Notional rent on unsold flats held as closing stock Vs. Revisionary powers under section 263 of the Income Tax Act, 1961
The Mumbai Bench of the Tribunal delivered a favorable verdict for the assessee in an appeal against the PCIT’s order dated 31/03/2022. The dispute centered around the PCIT invoking revisionary powers under section 263 of the Income Tax Act, 1961, arguing for notional rent on unsold flats held as closing stock.
Representing the assessee, counsel argued that the Assessing Officer had taken a valid view, aligning with a precedent (Osho Developers vs. ACIT) and that two plausible views existed. The PCIT’s reliance on CIT vs. Ansal Housing Finance & Leasing Company Ltd. was contested.
After evaluating both sides, the Tribunal upheld the assessee’s position, emphasizing the principle that where two views are possible, the PCIT cannot substitute their view. The decision in Osho Developers vs. ACIT was crucial in establishing that no addition under section 23 of the Act was warranted for vacant flats held as stock-in-trade.
Legal Precedent Affirmed: In line with settled law, the Tribunal quashed the impugned order, holding that the PCIT exceeded jurisdiction in exercising revisionary powers. A notable win for the assessee
The copy of the order is as under:
