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TMI Blog1984 (1) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents produced by the assesses, it appeared that there was a dispute in respect of the enhanced municipal tax, which was ultimately finalised in this year and the assessee claimed deduction, accordingly. According to the ITO, the municipal tax had to be deducted from the bona fide annual value in each year under section 23(1) of the Income-tax Act, 1961 (' the Act '). There was no scope for arriving at the annual value in respect of a particular year by allowing deduction in respect of arrears of municipal tax. He, therefore, disallowed the assessee's claim for the arrears amounting to Rs. 22,385. This decision has been confirmed by the AAC on appeal filed by the assessee. The assessee has come up in second appeal before us. 2. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. The word ' levied ' is a significant one in the construction of this provision. Its import cannot be ignored. Section 104 of the Madras City Municipal Act, 1919, also contemplates a ' levy '. The property tax is not automatic so as to require the property owner to pay the tax voluntarily. Hence, the liability to tax arises at the time of actual levy and the deduction under the proviso to section 23(1) is justified only in the year in which the levy is made." Another authority relied upon by the assessee was a decision of the Calcutta High Court in CIT v. Dalhousie Properties Ltd. [1979] 116 ITR 289. In this case, the assessee had claimed a sum of Rs. 1,78,784, which represented the tax levied by the corporation of Calcutta against its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house property." This decision was challenged by the department before the Hon'ble Supreme Court, which confirmed the same vide its order in CIT v. Dalhousie Properties Ltd. [1984] 149 ITR 708. The representative of the department, who incidentally was the AAC deciding this appeal, contended that the only contention of the department in this case was that under section 23, the annual value had to be determined after deduction of the taxes levied to the extent to which they were borne by the owner and unless the taxes were paid, they could not be said to have been borne. Hence, this decision was no authority for the proposition that taxes levied during the year for earlier years could be allowed as a deduction. According to him, a decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction on the basis of the levy which is in force." According to the departmental representative, while it was true that in completing the assessment, the assessee might loose the right to claim the taxes levied in a subsequent year, such consequence would be immaterial in the matter of interpreting a taxing statute. The proper course for the assessee would be a petition under section 264 of the Act. As regards the Madras High Court decision in Kuppuswamy Chettiar, he argued that the Tribunal was at liberty to take a contrary view on the subject even if there was no other contrary decision of any High Court in view of the decision of the Tribunal, Delhi Bench ' D ', in WTO v. Sunil Lamba [1982] 1 ITD 916. 3. After carefully considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice and as such could be said to be in conformity with the true intention of the Legislature. In this behalf, it may be pointed out that the framers of the Act were alive to the situation that in some cases, the amounts deductible for a particular year may be very heavy. Therefore, they enacted in sub-section (2) of section 24 that the total amount deductible under sub-section (1) thereof in respect of property of the nature referred to in sub-section (3) of section 23 shall not exceed the annual value of the property as determined under that section. So far as the observation of the Hon'ble Supreme Court regarding the scheme of the Act are concerned, the argument of the departmental representative appears to be quite plausible but sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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