BHAVNESH SAINI, J.M.: ORDER This appeal by Revenue is directed against order of CIT(A)-I, Ludhiana dt. 17th Sept., 2004 for asst. yr. 2001-02. 2 . I have heard learned representatives of both parties and gone through observations of authorities below. I take this Departmental appeal for purpose of disposal on each ground as under. 3. Ground No. 1 : "(1) learned CIT(A) has erred both in law and on facts of case in allowing claim for deduction of interest under s. 24 at Rs. 1,00,000, being not admissible under head "Income from house property" on plot adjoining hospital purchased by assessee after availing loan from bank." 3.1 This ground relates to share in land and building adjoining to Adlakha Hospital. AO recorded facts regarding this property and mentioned that this property was elongated plot measuring 168 feet by 40 feet approximately. This plot is situated at Race Course Road and thus it had front width of 40 feet. This plot had vacant land in front and in end i.e. away from road, it had some constructed portion consisting of three rooms, store, bath room, etc., and backyard behind constructed portion. width of plot on back side was 36.3 feet. This property, also called 393, Basant Avenue, was owned by one Shri Sudershan Verma. Three separate shares of this property were sold by him to assessee, his wife Dr. Sharda Adlakha and Shri Sahil Adlakha vide three separate transfer deeds executed on different dates in years 2000 and 2001 as detailed below : Shares Date Name of Transferee(s) sold of transfer 1/3rd i.e. 27-1- Dr. A.L. Adlakha 241.66 Sq. yds. 2000 1/3rd i.e. 30-5- 1/3rd i.e. 30-5- Dr. Sharda Adlakha 241.66 Sq. yds. 2000 1/3rd i.e. Dr. A.L. Adlakha & Sh. Sahil 26-2- 241.66 Sq. yds. Adlakha (equal co-owners) 2001 AO on perusal of these deeds found that at front of this plot, there is Race Course Road and at back is Nayyar Niwas . It was seen that three separate plots measuring 54.3 feet by 40 feet approximately were sold on 27th Jan., 2000 i.e. from portion of plot which fell on Race Course Road was sold to Dr. A.L. Adlakha (assessee). Thereafter, on 30th May, 2000, middle portion of land measuring 54.3 feet by 40 feet (falling between constructed portion and portion of land already sold to Dr. A.L. Adlakha) was sold to Dr. Sharda Adlakha, wife of assessee. Finally, on 26th Feb., 2001, balance portion of property which actually contained constructed portion of total plot was sold jointly to Dr. A.L. Adlakha and Shri Sahil Adlakha. assessee has thus two separate shares in this property. One is individual share and second is jointly with his son. AO has observed that first plot i.e. vacant plot of land was purchased on 27th Jan., 2000. assessee has claimed interest on loan taken from Punjab National Bank for purchase of this property. assessee has shown interest on loan of Rs. 1,86,888. However, assessee has not given any details as to whether amount of interest claimed includes any interest on loan, if any, taken for constructed portion purchased in February, 2001. two portions are completely separate from each other and vacant plot of land in front cannot be called appurtenant to construction portion at back as in between them lies plot of Dr. Sharda Adlakha constructed portion and vacant land b e in g 54.3 feet apart. AO further observed that interest claimed is apparently in respect of first portion which is vacant plot of land. This being not house property, no deduction of interest under s. 24 was allowed to assessee. addition was made accordingly by sum of Rs. 1 lakh. 3.2 addition was challenged before CIT(A) and it was submitted that during year under consideration, assessee purchased property adjoining to Adlakha Hospital, Amritsar along with other family members by separate sale deeds. It is constructed house with land appurtenant thereto. That for acquiring this property, assessee has taken loan from Punjab National Bank, Amritsar. During year under consideration, assessee had paid interest on borrowed capital taken for acquiring property and claimed Rs. 1 lakh under head "Income from house property" as interest paid on borrowed capital. It was submitted that AO while framing assessment disallowed assessee s claim of interest paid on borrowed capital with contention that as there is no construction on property, interest, so paid, is not allowable. Sec. 24(b) of IT Act was relied upon in which it is provided that income chargeable under head "Income from house property" shall be computed after making following deductions : "(b) where property has been acquired, constructed, repaired, renewed o r reconstructed with borrowed capital, amount of any interest payable on such capital;" It was, therefore, submitted that above provision clearly stated that if interest was paid by assessee on borrowed capital taken for acquiring any property, interest so paid is