# R~ Mfl"'qj v. · Bliagwandas Daruka AtttJ Othm

- **Citation:** [1950] 1 S.C.R. 553
- **Court:** Supreme Court of India
- **Decided:** 1950
- **Bench:** Saiyid Fazl Ali, Patanjali Sastri, Mehr Chand Mahajan, Mukherjea
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-mfl-qj-v-bliagwandas-daruka-atttj-othm-138
- **Pages:** 11

## Headnote

Indian Income-tax Act (XI of 1922), s. 9(1) (iv)-Income from
pt"Operty-Computation-Deductions-"Annual
charge .not
being
capital
charge"-"Annual charge" ·and
'~capital .charge",
mean-·
ittgi of-Charge for. municipal . property tax and urban immoveable
pro,,my tax-Whether deductible--City of Bombay Municipal Act,
1888, s. 212--,-Bombay Finance Act, I 932, s. 22.
The charge created in respect of municipal property tax by
s. 212 af the City of Bombay Municipal Act, 1888, is an "annual
charge not being a capital charge" within the meaning of s. 9 ( 1)
(it) of the Indian Income-tax Act, 1922, and the amount of such
charge should therefore be deducted in computing the income from
such property for the purposes of .s- 9 of the Indian Income tax Act.
The charge in . respect
of urban
immoveable property tax
created by the Bombay Finance Act, 1932, is similar in character
and the amount of such charge should also be deducted_
Tl* expression
"capital charge"
in s.
9 (1) (iv) means
a
charge created for a capital sum, that is to say, a charge created to
secure the discharge of a liability of a capital nature; and an
"annual charge" means a charge to secure an annual liability.
1950
R~
Mfl"'qj
v.
· Bliagwandas
Daruka
AtttJ Othm
P atanjali Sastri J.
1950
May26
1950
.N n11 Pieugoods
Baz;ar Co. Lid.
v.
Co.unissioner
.of lnamu-lax,
Bomb47
Ma/iqjan ].
554
SUPREME COURT REPORTS
APPELLATE
LXVI of 1949 .
JuR1so1cnoN:
Civil
Appeal
(1950}
No.
Appea~ from
the
High Court of Judicature,
Bombay,
m a reference under section
66 of the
Indian Income-tax Act,. 1922.
K. M. Munshi (N. P. Nathvani,
with him),
for
the appellant.
M.
C. Setalvad,
Attorney-General
for
India
(H. J. Umrigar, with him), for the respondent.
1950.
May 26.
The judgment of the Court was
delivered by
MEHR
CHAND
MAHAJAN J.--This
is an appeal
against a judgment of the High Court of Judicature at
Bombay in an income-t:\X
matter
and
it raises
the
question whether municipal property tax and urban
immoveable property tax payable
under the
relevant
Bombay Acts are allowable deductions under section 9
(1) (iv) of the Indian Income-tax Act.
The assessee company is an investment
company
deriving its income from properties in the city of
Bombay.
For the assessment year
1940-41
the net
income of the assessee under the head "property"
was
computed
by the Income-tax Officer
in the
sum
of
Rs. 6,21,764 after deducting from gross rents certain
payments.
The company had paid during the releva
year
Rs.
1,22,675
as
municipal
property tax
Rs. 32,760
as urban property tax.
Deduction of t
two sums was claimed under the provisions of section 9
of the Act.
Out of the first item a deduction in the
sum of Rs. 48,572
was allowed on the ground that this
item represented tenants' burdens paid by the assesscc,
-0therwise the cl.aim was disallowed.
The appeals of
the assessee to the Appellate Assistant Commissioner
and to the Income-tax
Appellate Tribunal were unsuccessful.
The Tribunal, · however, · agreed to refer
two questions of law to the High Court
of Judicature
at Bombay, namely,-
·
(1) Whether
the
munic;ipal taxes pai(l by
the
:;ipplicant-company are an an~wable deductio11 under
,
S.C.R.
