| Question And Answer | |
|---|---|
| Subject: | NOTIONAL RENT u/S 22 AND 23 IN CASE OF RESIDENTIAL UNITS HELD IN STOCK IN TRADE BY BUILDERS |
| Category: | Income-Tax |
| Querist: | KARAN SHAH |
| Answered by: | Research Team |
| Tags: | estimate of income, income from house property, notional rent |
| Date: | August 30, 2021 |
A partnership firm engaged in to real estate and construction activity. During the course of assessment proceedings, the Ld. Officer had raised contention of calculating notional rent U/s 22 and 23 of the Income Tax Act, 1961 for AY 2017-18 on 6 unsold completed units held as stock in trade of the business, for which BU permission was already received 1 year ago. The Ld. Officer computed notional rent and made addition under the head “Income from House Property”.
Is the Officer right in making such addition, given the facts that the partnership firm (builder) was holding such unsold unit as stock in trade for conducting business activity of selling such constructed units. Further, Can the assessee alternatively claim vacancy allowance if income is taxed Income from House Property
Please refer judgement of Mumbai Tribunal in DCIT v. Bengal Shapoorji Housing Development Pvt Ltd ( ITA NO 4369 /Mum/ dt 22 -3 2021 ( AY . 2013 -14 ) www.itatonline .org . the Tribunal held that addition of notional rent estimated by the Assessing Officer in respect of unsold flats which are held as stock-in trade is held to be not valid. The assessee can also take the alternative claim of vacancy allowance.
DCIT v. Bengal Shapoorji Housing Development Pvt. Ltd. (ITA No. 4369/Mum/2019, dt. 22-3-2021 (AY. 2013-14)