eligible for deduction. assessee relied upon decision in case of CIT vs. National Insurance Co. Ltd. (1978) 113 ITR 37 (Cal) and Dwarkadas Shrinivas vs. Sholapur Spg. & Wvg. Co. Ltd. AIR 1954 SC 119. It was submitted that property is bundle of rights which owner can lawfully exercise to exclusion of all others. He is entitled to use and enjoy it as he pleases provided he does not infringe any law of State. It was further submitted that word property does not mean merely physical property but also means right, title or interest in it. decision in case of CIT vs. Daksha Ramanlal (1992) 105 CTR (Guj) 207 : (1992) 197 ITR 123 (Guj) was relied upon. It was further submitted that word property has wider connotation and includes land, building and building with land appurtenant thereto for purpose of ss. 22 to 27 of IT Act. It was further submitted that since different words are used with regard to term house property , therefore, meaning assigned in s. 24 should be taken. decision by Tribunal, Madras Bench in case of S. Govindarajan vs. ITO (1982) 1 ITD 722 (Mad) was relied upon in which it was held : "The word "acquired" in s. 24(1)(vi) would certainly comprehend purchase of sites, and it would be narrow view to hold that "property" would comprehend only building and not site on which it is constructed. claim of assessee was, therefore, allowable." 3 . 3 CIT(A) considered similar matter in case of Dr. Sharda Adlakha and deleted addition. Copy of same order is also filed on record. CIT(A) deleted addition by finding force in submission of assessee by relying upon order of Tribunal, Madras Bench in case of S. Govindarajan (supra). CIT(A) held that assessee had purchased house along with land adjoining thereto. portion of constructed building also falls in assessee s case. Moreover, as per s. 24 of IT Act, to claim deduction of interest, requirement is whether property has been acquired. CIT(A) also held that word property has not been defined and different words have been mentioned as "Income from house property". Therefore, word used in Act is to be used. CIT(A) also believed that under s. 24, word house property is not used and word property has been mentioned. CIT(A) also accepted contention of assessee that property, in question, has only one entrance from road and if entry is not allowed from that gate on account of existing sides two portions of this property cannot be approached for entry in their areas. CIT(A) considering facts and circumstances of case deleted addition. 3.4 Revenue is in appeal on ground mentioned above. learned Departmental Representative relied upon order of AO and submitted that for claiming deduction under s. 24(b), word deduction from income from house property has been used and, therefore, since assessee did not have house property within meaning of s. 24 as is explained in assessment order, therefore, AO rightly disallowed interest paid on borrowed capital. He has submitted that loan is taken for purchase of vacant land and for claiming deduction under s. 24, there should be some construction in property purchased out of borrowed funds. learned Departmental Representative also referred to facts explaining various portions owned by assessee and his family members. learned Departmental Representative submitted that decision of Madras Bench in case of S. Govindarajan submitted that decision of Madras Bench in case of S. Govindarajan (supra) is not applicable. 3.5 On other hand, learned counsel for assessee relied upon submissions made before CIT(A) and submitted that assessee along with his family members purchased constructed house with land appurtenant thereto through separate sale deeds in which assessee has acquired 50 per cent share and his wife has 33.33 per cent and his son has 16.67 per cent share. He has submitted that it is one property having one boundary wall with one entrance and is used for purpose of residence. He has further submitted that after purchase of property by three family members, boundary wall, entrance and situation of house remained same and it was used by all family members together. He has further submitted that assessee has taken loan from Punjab National Bank for acquiring property in question. learned counsel for assessee relied upon order of Tribunal, Madras Bench, in case of S. Govindarajan (supra) and decision of Tribunal, Chandigarh Bench in case of Master Sukhwant Singh vs. ITO (1998) 61 TTJ (Chd) 643. 