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TMI Blog1997 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment year 1980-81. The question referred to us for our opinion by the Income-tax Appellate Tribunal is as follows : "Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in holding that the amount of Rs. 28,555 being municipal tax relating to earlier years was allowable as a deduction in computing the assessee's income from hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer. On further appeal to the Income-tax Appellate Tribunal, it was held that the amount in question was a permissible deduction in computing the income from the house property in the assessment year in question and thus allowed the appeal on October 22, 1985. It is from that order that the abovesaid question has arisen. Mr. J. V. Prasad, learned standing counsel for the Income-tax D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the property shall, to the extent such taxes are borne by the owner, be deducted in determining the annual value of the property." The proviso to section 23(1) as it stands after the amendment, i.e., w.e.f. 1-4-1985. "Provided that where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year in which such taxes are actually paid by him. It may be noted here that a Division Bench of this court in Hyderabad Co-operative Central Trading Society Ltd. v. CIT [1988] 173 ITR 690 held that the amendment is declaratory of the law as existing up to and including 1984-85. Therefore, what follows is that the local tax that has been paid has to be deducted in computing the annual rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and held that under the proviso to section 23(1), the assessee was entitled to the deduction during the year in which the property tax was demanded. That view of the Commissioner of Income-tax (Appeals) was confirmed by the Income tax Appellate Tribunal. On a reference to the High Court the view of the Tribunal was upheld. From the above it follows that the view taken by the Tribunal in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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