- (1.) This appeal under s. 260A of the IT Act, 1961 ("Act") is at the instance of an assessee and is directed against an order dt. 24th June, 2003 passed by the Tribunal, 'A' Bench, Kolkata in ITA No. 1291/Kol/2002 relating to asst. yr. 1998-99 by which the Tribunal allowed the appeal preferred by the Revenue and set aside the order of the CIT(A). Being dissatisfied, the assessee has come up with the present appeal.
(2.) The facts giving rise to filing of this appeal may be summed up thus : The assessee company is a property developer and builder. In course of its business activities, it constructed a building at 7, Camac Street, Kolkata - 17 in which there were some unsold flats which were appearing as stock-in-trade under the current assets in Sch. VI of the balance sheet furnished by the assessee and which were meant for sale. The costs of these unsold flats as appearing In the balance sheet was Rs. 26,09,456 and the assessee had shown the rental income of Rs. 49,00,612 under the head 'Operating income' in the P & L a/c. This income was received from letting out of unsold flats which were shown as stock-in-trade in the balance sheet and meant for sale. The assessee had shown the rental income under the head "Income from house properly" and, thus, claimed statutory reduction of Rs. 9,80,122 being the 1/5th on account of repair from annual letting out value of Rs. 49,00,612. The AO pointed out that in the wealth-tax proceedings the assessee had taken the plea that the unsold flats as shown in stock-in-trade were not assets for the purpose of WT Act and, hence, not taxable under the said Act. The AO took note of the fact that the Tribunal accepted the aforesaid contention in the appeal under the WT Act and was, therefore, of the view that since the assessee had been treating the unsold flats as stock-in-trade of its business, the income from such business assets in the nature of stock-in-trade should be treated as business income and not income from house property, as claimed by the assessee. The AO, therefore, rejected the claim of the assessee by treating the rental income from the unsold stock-in-trade flats under the head 'Income from house property' and rejected the claim of the statutory deduction on account of repair to the extent of 1/5th of the gross rental income.
(3.) Being dissatisfied, the assessee preferred an appeal before the CIT(A) who, however, accepted the contention of the assessee and held that the appropriate head for the income derived by way of letting out the unsold flats should be income from house property and not business income.;