26 February 2022
Dear Sir, One of concern is engaged in promoting/developing business, have completed all of this flats in a complex in the year 2012, completion certificate was also issued from authority of all flats, but till F.Y. they have some unsold flats showing his books of accounts & reflated in closing stocks. Is the Income Tax department charge deemed rent on there unsold flats ? Please clarify with section?
27 February 2022
YES. Vide Finance Act, 2017, sub-section (5) has been inserted in section 23 of the Income-tax Act, which reads as under:
“(5) Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil.” The same is amended to TWO years from AY 2020-21, by finance act, 2019. So after the period, the notional rent income would be added to P&L acc.
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