Section 23(5)

Section 23(5) — the law in short

What the courts have decided on section 23(5), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Ramesh Dungarshi Shah v DCIT ITATCuts both waysValidity unconfirmed
  I'm a builder taxed on notional rent for unsold flats. From which year can that apply?
  From AY 2018-19. The Tribunal followed the Delhi High Court in holding that notional rent must be determined on vacant unsold flats held as stock in trade under the head income from house property, but held that no such addition can be made for assessment years before AY 2018-19, when s.23(5) began to operate.
• Shamdarshan Properties Pvt Ltd v DCIT ITATHelps taxpayerHigh Courts differ
  The officer has added notional annual letting value on my builder-client's unsold flats for AY 2012-13. Section 23(5) did not exist then. Can he do that?
  No, on the Mumbai Tribunal's view. Section 23(5) was inserted by the Finance Act 2017 with effect from AY 2018-19; for earlier years there was no provision bringing the notional annual value of unsold flats held as stock-in-trade to tax under section 22, and flats carried as stock generate business income when they are sold, not house property income while they lie unsold.
• Osho Developers v ACIT ITATHelps taxpayerSuperseded by amendment
  I'm a builder holding unsold flats as stock. Can notional rent be taxed as house property?
  For the years before AY 2018-19, no. The Tribunal held the annual value of flats held as part of the stock in trade of a builder's business could not be determined and brought to tax under the head income from house property, and that no addition can be made under s.22 on a notional basis.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.