SUPREME COURT REPORTS
555
the provisions
of section . 9 ( 1)
(iv)
of the
Indian
Income-tax Act ;
(2) Whether
the urban
immoveable
property
taxes paid by the applicant-company are an allowable
deduction under section ? (1) (iv) or under section 9
(1) (v) .of the Indian Income-tax Act.
A supplementary reference was made covering a
third question which was not raised before us and it
is not therefore necessary
to
refer to it.
The
High
Court answered all the three questions in the . negative
.and hence this appeal.
The question for- our determination is whether the
municipal property tax
and
urban
immovable
property tax can b~ deducted as an alfowance under clause
(iv) of sub-section (1)
9£ section 9 of the Act.
The
·decision of the point depends firstly
on the construction of the language employed in sub-clause
(iv)
of
sub-section (

## Text

,
$.c.R.
SUPREME COURT REPORTS
553
deposited with the respondents
did not require
registration and was properly admitted in evidence to prove
the creation of the charge.
The appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant: Tarachand Brijmohanlal.
Agent for respondent No. 1 : S. P. Varma.
I
THE NEW PIECEGOODS BAZAR CO., LTD.,
BOMBAY
ti.
THE COMMISSIONER OF INCOME-TAX,
BOMBAY
[SAIYID FAZL ALI, PATANJALI SASTRI,
MEHR CHAND MAHAJAN and
, MUKHERJEA JJ.]
Indian Income-tax Act (XI of 1922), s. 9(1) (iv)-Income from
pt"Operty-Computation-Deductions-"Annual
charge .not
being
capital
charge"-"Annual charge" ·and
'~capital .charge",
mean-·
ittgi of-Charge for. municipal . property tax and urban immoveable
pro,,my tax-Whether deductible--City of Bombay Municipal Act,
1888, s. 212--,-Bombay Finance Act, I 932, s. 22.
The charge created in respect of municipal property tax by
s. 212 af the City of Bombay Municipal Act, 1888, is an "annual
charge not being a capital charge" within the meaning of s. 9 ( 1)
(it) of the Indian Income-tax Act, 1922, and the amount of such
charge should therefore be deducted in computing the income from
such property for the purposes of .s- 9 of the Indian Income tax Act.
The charge in . respect
of urban
immoveable property tax
created by the Bombay Finance Act, 1932, is similar in character
and the amount of such charge should also be deducted_
Tl* expression
"capital charge"
in s.
9 (1) (iv) means
a
charge created for a capital sum, that is to say, a charge created to
secure the discharge of a liability of a capital nature; and an
"annual charge" means a charge to secure an annual liability.
1950
R~
Mfl"'qj
v.
· Bliagwandas
Daruka
AtttJ Othm
P atanjali Sastri J.
1950
May26
1950
.N n11 Pieugoods
Baz;ar Co. Lid.
v.
Co.unissioner
.of lnamu-lax,
Bomb47
Ma/iqjan ].
554
SUPREME COURT REPORTS
APPELLATE
LXVI of 1949 .
JuR1so1cnoN:
Civil
Appeal
(1950}
No.
Appea~ from
the
High Court of Judicature,
Bombay,
m a reference under section
66 of the
Indian Income-tax Act,. 1922.
K. M. Munshi (N. P. Nathvani,
with him),
for
the appellant.
M.
C. Setalvad,
Attorney-General
for
India
(H. J. Umrigar, with him), for the respondent.
1950.
May 26.
The judgment of the Court was
delivered by
MEHR
CHAND
MAHAJAN J.--This
is an appeal
against a judgment of the High Court of Judicature at
Bombay in an income-t:\X
matter
and
it raises
the
question whether municipal property tax and urban
immoveable property tax payable
under the
relevant
Bombay Acts are allowable deductions under section 9
(1) (iv) of the Indian Income-tax Act.
The assessee company is an investment
company
deriving its income from properties in the city of
Bombay.
