9911796707
TMI Blog1981 (7) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property for the assessment year 1971-72 ? " The assessee derives a large income from " property ". During the year under consideration he derived an income of Rs. 36,896. This amount was arrived at without taking into account a sum of Rs. 2,490 demanded from him as property tax which related to the earlier years but demanded during the relevant accounting year. The said amount related to the earlier accounting years 1966-67 to 1968-69. The enhanced demand came to be made by the city municipal authorities consequent on the revision of the annual value of the several properties on various dates, viz., June, July, September and November, 1970. The disallowance made by the ITO was on the ground that the property tax payable in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue, in the present case, is that this provision would justify allowance only of the amount relating to the relevant year even though the assessee may have received a demand and may have actually paid certain amounts for the earlier years. The language of the provision shows that there must have been a levy by a local authority in respect of the property, which is in the occupation of a tenant and to the extent to which such levy is borne by the owner, he would be eligible for the deduction envisaged by the proviso. The word " levied " is a significant one in the construction of this provision. Its import cannot be ignored. Section 24 deals with certain other deductions which had to be effected from the gross income from the hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land revenue to the State Govt. before it could be allowed as deduction and the same clause envisages the deduction being granted in respect of other taxes levied by the State Govt. in respect of the property. Thus, the several clauses in s. 24 use appropriate expressions to demonstrate the basis of deduction. In the proviso to s. 23, with which we are now concerned, the expression " levied " has been used. We had occasion to examine the claim for deduction of the urban land tax paid by an assessee and claimed as deduction with reference not only to the relevant year but also other years, in CIT v. M. CT. Muthiah [1979] 118 ITR 104 (Mad). In the relevant assessment year, the assessee paid Rs. 8,564 being the urban land tax relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant procedure prescribed by the rules have to be gone into. There are also provisions for an assessee to contest the revision of the property tax by way of appeal, etc. As s. 104 contemplates a levy, it is clear that the liability to tax arises at the time of the actual levy. The property tax is not an automatic levy so as to require the property owner to go and pay tax voluntarily and without any levy, followed by a notice of demand from the departmental authorities. Thus, the scheme of the City Municipal Act is in no way different from the scheme of the Tamil Nadu Urban Land Tax Act, 1966, which was the subject of consideration in the case already cited. The learned counsel for the department, however, brought to our notice two decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction is allowable either on payment or on levy. In that particular case, the assessee could not have anticipated the enhanced ground rent demanded by the Railway authorities in pursuance of a fresh lease entered into between the parties in the year 1957, which covered the earlier years commencing from 1st July, 1951. We do not consider that it is possible to be so axiomatic as was done by the Bombay High Court so that any enhancement of ground rent for earlier years retrospectively in the relevant previous year has to be ignored for deduction. The hardship to the assessee in such a case is quite apparent as at the instance of the assessee the assessment for the earlier years cannot be reopened while the department, if it had a chance, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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