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TMI Blog1979 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... wan Kar Adhiniyam, 1962, in respect of land or buildings of the company used in the ordinary course of business for carrying on manufacturing process or for purposes incidental thereto ? The facts which gave rise to this reference are that during the financial year 1964-65 relevant to the assessment year 1965-66, the Lucknow Branch of the assessee, which is a public limited company, paid Rs. 13,338 on account of Bhumi Bhawan Kar which is a tax imposed by the U. P. Government under Uttar Pradesh (Nagar Kshettra) Bhumi Aur Bhawan Kar Adhiniyam, 1962, in respect of the land and buildings used for the purposes of its business. The said Adhiniyam is hereafter referred to as " the U.P. Act." Section 3 of the Act provides that there shall be ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounting year the amount of Rs. 11,962 relating to its factory premises and Rs. 1,376 for its staff quarters as the taxes under the U.P. Act. The Tribunal has held that since the amount of tax in dispute is not the tax imposed by a local authority, s. 30(b) of the Income-tax Act, 1961, has no application and, therefore, deduction on that account cannot be granted to the assessee. The Tribunal then proceeded to consider the provisions of s. 37(1) of the I.T. Act, 1961, and relied upon the decision given by the Punjab and Haryana High Court in CIT v. Jai Hind Picture Co. (P.) Ltd. [1973] 87 ITR 218 and came to the conclusion that since under the U.P. Act the tax was required to be paid on account of the assessee's ownership or occupatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n some observations made by Lord Atkinson in Smith v. Lion Brewery Company Ltd. [1910] 5 TC 568 (HL). These observations were as under : "Again, it is urged that the landlord pays his contribution as landlord and because of his proprietary interest in the premises, and not as trader, since he would be equally liable to it whether he traded or not. That, no doubt, is so, but in the present case the company have become landlords and thus liable to pay the charge, for the purpose solely and exclusively of setting up the tied-house system of trading. If the company took under lease a plot of land to enlarge their brewery or took similarly premises in which to establish a depot to sell their beer through an agent, the same criticism might be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge a liability imposed by statute on that estate or interest, or upon him as the owner of it, should be taken to have been expended by him wholly and exclusively for the purposes of his trade. " After having approved these observations, the Supreme Court has observed as under [1972] 84 ITR 735, 742 : "There is no doubt that in one sense when rates and taxes on property are paid by a trader he pays them as owner or occupier because taxes are either on possession of property or on its ownership. But, when the assessee has a dual capacity, i.e., he is owner-cum-trader, why should it be not deductible when according to ordinary commercial principles he would be treated as paying it as a trader. " The observations made by the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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