Bhgawati Abhilasha Con Venture Vs ACIT (ITAT Mumbai)
Prospective amendment to section 23(5) cannot be applied to AY 2017-18 — no notional rental income on unsold flats held as stock-in-trade.
Summary: In Bhagawati Abhilasha Con Venture Vs ACIT, ITA No. 1698/Mum/2023, the ITAT Mumbai considered the addition of ₹31,56,978 as deemed rental income on unsold flats held as stock-in-trade by a real estate/construction business for AY 2017-18. The Tribunal noted its earlier decision in the assessee’s own case, holding that no deemed notional rental value could be assessed on unsold stock-in-trade for AY 2017-18 because the amendment to section 23(5) of the Income Tax Act, 1961, introducing such treatment, applied from 01.04.2018, relevant to AY 2018-19 onwards. The Tribunal also considered CIT v. Neha Builders Pvt. Ltd., 296 ITR 661 (Guj.), followed by Mumbai Tribunal decisions, including C.R. Development Pvt. Ltd. v. JCIT (OSD) and Runwal Constructions v. ACIT, while noting the contrary Delhi High Court decision in CIT v. Ansal Housing Finance & Leasing Company Ltd., 354 ITR 180 (Del.). In view of conflicting decisions, the Tribunal noted adoption of the assessee-favouring view following CIT v. Vegetable Products Ltd., 88 ITR 192 (SC), and directed deletion of the ₹31,56,978 addition. The appeal was allowed and the order was pronounced on 21.08.2026.
