INCOME TAX ACT, 1961

Section 23(5)

Income from house property - Deemed rent on unsold stock under section 23(5) - Assessee contended that provisions of section 23(5) were prospective -

Assessee was a real estate developer AO taxed deemed rent on the unsold real estate property of assessee. Assessee contended that amendment to section 23(5) to tax notional deemed house property income on unsold units held as inventory was prospective and therefore, conversely, there were no provisions to tax the same in assessment year 2015-16. Held: Section 23(5) was inserted to provide relief to the builders and developers from ambit of deemed rent on unsold stock already present in the sanguine provisions of section 23, for a period of one year with effect from 1-4-2018. Hence, assessee was mistaken in its plea that deemed rent had been levied under the provisions of section 23(5) which as per claim of assessee was prospective. It was nobody's case that deemed rent was to be levied under provisions of section 23(5). Hence, plea of assessee that deemed rent was not leviable as section 23(5) was not in existence in the statute books for the concerned assessment year was totally unsustainable. However, AO had not levied deemed rent on municipal ratable value or any nearly similar instance. Hence, AO was directed to compute valuation of deemed rent after obtaining municipal ratable value from Departmental or Government machinery.

Suported by:CIT v. Tip Top Typography (2014) 368 ITR 330 (Bom) : 2014 TaxPub(DT) 3370 (Bom-HC).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2015-16

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