Atul Jaiprakash Goel Vs DCIT (ITAT Pune)
The assessee is a builder who had certain unsold flats/units in his possession. Such flats were let out and the income was earned therefrom. The short question before us is as to whether such income would constitute ‘Income from house property’ or would partake of the character of Business income. In this regard, we find that the Hon’ble Bombay High Court in CIT Vs. Sane and Doshi Enterprises (2015) 58 taxmann.com 111 (Bom.) has dealt with a similar issue and held that the rental income received from unsold portion of the property constructed by the assessee, a real estate developer, is assessable as ‘Income from house property’. The facts of the instant case are on all fours with the case before the Hon’ble Bombay High Court. No contrary decision has been brought to our notice by the ld. DR. It is further relevant to note that the Finance Act, 2017 has inserted section 23(5) providing that where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to two (earlier it was one) years from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil. This shows that but for the exceptions provided under this provision, the legislature contemplates to compute income under such circumstances under the head `Income from house property’ and not as Business income. Respectfully following the afore referred precedent of the Hon’ble jurisdictional High Court, we hold that the rental income earned by the assessee from unsold portion of the property should be taken as ‘Income from house property’. This ground is, therefore, allowed.
