ACIT Vs Akarshan Estate Pvt. Ltd. (ITAT Delhi)
The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre dated 04.07.2025 for Assessment Year 2018-19. The dispute arose from the assessment order passed under Sections 143(3) read with 144B of the Income-tax Act, 1961.
The assessee, a real estate developer, had developed a commercial project known as “M2K Corporate Park” located in Sector-51, Gurgaon. For Assessment Year 2018-19, it filed its return declaring a total income of Rs. 1,01,70,868. The case was selected for complete scrutiny to examine issues relating to disallowance under Section 40A(7), unsecured loans, investments/advances/loans, and stock valuation.
During assessment proceedings, the Assessing Officer observed that the assessee had converted commercial units measuring 1,84,294.33 square feet from stock-in-trade into investment property. According to the Assessing Officer, while 1,02,572 square feet had actually been let out, generating rental income of Rs. 5,51,62,000, the entire area could have earned rent amounting to Rs. 9,91,11,118. Based on this reasoning, the Assessing Officer added Rs. 4,39,49,118 as notional rent and completed the assessment by determining the total assessed income at Rs. 3,39,36,490.
The assessee challenged the addition before the CIT(A), who partly allowed the appeal. The CIT(A) examined the documentary evidence and found that the total built-up area of the project was 2,75,444 square feet. Out of this, 91,149.67 square feet had been sold, while the remaining 1,84,294.33 square feet, initially held as stock-in-trade, had been converted into investment property on 01.01.2018.