For the assessment year
1940-41
the net
income of the assessee under the head "property"
was
computed
by the Income-tax Officer
in the
sum
of
Rs. 6,21,764 after deducting from gross rents certain
payments.
The company had paid during the releva
year
Rs.
1,22,675
as
municipal
property tax
Rs. 32,760
as urban property tax.
Deduction of t
two sums was claimed under the provisions of section 9
of the Act.
Out of the first item a deduction in the
sum of Rs. 48,572
was allowed on the ground that this
item represented tenants' burdens paid by the assesscc,
-0therwise the cl.aim was disallowed.
The appeals of
the assessee to the Appellate Assistant Commissioner
and to the Income-tax
Appellate Tribunal were unsuccessful.
The Tribunal, · however, · agreed to refer
two questions of law to the High Court
of Judicature
at Bombay, namely,-
·
(1) Whether
the
munic;ipal taxes pai(l by
the
:;ipplicant-company are an an~wable deductio11 under
,
S.C.R.
SUPREME COURT REPORTS
555
the provisions
of section . 9 ( 1)
(iv)
of the
Indian
Income-tax Act ;
(2) Whether
the urban
immoveable
property
taxes paid by the applicant-company are an allowable
deduction under section ? (1) (iv) or under section 9
(1) (v) .of the Indian Income-tax Act.
A supplementary reference was made covering a
third question which was not raised before us and it
is not therefore necessary
to
refer to it.
The
High
Court answered all the three questions in the . negative
.and hence this appeal.
The question for- our determination is whether the
municipal property tax
and
urban
immovable
property tax can b~ deducted as an alfowance under clause
(iv) of sub-section (1)
9£ section 9 of the Act.
The
·decision of the point depends firstly
on the construction of the language employed in sub-clause
(iv)
of
sub-section (1) of section 9 of the Act, and secondly, on
a. finding as to the true nature
arid character of
the
liability of the owner under the relevant Bombay Acts
for the payment of these taxes.
Section 9 along
with
the relevant
clause
runs
thus:-
"9.
( 1) The tax shall be pa,yable by an assessee
under the head
'income from property'
in respect of
the bona fide
annual value of property
consisting of
any buildings or· lands appurtenant thereto of which
he is the owner, ...... subject to the following allowances,
namely:-
(iv) where. the property is subject to a mortgage
or other capital charge,
the amount of any interest on
such mortgage or charge ;
where the property is subject
to an annual charge not being a capital charge,
the
amount of such charge ; where the property
is subject
to a ground rent,
the amount of such ground rent:
and, where the property has been acquired, constructed,
repaired,
renewed
or
reconstructed
with borrowed
capital,
the amount of any interest payable on such
•
\
II
~ap1ta : ......... .
It will be seen that clause
(iv) consists of four subclauses corresponding to the four deductions allowed
1950
New Pi4cegoods
Baz:ar Co. Ltd.
v.
Commissioner
of Incorne-t1J1<,
Bombay
MllMjan].
1950
New Piectgoods
Bazar Co. Ltd.
v.
Commissionn
of /n1;omt-tax,
Bombay
Mahajma].
556
SUPREME COURT REPORTS
[1950]
under the the clause.
Before the amending Act of 1939,
clause (iv) contained only the first,
third and fourth
sub-clauses.
Under the first sul>-clause interest is deductible whether the amount borrowed on the security of
the property was spent on the property or not.
There
is no question of any capital or other expenditure on
the property.
The expression "capital charge"
in the
sub-clause cannot connote a charge on the capital, that
is,
the property assessed.
That would be a redundancy
as the opening words themselves clearly indicate that
the charge is on ·the property.
We are therefore of
opinion
that capital charge here could
only mean a
charge created for a capital sum,
i.e., a charge to secure
the discharge of a liability of a capital nature.
In 1933 the Privy Council decided the case of
Biioy Singh
Dud huria v. Commissioner
of Income-tax
Calcutta (1 ).
