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Issues Involved:
1. Deduction of interest under section 24 on a plot adjoining the hospital. 2. Addition under the head "Income from house property" for the Dharampur building. 3. Addition under the head "Income from profession" due to non-production of books of account. Issue-wise Detailed Analysis: 1. Deduction of Interest under Section 24: The primary issue was whether the assessee could claim a deduction for interest under section 24 on a plot of land adjoining a hospital. The Assessing Officer disallowed the interest deduction, arguing that the plot was vacant land and not a house property. The CIT(A) overturned this decision, noting that the assessee had purchased a constructed house with land appurtenant thereto and had taken a loan for this purpose. The CIT(A) relied on the ITAT, Madras Bench decision in S. Govindrajan v. ITO, which allowed a deduction for interest on borrowed capital used to acquire property, including land. The Tribunal upheld the CIT(A)'s decision, emphasizing that section 24(b) uses the term "property" and not "house property," thus allowing the deduction for interest on the borrowed capital. 2. Addition under the Head "Income from House Property": The second issue involved the determination of the annual value of a building at Dharampur. The Assessing Officer added Rs. 20,000 to the assessee's income, assuming the building was incomplete and not habitable. The CIT(A) deleted the addition, relying on the Special Bench decision in M. Raghunandan v. ITO, which stated that the annual value must be for a full year and not a part of the year. The CIT(A) found that the building was demolished in December 2000, and thus, no annual value could be computed for the period from April 2000 to November 2000. The Tribunal upheld the CIT(A)'s decision, confirming that the Assessing Officer's addition was based on presumption and not permissible under the law. 3. Addition under the Head "Income from Profession": The third issue was the addition of Rs. 60,177 under the head "Income from profession" due to the non-production of books of account. The Assessing Officer estimated the income at Rs. 1,25,000, while the assessee had declared Rs. 64,823. The CIT(A) partly allowed the appeal, reducing the addition to Rs. 15,000. The Tribunal confirmed the CIT(A)'s order, noting that the assessee had provided reasonable explanations for the non-production of some books and that the Assessing Officer's estimate was excessive and not based on material evidence. The Tribunal cited the Supreme Court decision in Dhakeswari Cotton Mills Ltd. v. CIT, emphasizing that assessments should not be based on pure guess and suspicion. Conclusion: The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s decisions on all three issues. The assessee was allowed a deduction for interest on borrowed capital under section 24, the addition for the Dharampur building was deleted, and the addition under the head "Income from profession" was reduced to Rs. 15,000.
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