Modern Abodes Pvt. Ltd. Vs ITO (ITAT Mumbai)
Summary: The appeal was filed by Modern Abodes Pvt. Ltd. against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi dated 29.08.2022 for A.Y. 2014-15. The assessee had filed its return declaring a total loss of ₹.12,65,200/-. The Assessing Officer observed that the assessee was engaged in buying and selling immovable properties and had not generated income from sale or renting during the relevant year. Certain properties had been treated as deemed-to-be-let-out properties and deemed rental income was determined under section 23(1) of the Act. The Assessing Officer determined deemed rental income of ₹.20,61,170/-.
The assessee contended that the properties were held as stock-in-trade and that, in the case of certain property, no occupation certificate had been received. The Assessing Officer nevertheless made the addition. The CIT(A) partly allowed the assessee’s claim concerning deemed rental income, relying upon ITO v. Chem Mech Pvt. Ltd. and directing adoption of 8.5% instead of 10% for determining the annual value.
Before the Tribunal, the assessee contended that no deemed or notional rental income could be assessed in respect of properties held as stock-in-trade. It specifically relied upon the fact that the amendment introducing section 23(5) applied from A.Y. 2018-19 and contended that the amendment could not govern A.Y. 2014-15. The assessee also relied upon decisions including Pegasus Properties (P.) Ltd. v. Dy. CIT, Osho Developers, M/s. Sheth Developers Private Limited, Sunil Kumar v. ACIT, Sharan Hospitality (P.) Ltd. v. Dy. CIT, Brigade Enterprises Ltd. v. Addl. CIT and ITO v. Chem Mech Pvt. Ltd.