3.6 I have considered rival submissions and material on record. AO has referred various deeds of sale through which property, in question, was purchased by assessee and his family members. assessment year involved is 2001-02. assessee claimed deduction on account of interest paid for borrowed funds which was taken for acquiring property in question. Details mentioned by AO clearly show that assessee had ownership right not only on account of land, in question, but also in constructed portion also. facts clearly justified that assessee and family members though purchased property, in question, through different sale deeds on different dates but their intention to purchase whole of house property is clear which consists of constructed portion as well as land appurtenant thereto. In previous year, relevant to assessment year in question, assessee and his all family members were owners of property. Even going by finding of AO, position of building was such that it has some open land and some constructed portions. CIT(A) rightly appreciated facts and circumstances of case while deleting addition because if property is taken in different portions, then it would not be in better use by assessee and his family members. It is not disputed fact that assessee and his family members are residing in aforesaid residential property which is having one boundary wall and one entrance. AO tried to bifurcate their shares for purpose of making disallowance. Moreover, AO disallowed interest because it was not house property. I do not agree with finding of AO because in s. 24(b) deduction is allowable where property has been acquired, constructed, repaired, renewed or reconstructed with borrowed funds, amount of any interest payable on such capital. Therefore, only word property has been used in this section, which is acquired from borrowed capital. CIT(A), therefore, rightly held that in s. 24(b) word house property is not used. CIT(A), therefore, rightly relied upon decision in case of S. Govindarajan (supra). This is direct decision applicable to facts and circumstances of case. It is settled law that while interpreting provisions of taxing statute, strict interpretation has to be applied. Since in s. 24(b), word house property is not used, therefore, entire findings of AO are not justified. 3.7 In case of Master Sukhwant Singh vs. ITO (supra), Tribunal, Chandigarh Bench held : "Income from house property Deduction under s. 24(1)(vi) Interest payable to estate office Assessee purchased leasehold commercial site in open auction Bid money payable in yearly instalments along with interest Unpaid price is debt incurred by assessee for acquiring property Capital passed into hands of assessee in form of leased property Transaction of allotment of property to assessee on instalment basis does give rise to relationship of lender and borrower between Estate Office and assessee Accordingly interest paid on unpaid price is admissible deduction under s. 24(1)(vi)." CIT(A) rightly deleted addition in matter. I do not find any infirmity in order of CIT(A). same is confirmed and appeal of Revenue on this issue is dismissed. 4. Ground No. 2 : "(2) learned CIT(A) has erred both in law and on facts of case in deleting addition of Rs. 20,000 under head "Income from house property" made by AO on account of assessee s share in ARV of Dharampur building." This issue relates to determination of annual value of building at Dharampur. assessee stated that building is incomplete as per photographs available on record taken at time of search on 6th Feb., 2001. However, perusal of record reveals that this building was purchased in 1993 and was called "Sunrise cottage". assessee has been showing this building in asset side of balance sheet of earlier years. During year under consideration, in December, 2000, this building was demolished and new construction was started on this building. However, building was existing till November, 2000 and assessee has not shown annual value for period April, 2000 to November, 2000. In absence of any details, AO took annual value of assessee s share in this building for period from April, 2000 to November, 2000 at Rs. 20,000 to best of his judgment and added same. addition was challenged before CIT(A) and it was submitted that assessee had one property at Dharampur which was purchased with co- owner Dr. Ved Prakash of Ludhiana in 1988 in equal shares. It was very old property. property was situated near railway track and contains one Lantor which was cracked. During year under consideration, constructed portion was demolished as it is situated near railway track. building was not in condition for any type of use by anybody. No part of building was ever put to use by assessee on account of its dilapidated conditions. In such circumstances, there could be no expectation of any rent, specially when there is railway track below property and on top of property, there is national highway. It was further submitted that there is no evidence with Department that property which was demolished even before search was capable of inhabitant. It was submitted that AO with presumption that building was demolished in December, 2000 had taken annual value for whole building for period April, 2000 to November, 2000. It