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TMI Blog2014 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled for deduction of the municipal taxes paid, the AO is directed to assess the receipt as income of the assessee under the head ‘income from other sources’ and the claim of expenditure/deduction of actual payment made by the assessee in respect of the municipal taxes is allowed – Decided in favor of assessee. - ITA No. 6663/Mum/2012 - - - Dated:- 30-7-2014 - Shri Sanjay Arora And Dr. S. T. M. Pavalan,JJ. For the Appellant : Shri Bihari Lal For the Respondent : Shri Durga Dutt ORDER Per Dr. S. T. M. Pavalan, JM: This appeal filed by the Revenue is directed against the order of the Ld.CIT(A)-27, Mumbai dated 29.08.2012 for the Assessment Year 2009-10. 2. In this appeal, the Revenue has agitated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... municipal tax paid during the financial year 2008-09, being, ₹ 30,00,000/-. Accordingly, the compensation receivable was ₹ 30,00,000/-. Thus in substance, the amount of compensation receivable from M/s. Kiran Retail P. Ltd. stood expended for payment of municipal taxes, resulting in zero income. The AO agreed in principle that the compensation payable under the agreement with M/s. Kiran Retail P. Ltd. was relatable to municipal taxes, as the same was highest of other alternatives. However, the AO went by actual demand, raised by the Municipality for the Financial Year 2008-09 which was ₹ 41,78,756/-. He, therefore, substituted the quantum of compensation from ₹ 30,00,000/- to ₹ 41,78,756/-. However, the AO did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 99 years from M/s. Harpra Investment P. Ltd. for a consideration of ₹ 65 lakhs and a yearly rent of Rs. one lakh. At the time of lease, the municipal taxes applicable were ₹ 2,628/- per annum and the N.A. assessment payable was ₹ 2,154/- per annum. The assessee has been allowed to demolish the then existing buildings and structures standing thereon if any, and to carry out any addition or alteration or to put up any additional structure or building and/or to reconstruct buildings and/or structures on the said demised premises in accordance with the plan that may be approved and/or sanctioned by the Municipal Corporation of Greater Mumbai and the other concerned authorities at any time during the subsistence of le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the defacto owner of the building and enjoying the fruit thereon has to incur the municipal taxes on the said building as agreed upon. But for the new building brought into existence, higher municipal taxes could not have been levied. Therefore, while the levy of municipal taxes arises on account of a statutory obligation, the payment of the municipal taxes by the assessee arises out of contractual obligation between the assessee and the land owner, irrespective of the fact that in whose name the demand has been raised by the municipal authorities. The AO failed to look at the content of the agreement in coming to the conclusion that municipal taxes being a statutory levy, the assessee is not required to pay the same. Therefore, we conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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