COMMISSIONER OF INCOME TAX Vs. WOODLANDS HOTEL

JUDGEMENT

(1.) IN this reference under Section 256(1) of the INcome-tax Act, 1961, hereinafter referred to as "the Act", the following question has been referred :

(2.) THE assessee is a firm carrying on the business of boarding and lodging under the name and style of M/s. Woodlands Hotel, Royapettah, Madras. THE claim for deduction relates to the urban land tax. Certain provisions of the Madras Urban Land Tax Act of 1963 were struck down as unconstitutional. THEre was no assessment made by the authorities concerned on account of the provisions having been struck down. A subsequent Act came to be passed as Tamil Nadu Urban Land Tax Act 12 of 1966. This Act had retrospective effect from 1st July, 1963. After the passing of this Act assessments in the case of the assessee came to be made during the relevant previous year and the demands were also made during that year. THE assessee made two payments of Rs. 16,697 each on 29th June, 1970, and 16th November, 1970, respectively, both payments falling during relevant previous year. THE first of the payments was in respect of the Faslis 1373 and 1374 and the second in respect of Faslis 1375 and 1376. THE assessee claimed the total sum of Rs. 33,394 as deduction allowable in the year under consideration. THE ITO held that there was no provision for allowing as deduction, the urban land tax, paid in the case of business premises. THE AAC, however, on appeal accepted the assessee's claim and the Tribunal, on further appeal by the department, confirmed the order of the AAC. It is this order of the Tribunal that is now the subject of reference.