It was not an assessment under section 9
but an assessment on the general income of an assessee
who was liable to pay maintenance for his step-mother
which had been charged on all his assets by a decree
of Court.
It was not a liability voluntarily incurred
by him but one cast on him by law. The Privy Council
held that the amount paid by him in discharge of that
liability formed no part of
his real income
and so
should not be included in his assessment. Though the
deci,ion proceeded on the principle that the
outgoings
were not part of the assessee's income at all,
the framers
of the amending Act of 1939 wanted,
apparently,
to
extend the principle,
so far as the assessment of property was concerned,
even to cases where obligatory
payments had to be made out of the
assessee's income
from the property charged with such payments,
and
the second
sub-clause,
namely, "where the property is
subject to an annual charge not being a capital charge,
the amount of such charge"
was added.
It is this
sul>-clause which the appellant invokes in support of
its claim to deduction of the municipal and urban property taxes in the present case.
In view of the opening
words of the newly added sul>-clause,
the expression
"capital charge"
also used therein cannot
have reference to a charge on the property,
and we think it must
(1)
T.t •. R. 6o Cal. 1029.
S.C.R.
SUPREME COURT REPORTS
557
be understood in the same sense as in sub-clause
( 1);
that is to say,
the first sub-clause having provided for
deduction of interest where a capital
sum
is charged
on the property,
this sub-clause provides for a- deduction of annual sums so charged,
such sums not being
capital sums,
the limiting words being intended to
exclude cases where capital
raised
on the securiy
of
the property is made repayable in instalments.
In
Commissioner
of Income-tax, Bombay
v.
Mahomedbhoy Rowji (1),
a Bench of the Bombay High
Court considered
the meaning
of these words.
As
regards
"annual charge,"
Beaumont C. J. observed as
follows:-
"The words,
I think,
would cover a charge to
secure an annual liability."
Kania J ., as he then was, said as follows :-
"I do not see how a charge can be annual unless
it rnearis a charge in respect of a payment to be made
a nmw ll v."
This construction of the words has been followed
in the iudgment under appeal.
In Gappumal Kanhaiya Lal
v.
Commissioner of
Income-tax (2)
(the connected appeal before use),
the
Bench of the Allahabad High Court agreed with the
construction
placed
on these
words in
the
Bombay
case,
i.e., the words
"annual charge"
mean a charge
to secure an annual liabilitv.
It is therefore clear that
there ·is
no
confli~t of j~dicial decisions
as
to
the
meaning of the phrase
"annual charge"
occurring in
sectian 9 (1) (iv) and the meaning given is the natural
meaning of these words.
As. to the phrase "capital charge", Beaumont C. J.
in the case above referred to took the view that the
words mean a charge on capital.
Kania J., however,
took a different view
and observed that he was not
prepared to accept the suggestion that a document
which provides
for
a certain payment to be made
monthly or annually and charged on immoveable propel:ty or the estate of an individual becomes a capital
charge.
In the Allahabad judgment under appeal these
(1)
l.L.R. 1943 Born. 628.
(1)
I.L.R. 1944 All. 780.
1950
Ntt11 Pieugoods
Bazar Co. Ltd.
v.
Commissioner
of lncMm-lfVI,.
Bomh<ry
Mahajan].
1950
v.
Commissioner
ef /nfOme-tax,
Bomb9
558
SUPREME COURT REPORTS
(1950)
words were considered as not meaning a charge on
capital.
It was said that if an annual charge means
a chrage to secure the discharge of an annual liability,
then,
capital charge means a charge to secure the
discharge of a liability of a capital nature.
We think
·this construction
is a natural ~onstruction of
the section and is right.
The determination of the point whether the taxes
in dispute fall within the ambit of the phrase
"annual
charge not being a capital charge"
depends on the
provisions of the statutes under which they are levied.
Section 143 of the City of Bombay
Municip~l Act,
1888,
authorises the levy of a general tax on all buildings and lands in the city.
