# Property Held as Stock-in-Trade

A real-estate builder/developer holds unsold flats as stock-in-trade of business. Question: should annual value still be taxed under House Property?

## Key Rule

Annual value of the house property is taxable under Income from House Property, even if it is held as stock-in-trade of a business.

## Important Relief — 2-Year NIL Window

Annual Value shall be treated as NIL for:

2 years from the end of the financial year in which the Certificate of Completion of the property is obtained from the competent authority
Subject to condition: such property is not let out during that period

## Practical Flow

1. Completion Certificate obtained → start counting 2 years from end of that FY

2. If property remains unsold AND not let out → AV = NIL

3. After 2 years OR if let out → normal HP provisions apply

Worked example

### Example 1

Example: XYZ Builders received Completion Certificate for Tower A on 15-Aug-2024 (FY 2024-25). The flats remained unsold and were not let out.

Period of NIL AV: From 01-Apr-2025 to 31-Mar-2027 (2 years from end of FY 2024-25)
From FY 2027-28, even if unsold, notional rent (as DLOP) will be taxed.

⚠️ Common exam mistakes

Treating builder's unsold flats as business stock and not taxing under House Property at all.
Counting the 2-year period from the date of completion certificate instead of from the end of the FY of completion.
Claiming NIL AV benefit even after letting out the property during the 2-year window.

Bare-Act text Section 23(5) · Income-tax Act, 1961 · click to expand

Section 23(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 two years 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.

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