was further submitted that even what is taxed under IT Act is only annual value of property. expression "annual" is adjective of word "year". What is taxed under s. 22 is, therefore, only yearly income of person derived from property. Annual value cannot mean monthly value, weekly value, daily or momentary value. Therefore, addition is unjustified. assessee has relied upon decision of Special Bench of Tribunal, Madras Bench (Special Bench) in case of M. Raghunandan vs. ITO (1985) 21 TTJ (Mad) 526 : (1985) 11 ITD 298 (Mad) in which it was held as under : "A basic concept in which s. 22 differs from all other sections is in brining in taxable period by reference to annual value . In other words, what is taxed is only annual value of property. expression annual is adjective of word year . What is taxed under s. 22 is, therefore, only yearly income of person derived from property. Legally and etymologically annual value cannot mean monthly value, weekly value, daily or momentary value. Therefore, here property income is brought to tax; if there is no annual value , there is no authority for taxing property income at all. If legislature wanted taxing of property income for shorter period, there was no purpose in utilising expression annual value of property . Therefore, where property does not give rise to annual value or gives income for lesser period, notional or otherwise, income from that property cannot be included in total income. This was relevant in instant case, where property was in possession of assessee only for part of year having been built during course of previous year. This is also of importance, where assessee has disposed of property during course of year. Therefore, if for one reason or other, assessee is not owner of property for full year, income from property cannot be included while working out his total income." CIT(A) considering decision of Special Bench in case of M. Raghunandan (supra) deleted addition. CIT(A) was also of view that entire finding of AO is based upon presumption and that facts stated by AO has been controverted by counsel of assessee because at time of search on 6th Feb., 2001, new lantor stood in place of old property which had been demolished and that Department had taken photographs of crack in lantor during said search. CIT(A) also accepted view that as per s. 22 only annual value of property could be taken for purpose of making addition. However, in this case, AO be taken for purpose of making addition. However, in this case, AO has taken only estimated value of property for part of year which is not permissible under law. CIT(A) accordingly deleted addition. 4.1 Revenue is in appeal. learned Departmental Representative relying upon order of AO submitted that no notional value was shown because property was demolished therefore, AO rightly took part of value because no details whatsoever was filed and assessment can be made as is made by AO. 4.2 On other hand, learned counsel for assessee relied upon submissions made before CIT(A) and relied upon order of Special Bench of Tribunal, Madras Bench in case of M. Raghunandan (supra). 4 . 3 I have considered rival submissions and material available on record. Sec. 22 of IT Act provides : "Income from house property : annual value of property consisting of any buildings or lands appurtenant thereto of which assessee is owner, other than such portions of such property as he may occupy for purposes of any business or profession carried on by him profits of which are chargeable to income-tax, shall be chargeable to income-tax under head Income from house property ." Sec. 23 provides determination of annual value and sub-s. (1)(a) provides that annual value of any property shall be deemed to be sums for which property might reasonably be expected to let from year to year. Letting means creation of interest of tenant in property therefore it should be capable of being let out to tenant. Hon ble Bombay High Court in matter of Shree Nirmal Commercial Ltd. vs. CIT (1991) 96 CTR (Bom) 54 : (1992) 193 ITR 694 (Bom) held that income from house property- charge-property owned by assessee should be capable of being let out. 4.4 AO himself mentioned certain facts and agreed to submissions of assessee that during part of year building was demolished and, therefore, AO has taken only part of value for purpose of making addition in year under consideration. CIT(A) relied upon decision of Special Bench of Tribunal, Madras Bench in case of M. Raghunandan (supra). From this decision of Special Bench expression "annual" is adjective of word "year". What is taxed under s. 22 is, therefore, only yearly income of person derived from property. annual value, therefore, cannot be taken on notional basis for part of year as per aforesaid decision. All facts on record, therefore, were clearly justified deletion of addition. CIT(A) deleted addition because in year under appeal annual value of property had not been taken by AO. decision in case of M. Raghunandan was, therefore, rightly relied upon by CIT(A). 