltd, Mumbai vs. The Deputy Commissioner of Income Tax, Circle -4(3)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3861/MUM/2024[2017-18]Status: DisposedITAT Mumbai16 Dec 2024AY 2017-18

Bench: Smt. Beena Pillai & Smt. Renu Jauhrimakewaves Sea Rsorts Pvt. V/S. Dcit, Circle – 4(3)(1) Ltd. बनाम 6Th Floor, Aaykar Bhavan, Construction House – B, Mumbai-400020 2Nd Floor, 623, Linking Road, Khar(West), Mumbai-400052 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaacm0673J Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Sanjaj B. SawantFor Respondent: Shri R. R. Makwana

Section 143(3)Section 23(5)Section 250

appeal before CIT(A) who allowed part relied vide order dated 05.06.2024. In his order, Ld. CIT(A) observed that the amendment to section 23(5) comes into effect from AY 2018-19 and, therefore, assessee was not entitled to claim the benefit of section 23(5

Bengal Shapoorji Housing Development Pvt Ltd, Mumbai vs. DCIT, Circle 3(1)(1), Mumbai

In the result, the appeals filed by the assessee are allowed for statistical purpose

ITA 4641/MUM/2024[2020-21]Status: DisposedITAT Mumbai25 Oct 2024AY 2020-21

Bench: Ms. Kavitha Rajagopal, Jm & Smt. Renu Jauhri, Am

For Appellant: Dr. K. Shivaram, Sr. Adv &For Respondent: Shri Kailash C. Kanojiya &

Section 23(5)Section 250

DCIT 2.1. The Ld CIT(A)/NFAC failed to appreciate that the annual letting value of the inventory as per the provisions of Section 23(5) shall be NIL and hence, the entire income from house property assessed u/s 23(5) may be deleted. 2.2 The Ld CIT(A)/NFAC ... failed to appreciate that the provisions of Section 23(5) are not applicable in the facts and circumstances of the case and hence, the entire income from house property assessed u/s 23(5) may be deleted. 3. Merits Flats allotted to the allottees cannot