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M/s J V Constructions and Developers, Akhil Tower, Ground Floor, Ratan Nagar, Dahisar (E), Mumbai-400068 Vs. Asstt. Commissioner of Income Tax 25(2), IT Offices, Bandra-Kurla Complex, Bandra (E), Mumbai-400051
July, 02nd 2015
                     ,    ""  
      IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI

      BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM)
  .. ,      .. ,     

                  ./I.T.A. No.3282/Mum/2013
                (   / Assessment Year :2008-09)

 M/s J V Constructions and       / Asstt. Commissioner of Income
 Developers,                     Vs. Tax 25(2), IT Offices,
 Akhil Tower, Ground Floor,               Bandra-Kurla Complex,
 Ratan Nagar,                            Bandra (E),
 Dahisar (E),                            Mumbai-400051
 Mumbai-400068
        ( /Appellant)             ..     (    / Respondent)


          . /   . /PAN/GIR No. :AACFJ8189R

           / Appellant by               Shri Yegnesh Desai
              /Rspondent by             Shri Satyapal Kumar


            / Date of Hearing                :   01.7.2015
            /Date of Pronouncement : 01.7.2015

                                / O R D E R

PER B.R. BASKARAN (AM)

      The assessee has filed this appeal challenging the order dated
1.3.2013 passed by Ld CIT(A)-35, Mumbai and it relates to assessment
year 2008-09.


2.    The assessee is aggrieved by the decision of the ld.CIT(A) in holding
that the rent received from the letting of building, which forms part of
stock-in-trade, is assessable as business income of the assessee.
                                     2                 I T A N o . 3 2 8 2 / Mu m / 2 0 1 3






3.     We heard the parties and perused the record. The assessee is in
the business of building construction. The AO noticed that the assessee
has declared rental income of Rs.5 lakhs and claimed deduction of 30%
under the provisions of section 24 of the Income tax act, 1961 (the Act).
The AO noticed that the assessee has let out the properties held as stock-
in-trade, for a period of two months. The AO took the view that the rental
income received from the properties as held by the assessee as Stock-in-
trade is assessable as business income.      Accordingly, he assessed the
rental income of Rs.5 lakhs as business income of the assessee.
Accordingly, the claim for deduction of 30% of rental income claimed u/s
24 of the Act came to be disallowed. The ld.CIT(A) also confirmed the
same and hence the assessee has filed this appeal before us.


4.     The ld. Counsel for the assessee has placed reliance on the following
case laws to submit that the rental income derived from unsold flats held
as stock-in-trade is assessable under the head "income from house
property" :
a)    CIT V/s Ansal Housing and Construction Ltd
      (2013) 40 Taxmann.com 305(Delhi)
b)    M/s J B Estates, V/s ITO in ITA No.1974/Hyd/2011 (AY-2008-09)
      dated 12.10.2012 (Hyderabad Bench)
c)    Azimganj Estates Pvt. Ltd V/s DCIT in ITA No.1675/Kol/2008
      (AY-2005-06) dated 7.6.2012 (Kolkata Bench)
d)     CIT V/s Discovery Estates Pvt Ltd in ITA No.1089/2011 and
      1090/2011 and 1097 of 2011, Delhi High Court dated 18.2.2013.


4.     On the contrary, the ld. DR placed reliance on the decision of the
Hon'ble Supreme Court rendered in the case of M/s Chennai Properties
and    Investment Ltd V/s CIT in Civil Appeal No. 4494          of 2004 dated
9.4.2015 and contended that rental income earned by the assessee during
the course of carrying on business is assessable under the head "income
from business".
                                    3                 I T A N o . 3 2 8 2 / Mu m / 2 0 1 3




5.    We have carefully gone through the decision of Hon'ble Supreme
Court in the case of M/s Chennai Properties and Investment Ltd (supra)
and notice that the main object of the assessee company therein was to
acquire and hold the properties and to let out them.         Considering the
object of the assessee therein, the Hon'ble Supreme Court has held that
the rental income earned by the assessee was assessable under the head
"Income from business". In the instant case, it is not shown to us that the
object of the assessee company is to acquire and let out the property. On
the contrary, the AO himself has pointed out that the assessee is engaged
in the business of building construction. Further, the Hon'ble Delhi High
Court in the case of Ansal Housing and Construction Ltd (supra) has held
on clear term that Annual Letting Value of unsold flats owned by a
construction company is assessable under the head income from house
property.   In the instant case, the assessee has actually let out the
property. The Ld A.R further submitted that the AO has assessed rental
income under the head Income from House Property in the succeeding
year. Under these set of facts, we are of the view that the tax authorities
were not justified in assessing the rental income under the head income
from business.





6.    Accordingly, we set aside the order of the ld.CIT(A) and direct the
AO to assess the rental income earned by the assessee under the head
income from house property.
                                       4                  I T A N o . 3 2 8 2 / Mu m / 2 0 1 3




7.     In the result, the appeal filed by the assessee is allowed.
             Pronounced accordingly on 01st July, 2015.
                                             01st July, 2015    

       Sd                                            sd
(.. /I.P. BANSAL)                          (.. / B.R. BASKARAN)
         / Judicial Member                   /Accountant Member

 Mumbai: 01st Jul,2015.

. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant
2.      / The Respondent.
3.      () / The CIT(A)- concerned
4.       / CIT concerned
5.       ,     ,  /
      DR, ITAT, Mumbai concerned
6.      / Guard file.

                                                             / BY ORDER,
True copy
                                                      (Asstt. Registrar)
                                                ,   /ITAT, Mumbai

 
 
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