Osho Developers Vs ACIT (ITAT Mumbai)
The appeals were filed by Osho Developers against the orders of the CIT(A)-44, Mumbai dated 08.02.2019, arising from assessment orders under section 143(3) for Assessment Years 2014-15 and 2015-16. The common issue was whether annual letting value (ALV) could be assessed on a notional basis under the head “Income from house property” in respect of unsold flats held by the assessee, a real estate developer, as stock-in-trade.
For A.Y. 2014-15, the assessee had returned nil income. During scrutiny, the Assessing Officer noticed unsold flats in closing stock and, relying principally on the Delhi High Court decision in CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Del), held that their ALV was taxable under section 22. The AO computed ALV at 8% of the relevant property value, after considering the period for which occupation certificates had been received, and after allowing the standard deduction under section 24(a), resulting in an addition of Rs.43,15,097/-. The CIT(A) upheld the addition by relying on CIT Vs. Gundecha Builders (2019) 102 taxman.com 27 (Bom).
Before the Tribunal, the assessee contended that the flats were stock-in-trade of its business of civil construction and property development, were intended for sale and had not been let out. It relied on CIT vs. Neha Builders (2008) 296 ITR 661 (Guj), the Supreme Court decision in Chennai Property and Investments Ltd. Vs. CIT (2015) 373 ITR 673 (SC), and several coordinate-bench decisions including C.R. Development Pvt. Ltd., Runwal Constructions, Shree Balaji Ventures, Rafiaahmad Patel and ITO Vs. Arihant Estates Pvt. Ltd. The Revenue relied on Gundecha Builders.