4.5 I may also rely upon order of Division Bench of Tribunal, Amritsar Bench in case of Sham Sunder Behl vs. Addl. CIT in ITA Nos. 491/Asr/2001 & 386/Asr/2002 in which Tribunal vide order dt. 15th Feb., 2005 [reported at (2006) 99 TTJ (Asr) 1147 Ed.] considered same matter in issue and decided issue in favour of assessee vide order dt. 15th Feb., 2005. findings in paras 21, 22 and 23 are reproduced as under: "21. We have considered rival submissions and material available on record. assessee very specifically before authorities below have pleaded that there was no electricity or water supply fitted in flat. This fact was not verified by authorities below and no such attempt have been made on their part. assessee has made same submissions before AO in earlier asst. yrs. 1996-97 and 1997-98. Copies of written submissions and assessment orders are available in paper book. AO was satisfied with explanation of assessee as regards non-habitability of flat in question, because of electricity and water supply not provided in flat and as such did not charge ALV of flat to tax under ss. 22 and 23 of IT Act. Considering past history of assessee and submissions made before authorities below clearly established that no water or electricity supply was available in flat in question, in relevant assessment year. assessee also explained that certain flooring, bath room etc. were also found incomplete and as such it could not be used for purpose of dwelling. Hon ble Orissa High Court in matter of CWT vs. K.B. Pradhan (1981) 130 ITR 393 (Ori) while considering definition of house observed that word "house" has while considering definition of house observed that word "house" has no statutory definition and, therefore, has to be given common parlance meaning. dictionary meaning of word is "building for dwelling in, building in general, dwelling place". It has also meaning of "abode habitation, etc.". It was further observed that where, however, house is in process of construction and, on account of fact that it is not complete, has not reached habitable stage, concept of "house" cannot be extended to cover such incomplete construction. Sec. 22 of IT Act provides annual value of property consisting of any buildings or lands appurtenant thereto of which assessee is owner, other than such portions of such property as he may occupy for purposes of any business or profession carried on by him profits of which are chargeable to income-tax, shall be chargeable to income-tax under head "Income from house property". Sec. 23 of IT Act provides how annual value to be determined and provides that annual value of property shall be deemed to be (a) sum for which property might reasonably be expected to let from year to year; or (b) where property or any part of property is let and actual rent received or receivable by owner in respect thereof is in excess of sum referred to in cl. (a), amount so received or receivable; 22. It is admitted fact that property was not let out to any tenant. necessary condition for charging ALV to tax is annual value of property which would be sum for which property might reasonably be expected t o let or where property is let and annual rent received or receivable. Therefore, condition of s. 23(1)(a) is to be satisfied in this case upon which property might reasonably be expected to let from year to year. letting of property means creating interest of tenant in property or capable of creating interest of tenant in property for use and occupation of tenanted property. According to assessee flat, in question, was not in habitable condition because it was not having electricity or water connection in financial year, relevant to assessment year and other things have also to be completed for purpose of use and occupation of property by tenant. In absence of material amenities available in property, it is difficult to believe that property might reasonably be expected to let out to tenant. It is also difficult to believe that owner would be in position to create interest of tenant in property. Hon ble Bombay High Court in matter of Shree Nirmal Commercial Ltd. vs. CIT (1991) 96 CTR (Bom) 54 : (1992) 193 ITR 694 (Bom) at p. 712 held : In our view, unless property owned by assessee is of such nature as could be let out, charge under s. 22 of Act cannot be attracted. In our view, if property is of such nature that it is inherently incapable of being let out and assessee is owner thereof, then charge under s. 22 of Act cannot arise. What is necessary for charge under s. 22 of Act to arise is that property be inherently capable of being let out. 23. word building used in s. 22 of IT Act should be