Case Law Details
Pride Purple Properties Vs DCIT (ITAT Pune)
In a pivotal ruling, the Income Tax Appellate Tribunal (ITAT), Pune, in the case of Pride Purple Properties Vs DCIT, has overturned the retrospective determination of the annual letting value of un-sold residential units based on a prospective amendment. The judgement has significant implications for the real estate industry, particularly for builders holding unsold units.
Analysis: The ITAT, considering the provisions of section 23(4) of the Income-tax Act, 1961, highlighted that the Finance Act, 2017’s introduction of sub-section (5) to section 23 does not apply to the assessment year 2014-15. This sub-section provides that if a property held as ‘stock in trade’ isn’t let out during the year, its annual value is considered for inclusion under the ‘Income from House property’ after a period of one or two years. However, this provision came into effect from 01-04-2018, and as such, could not be applied retrospectively. Thus, the tribunal ruled that the addition of ₹2,52,000 to the total income was uncalled for and should be deleted.
Conclusion: Ruling upholds the principle that prospective amendments cannot be applied retrospectively, providing more clarity and certainty in taxation matters.
FULL TEXT OF THE ORDER OF ITAT PUNE
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