Ramesh Dungarshi Shah Vs DCIT (ITAT Mumbai)
Assessee is an individual & engaged in the business of Civil Construction & Builders & Developers declaring total income from sale of flats amounting & other income. Assessee’s case was selected for limited scrutiny under CASS, for the reason that the assessee has not declared income from house property for unsold shops/flats which remained vacant during the year under consideration. AO made an addition on deemed rental income, after the standard deduction @ 30%, on the vacant flats which was shown in the balance sheet & P & L Account of the assessee as closing stock of the unsold flats as per Sec 23(4)(b) r.w.s. 23(1)
CIT(A) upheld the addition by relying on the decision of the jurisdictional coordinate bench in Dimple Enterprises vs. DCIT (2023) 154 taxmann.com 653. which has t considered the decision of the Gujrat HC in the case of CIT vs. Neha Builders Private Limited (2008) 296 ITR 0661 & the coordinate bench decision in the case of DCIT vs. Inorbit Malls Pvt. Ltd., ITA No. 2220/Mum/2021, order dated 11.10.2022.
The issues that require adjudication before the Tribunal is whether in light of the insertion of the provision of Sec 23(5) by way of Finance Act, 2017 which is w.e.f. 01.04.2018 is that since it applies retrospectively can there be an addition in the case of notional rent on unsold flats held as stock-in-trade & if so, whether the same has to be determined as per the Municipal Rentable Value.