capable of letting out as stated in s. 23(1)(a) of IT Act. flat, in question, was not in position because of above infirmity to be let out to any tenant. Therefore, authorities below have not considered case of assessee in property perspective. AO rejected claim of assessee merely by mentioning that in Delhi flats are handed over after obtaining completion certificate by builder. This finding is based upon presumption only and cannot take place of proof. At cost of repetition, we hold that AO shall accept claim of assessee that property was not expected to be let out. Considering above discussion and case law referred to above, we set aside orders of authorities below. addition is uncalled for in matter. same is accordingly deleted. As result, appeal of assessee is partly allowed." 4.6 finding of CIT(A) has clearly held that property, in question, was not capable to let out or to use for any purpose because it was demolished as cracks appeared which is supported by photographs taken by Department. There is no infirmity in order of CIT(A). same is, therefore, confirmed. This ground of appeal of Revenue is accordingly dismissed. 5. Ground No. 3 : "(3) learned CIT(A) has erred both in law and on facts of case in deleting addition of Rs. 60,177 under head "Income from profession" ignoring thereby fact that non-production of books of account, record and supporting vouchers required to be maintained as per law, as prescribed under r. 6F of IT Rules, 1962 inspite of availing numerous opportunities ought to have been maintained, for which adverse inference was required to be drawn as per settled position of law." 5 . 1 AO directed assessee to furnish details of income earned from profession. books of account as specified in r. 6F of IT Rules were also called for. assessee, however, could not furnish details of income earned from profession. AO, therefore, estimated income at Rs. 1,25,000 from profession. 5.2 addition was challenged before CIT(A) and it was submitted that part of books of account were produced and part of books of account could not be produced because search was conducted in case of assessee on 6th Feb., 2001 and almost whole time assessee remained busy in that matter and books of account were checked as his accountant now left job and his record keeper who maintained all records was on leave due to death of his relative. Therefore, all vouchers of expenditure could not be produced. It was further submitted that assessee had suo moto offered sum of Rs. 84,145 for taxation purposes on account of disallowance of expenses and that assessee had already declared income from profession of Rs. 64,823. It was determined by AO at Rs. 1,25,000. CIT(A) considering facts and circumstances of case was of view that addition of Rs. 15,000 would serve purpose and accordingly allowed appeal of assessee partly. 5.3 learned counsel for assessee at outset submitted that after order of CIT(A) addition left for consideration is Rs. 45,177 instead of Rs. 60,177. 5.4 learned Departmental Representative agreed to this proposition. learned Departmental Representative relied on order of AO. 5.5 On other hand, learned counsel for assessee submitted that part of books of account were produced and part could not be produced as is explained before CIT(A). 5.6 I have considered rival submissions. facts are not in dispute with regard to non-production of part of books of account because assessee is not in appeal and did not challenge part of addition of Rs. 15,000 as sustained by CIT(A). There is only question left for consideration is whether addition sustained by CIT(A) is justified. assessee has already declared income from profession at Rs. 64,823. AO has taken addition at Rs. 1,25,000. Hon ble Supreme Court in matter of Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC) held "On facts of case that both ITO and Tribunal in estimating GP rate on sales of assessee did not act on any material but acted on pure guess and suspicion and therefore it was fit case for exercise of power of Supreme Court under Art. 136 of Constitution of India." It was also held "there must be something more than bare suspicion to support assessment order". In aforesaid case though part of books were not produced but AO made excessive estimate of income which was not based on any material. Merely because some of books of account have not been produced before AO would not justify unreasonable and exhorbitant estimate of income. Considering income declared by assessee and estimated by CIT(A) through which part addition is sustained, I am of view that no interference is called for in matter. I confirm order of CIT(A) and dismiss this ground of appeal of Revenue. 6. No other ground is pressed or argued. 7. As result, appeal of Revenue is dismissed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. DR. AMRIT LAL ADLAKHA