Rushikesh construction Vs ITO (ITAT Pune)
Notional Rent on Work-in-Progress Invalid – Section 23 Misapplied
The ITAT held that the Assessing Officer wrongly invoked section 23(4)(b) to compute notional rental income on unsold properties held by a builder. The AO treated closing stock as finished goods and calculated notional rent, making an addition of ₹5.02 lakh.
However, the Tribunal observed that the properties were work-in-progress (WIP) and construction was not complete. Therefore, they could not be considered as completed units capable of generating rental income. Further, the amount disclosed by the assessee was merely casual receipts and not rental income.
In absence of any contrary evidence from the Revenue, the Tribunal held that section 23 was wrongly applied and deleted the addition. The appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2014-15 is directed against the order dated 04.11.2025 framed by National Faceless Appeal Centre, Delhi (NFAC) arising out of Assessment Order dated 25.12.2019 passed u/s. 143(3) r.w.s147 of the Income Tax Act, 1961 (in short ‘the Act’).
2. When the case called for, none appeared on behalf of the assessee despite due service of notice of hearing. On the previous date of hearing on 05.02.2026, there was no representation from the side of assessee. I therefore proceed to adjudicate the appeal exparte qua assessee with the assistance of ld. Departmental Representative.