The primary responsibility
to pay Jhis property tax is on the lessor (vi de section
146 of the Act).
In order to assess the tax provision
has been made for the determination of the annual
rateable
value of
the
. building
m
section 154.
Section
156
provides
for
the
maintenance
of an
assessment book in which entries have
to
be made
every official year of all buildings
in the cit)',
their
rateable value,
the names of persons primarily liable
for payment of the property tax on such buildings and
of the amount for which each building has been
assessed.
Section 167 lays down that the assessment
book need not be prepared every
official
year
but
public notices shall be given in accordance with sections
160 to 162 every year and the provisions of the
said sections an<l of sections 163 and
167 shall be applicable each year.
These sections lay down a procedure for hearing objections and complaints agamst
entries in· the assessment book.
From these
provisions it is
clear
. that the liability for the tax
1s
determined
at
the 'beginning
of
each
official
year and the tax is an annual one.
It recurs from
year to year.
Sections 143 to 168 concern themselves
with the imposition,
liability and assessment of
the
tax for the year.
The amount of the tax for the year
and the liability for its payment having been determined,
the Act then prescribes for its collection in the
chapter
"The collection of taxes". Section. 197 provides
that each of the
property taxes shall be payable in
S.C.R.
SUPREME COURT REPORTS
559
advance in half yearly instalments on each first day of
April and each first day of October. The provision as to
half yearly instalment necessarily connotes an
annual
liability.
In other words, it means that the annual liability can be discharged by half yearly payments. Procedure has also been prescribed for recovery of the instalments by presentment of a. bill,
a notice of demand and
then distress,
and ·sale. Finally section 212 provides as
follows:-
"Property taxes due under this Act in respect of
any building or land shall,
subject to the prior payment of th_e land revenue,
if any, due to the provincial
Government thereupon,
be a first charge ...... upon the
said building or land ......... "
It creates a statutory charge on the building.
Urban immoveable property tax is leviable under
section 22 of Part VI of the Bombay Finance Act,
1932,
on the annual letting value of the property.
The duty
to collect the tax is laid on the munic!pality
and it
does so in the same manner as in the case of the
municipal property tax.
Section 24 (2) (b) is in terms
similar to section 212 of the Bombay Municipal Act.
It makes the land or the building security for the
payment of this tax also.
For the purposes of section
9 of the
Indian Income-tax
Act both these taxes
namely,
the municipal property tax
as well as the
urban
immoveable property tax are of
the same
character and stand on the same footing.
Mr. Munshi,
the learned counsel for the appellant
contended
that both the taxes are assessed
on the
annual value of the land or the building and are annual
taxes,
although it may be that they
are collected at
intervals of six _ months
for thi:: sake of convenience,
that the
income-tax itself
is assessed
on an
annual
basis,
that in allowing deductions all payments made
or all liabilities incurred during the ' prc;vious year of
assessment should be allowed and that the taxes in
question fell clearly within the language of section 9 (1)
(iv).
The. learned Attorney-General, on the other hand,
argued that although the taxes are assessed for
the
year the liability to pay them arUc:t at the beginning
1950
V111J Piecegoods,
Baz.ar Co. Ltd.
v.
Commissi'lNr
?f ln&Omt-lax,.
Bombay
Mahqjan].
1950
!(,.. Piee•& cods
JJ"rw Co. l.J4.
v.
~
of l"'601'W·IO¥,
Bomb".1
Mahajan].
560
SUPREME COURT REPORTS
[1950]
of each half year and unless a notice of demand is
issued and a bill presented there
is no liability to pay
them and that till then no charge under section 212 of
the Act could possibly arise
and that the liability to
pay being half yearly in advance,
the charge is not an
anRUal charge.
It was also suggested that
the taxes
were a capital charge in the sense of the property being security for the payment.
We are satisfied that
the contentions raised by the learned Attorney-General
are not sound.
It is apparent from
the whole tenor
of the two Bombay Acts that the t axes are in the
nature of an annual levy on the property and are
assessed
on the annual value
of the
property
each
year.
