Per S. Bandyopadhyay, Accountant Member - This departmental appeal is directed against the order of the CIT (Appeals) dated 26-4-1989. In this particular case, the assessee returned an amount of Rs. 21,915 as his net taxable income from the house property constructed by him. The completion of the construction work was made by the assessee in this year only and he let it out at the monthly rent of Rs. 3,000. Although the Assessing Officer does not make any mention about any point having been raised before him at the time of hearing of the assessment proceedings, regarding exemptability of the entire income from house property, the CIT (Appeals), however, mentions in his appellate order that such a contention was actually raised before the Assessing Officer. The CIT (Appeals) states that although the assessee had included the income from house property in his return, in the course of the assessment proceedings, however, he had contended before the Assessing Officer that since he was the owner of the property, only for a period of 10 months during the year, there was no annual value to be determined and hence no income was to be assessed under the head income from house property". The CIT (Appeals) states thereafter that the Assessing Officer does not appear to have examined this contention of the assessee.

2.1 The assessee relied on the decision of the Special Bench of ITAT, Madras Bench "B" in the case of M. Raghunandan v. ITO [1985] 11 ITD 298 in support of his claim that the income from the house property was not taxable in his hands in this year, inasmuch as, he was not the owner of the house property, nor did he derive rental income therefrom for the full year corresponding to this assessment year. The CIT (Appeals) discussed the decision of the abovementioned Special Bench case of the ITAT to the effect that where a property does not give rise to an annual income or gives income for a lesser period, notional or otherwise, the income from that property cannot be included in the total income. The CIT (Appeals) also took into consideration the observation of the Special Bench of the ITAT that if out of 365 days in a year the assessee is the owner of the property for 364 days, no property income can be included in his total income because no annual value can be computed for that previous year. The CIT (Appeals) by following the aforesaid decision of the ITAT, Special Bench, accepted the contention of the assessee that no income from the house property could be assessed in his hands for this year and directed the Assessing Officer to exclude the income from property and re- determine the total income of the assessee.

2.2 So far as the other ground raised in the appeal before him, relating to computation of income from the property, by allowing the assessee's liability towards building tax is concerned, the CIT (Appeals) stated that under the first proviso to section 23(1), taxes levied by a local authority in respect of a property are deductible while determining the annual value of the property. He held that when no building tax had admittedly been levied in respect of the building belonging to the assessee, till then the question of its deduction did not arise. The CIT (Appeals) found support to his view in this regard from the decision of the Andhra Pradesh High Court in the case of Hyderabad Co-operative Central Trading Society Ltd. v. CIT [1988] 173 ITR 690 and accordingly rejected this particular ground of the assessee.

3.1 Before us, the learned departmental representative has strongly argued that the abovementioned decision of the ITAT, Special Bench Madras Bench "B", is not to be followed in deciding the issue in the instant case. He relied on the decision of the Lahore High Court in the case of Lalla Mal Samgham Lal v. CIT [1936] 4 ITR 250 and contended that in accordance with the said decision, the annual value of a house property does not necessarily mean the money benefit accruing to its owner. He also relied