Case Law Details
Shamdarshan Properties Pvt. Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that determination of Annual Let Out Value (ALV) of unsold flats held as stock-in-trade is not sustainable in law. Accordingly, addition of ALV of unsold flats deleted.
Facts- During scrutiny assessment, AO found that the assessee has constructed 20 flats in a building known as “Sham Sharan” and the assessee disclosed 6 flats as transferred to fixed assets and remaining 14 flats are treated as stock in trade and are disclosed in the balance sheet. AO found that the assessee company has disclosed inventory value of 14 flats at cost of Rs.45,91,986/-. Whereas the remaining 6 flats are disclosed under the fixed Assets, and the assessee has offered the rental income after claiming vacancy allowance under income from house property as per the computation of income Rs.2,16,348/-.
AO dealt on the provisions u/s. 22 and u/s. 23(1) of the Act and computed the Annual let out value (ALV) of flats disclosed under stock in trade of Rs. 47,78,400/- and allowed deduction u/s 24(a) @ 30% and the balance amount was taxed under income from house property of Rs.32,92,135/- and assessed the total income of Rs. 26,67,910/- and passed the order u/s 143(3) of the Act dated 31.03.2015. CIT(A) confirmed the same. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Tribunal in the case of Unique Estates Development Co. Ltd. has held that in the present case, the assessee has not let out any flats and all were lying unsold as stock in trade. Accordingly, we are inclined to set aside the order of the CIT(A) and direct the AO to delete the addition on account of estimation of ALV in respect of unsold flats for A.Y. 2013-14. The appeal of the assessee is allowed.
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