The annual liability can be discharged by half
yearly instalments.
The liability being al} annual one
and the property having been subjected to it, the provisions of clause (iv) of sub-section ( 1) of section 9 are
immediately attracted.
Great emphasis was laid on
the word "due" used in section 212 of the Municipal
Act and it was said that as the
taxes
do not become
due under the Act unless the time for
the
payment
arrives,
no charge comes into existence till then and
that the charge
is not an annual charge.
We <lo
not
think that this is a correct construction of section 212.
The words
"property taxes due under this Act"
mean
property taxes for which a person is liable
under the
Act.
Taxes payable during the year have been made
a charge on the property.
The liability an<l the charge
both
co-exist and are co-extensive.
The provisions of
the Act affording facilities. for the discharge of the liability do not in any way affect their true nature and
character.
If the annuaf liability is not discharged in
the manner laid down by section 197,
can it be said
that the property
cannot be sold for recovery
of the
whole amount due for the year ?
The answer to this
query can only be in the affirmative,
i.e.,
that the
property is liable to sale.
In Commissioner of Income-tax,
Bombay v. Mahomedhov Rowji ( 1 ) Beaumont C. J., while rejecting the
claim for the deduction of the taxes,
placed reliance on
(1)
T. L.R. '943 Born. 628.
S.C.R.
SUPREME COURT REPORTS
561
section 9 (1) (v) which allows a deduction in respect
of any sums paid on account of land revenue.
It was
observed that land revenue stands on the same
footing
as municipal taxes and that as
the legislature made a
special
provision
for
deduction
of sums payable in
regard to land revenue but not in respect of sums paid
on account of municipal taxes
that circumstance indicated that the deduction was not allowable.
For the
same purpose reference was also made to the provisions of section 10 which deal with business
allowances
and wherein deduction of any sum paid on account of
land revenue,
local rates or municipal taxes
has been
allowed.
In the concluding part of his judgment · the
learned Chief
Justice said that
it was
not
necessary
for him . to consider what · the exact meaning of the
words was and that it was sufficient for him to say
that it did not cover municipal
taxes
which are made
a charge on the property under section 212 of the
Bombay
Municipal
Act.
Without
<leterminirig
the
exact meaning of the words u·sed by the statute .jt seems
to us it was not possible to arrive at the conclusion
that the taxes
were not within the ambit of the clause.
It is elementary that the primary duty of a Court is
to give effect
tO' the intention of the legislature as expressed in the
words used by it and no outside
consideration can be called in aid to find
that intention.
Again reference to clause ( v) of the section is not very
helpful. because land revenue
is · a .charge of a paramount nature on all buildings and lands and that being so,
a deduction in respect of the amount was mentioned · in express
terms.
Municipal taxes,
on
the
other hand,
do not stand on the same footing as land
revenue.
The law as to them varies from province to
province and they may 1wt be necessarily
a charge on
property in all cases.
The legislature
~eems to have
thought that so far
as municipal
taxe~ on
property
. Are concerned,
if they fall within the ambit of clause
(iv),
deduction will be claimable in respect
of them
but not otherwise.
The deductions alfowed
in section
11) under the ·head
"Income from business" proceed on
a different footing and construction of section
9 with
the aid of section 10 is apt to mislead.
1950
New Pm,gOf/ds
Bazar Co. Ltd.
v.
CommissiOlllr
of Income-It»<,
Bombay
Mahajan].
1950
New Pitcegoods
Bazar Co. 1.Jd.
v.
Commissiuner
of lncome~tax,
Bombay
Mahajan].
562
SUPREME COURT REPORTS
f 1950 I
Kania J.
in the above
case in arriving at his
conclusion was influenced
by
the consideration
that
these taxes were of a variable character,
i.e., liable to
be increased or reduced
under the various
prov1s10ns
of the Municipal Act and that the charge was in the
natu"re of a contingent charge.
