ACIT Vs Haware Constructions Pvt. Ltd. (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has dismissed an appeal filed by the Assistant Commissioner of Income Tax (ACIT) against Haware Constructions Pvt. Ltd. for the Assessment Year 2014-15. The Revenue’s appeal challenged the decision of the National Faceless Appeal Centre (NFAC), which had deleted additions made by the Assessing Officer (AO) concerning deemed rental income on unsold flats and a disallowance under Section 14A of the Income Tax Act, 1961.
Deemed Rental Income on Unsold Stock-in-Trade
The first ground of appeal by the Revenue contested the NFAC’s decision to delete the addition of Rs. 1,35,22,019/-, which the AO had made as “deemed income from house property” on unsold flats and shops held as stock-in-trade. The AO had applied Section 22 read with Section 24(b) of the Act, computing an 8.5% deemed annual value on the cost of construction of Rs. 22,72,60,825/-, followed by a 30% standard deduction.
The Revenue argued that the NFAC erred by considering the amendment made vide sub-section (5) inserted after sub-section (4) of Section 23 by the Finance Act, 2017, effective from April 1, 2018. The Revenue contended that this amendment was prospective and not applicable for AY 2014-15.
