DCIT Vs Inorbit Malls Private Limited (ITAT Mumbai)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18 arising from an assessment made under Section 153A read with Section 143(3) of the Income-tax Act, 1961. The appeal challenged (i) deletion of addition made towards notional rental income on unsold units held as stock-in-trade, (ii) restriction of disallowance under Section 14A to the extent of exempt income, and (iii) deletion of disallowance under Section 14A while computing book profit under Section 115JB.
The assessee was engaged in the business of real estate development, leasing and management of shopping malls. During assessment proceedings, the Assessing Officer found that the assessee held completed but unsold units as closing stock. Relying upon the decision of the Delhi High Court in CIT Vs. Ansal Housing Finance and Leasing Company Ltd., the Assessing Officer treated the vacant unsold units as liable to tax under the head “Income from House Property” on the basis of their Annual Letting Value (ALV). Since the assessee did not furnish the municipal ratable value, the Assessing Officer estimated ALV at 8.5% of the value of the unsold inventory and computed Rs. 6,66,43,442 as income from house property after allowing the statutory deduction.