With great respect,
it
may
be pointed out that all charges
in a way
may
be or
arc
of a
variable and
contingent nature.
If no default is made, no charge is ever enforceable and
whenever there is a charge,
it can be increased or
reduced during
the year
either
by payment
or hy
additional borrowing.
In Moss Empires Ltd. v. Inland R~venue Commissioners ( 1 ) it was held by the House of Lords that the
fact that certain
payments were contingent and variable in amount did not affect their character of being
annual
payments and that the word
"annual"
must
be taken to have
the quality
of being recurrent or
being capable of recurrence.
In Cunard's Trustees v. Inland Revenue Commissioners ( 2 ) it was held that the payments were capable
of being recurrent and were therefore annual payments
even though they
were not necessarily
recurrent year
by year and the fact that they varied in amount was
immaterial.
The learned Attorney-General in view of
these decisions did not suppor~ the view
expressed
by
Kania J.
Reliance was placed
on
a decision of the High
Court of Madras in Mamad Keyi v. Commissioner of
Income-tax,
Madras (..~,)
in which moneys paid as
urban immoveable property tax under the Bombay
Finance Act were disallowed as
inadmissible under
section 9 (1) (iv) dt 9 (1) (v) of the Indian Income-tax
Act.
This decision merely followed the view expressed
in Commissioner of Income-tax,
Bombay v. Mahomed·
within the meaning of schedule D case III, rule 1
( 1 ),
bhov Rowji ( •) • and was not arrived
at on any independent or fresh reasoning and is not of much assistance
in the decision of the case.
The Allahabad High Court
(')
[1937] A.C. 785.
(')
[1948] I A.E.R. 150.
(S)
l.L.R. 1944 Mad. 399·
~
1 )
l t..R. 1943 Born. 628.
S.C.R.
SUPREME COURT REPORTS
563
in Gappumal Kanhaiya Lal v. Commissioner of Jncometax ( 1 )
(the connected appeal took a correct view of
this matter and the reasoning given therein has our
approval.
The result is that this appeal is allowed and the
two questions which were referred to the High Court
by
the
Income-tax Tribunal and cited
above
are
answered in the affirmative. The appellants will
have
their costs in the appeal.
Appeal allowed.
Agent for the appellants :
M. S. Krishnamoorthi
Sastri.
. Agent for the· respondent : P. A. Mehta.
COMMISSIONER OF INCOME-TAX, U.P.
v.
GAPPUMAL KANHAlYA LAL
[SAIYID FAzL Au, PATANJALI SAsTRI,
MEHR CHAND MAHAJAN ;nd MuKHERJEA JJ.]
Indian Income-tax (XI of 1922), s. 9 (1) (iv)-lncome from
p1"Dperty-Computation
of
annual
value-Deduction
of "annual
charges not being capital charges"-Municipa/ house-tax and watertax-Whether deductible-Nature of such· charges-U.P. Municipalities Act (II of 1916), ss. 128, 149, 177.
The amount of house-tax and the amount of water-tax imposed
by the municipal board of Allahabad under s. 128 of the Unit¢
Provinces Municipalities Act, 1916, and
paid by the owner as a
lessor under .s. 149 of the said Act are "annual charges not being
capital _ charges to which · the property is subject," within the
meaning of s. 9 (1) (iv) of the Indian Income-tax Act, 1922, and
should therefore be deducted from the bona fide ai;mual value of
the property determined under sub-sections ( l) and -(2) of s. 9 of
the Indian Income-tax Act
Judgment· of the Allahabad High Court affirmed.
New Pieccgoods. Bazar
Co. Ltd. v.
Commissioner
of
Income-tax, Bombay fl950l S. C. R. 553) followed.
( 1 ) I.L.R. 1943 Born. 628.
.
4-5 S, C. Tndia (N. D )/58
1950
New Piecegoods
Bazar Co. Ltd.
v.
Commissioner
of fn,ome-tax,
Bombay
Mahajan].
1950
May26