Shree Infra Vs PCIT (ITAT Surat)
The Income Tax Appellate Tribunal (ITAT) Surat Bench has dismissed an appeal filed by Shree Infra, upholding an order by the Principal Commissioner of Income Tax (PCIT) that directed a fresh assessment for the Assessment Year 2018-19. The case revolves around the applicability of notional rental income on unsold flats held as stock-in-trade by the real estate developer.
The appeal, filed by Shree Infra, challenged the PCIT’s order dated February 23, 2024, which deemed the original assessment under Section 143(3) as erroneous and prejudicial to the interests of the revenue. The ITAT condoned a 22-day delay in filing the appeal, citing the smallness of the delay.
Background of the Case:
Shree Infra, a real estate developer, filed its nil income return for A.Y. 2018-19 on September 27, 2018. The case was selected for scrutiny specifically concerning “Income from Real Estate Business.” The Assessing Officer (AO) completed the assessment under Section 143(3) without any additions, accepting the declared income.
However, the PCIT, upon reviewing the assessment records, observed that Shree Infra had completed Phase-1 of its ‘River View Heights’ project in financial year 2014-15 and obtained the Building Use Certificate. By March 31, 2018, out of 260 flats in Phase-1, 230 were sold, leaving 30 unsold flats as part of the assessee’s closing stock.
