COMMISSIONER OF INCOME TAX Vs. MUTHIAH M CT

JUDGEMENT

(1.) THE Appellate Tribunal has referred the following question for the opinion of this court under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act").

(2.) FOR the assessment year 1970-71, the assessee was assessed on a total income of Rs. 3,19,310. He made a claim for allowance of Rs. 8,564 which represented the urban land tax paid by him in the previous year relevant to the assessment year 1970-71. The AAC was of the view that the urban land tax related to previous years prior to the year under consideration and that it could not be allowed as deduction. The assessee took the matter on appeal to the Tribunal. The Tribunal, considering the language of Section 24(vii) of the Act, came to the conclusion that the amount was an allowable deduction. It is this conclusion of the Tribunal that is challenged in the form of reference of the question extracted already.

(3.) LEARNED counsel relied on two decisions of the Privy Council in support of her stand that no expenditure relating to any earlier year can be allowed in the assessment of any particular year. There is no question of any general principle applicable with reference to the deductions under the I.T. Act. The deductions in the I.T. Act are provided for by the statute itself and the expression in the statute would govern the allowability of any particular amount. In the case cited, viz., Cit V. Maharajadhiraja Kameshwar Singh Of Darbhanga, 1933 1 ITR 94 , one of the points in issue was that the assessee was entitled to deduct the arrears of royalty which had accrued in the previous year up to the date of his possession. The assessee in that case put forward a contention that the amount of royalty due to him before he took possession could not be brought to tax. The question did not relate to any deduction or allowance under Section 24 or any corresponding provisions of the Act of 1922. We do not consider that the said decision has any scope for application to the facts of the present case before us. The other decision relied on is reported in Cit V. Basant Rai Takhat Singh, 1933 1 ITR 197 . That was a somewhat curious case. The assessee had taken on lease for thirty years a property belonging to the cantonment authority. The assessee was required to build a certain building which became the property of the owner. The assessee sought deduction of 1/30th part of the kist of the building in the assessment made on him for the assessment year 1929-30. The Privy Council held that an amount spent in any earlier year could not be allowed as deduction for purposes of computation of the income. It was pointed out that on the true construction of the provision under consideration the allowance must be an allowance incurred in the year in respect of which arise the income, profits and gains, forming the basis of assessment. That was a case where the provisions of Section 12 were under consideration. Section 12 relates to the assessment under "other sources" and the method of accounting employed which was also relevant. That decision came to be rendered under these special features and we do not consider that the said decision has anything to do with the interpretation raised on the word "paid" with which we are now concerned. The word "paid" would permit allowance of the amount paid for any year or years. Therefore, the question that has been referred is answered in the affirmative and against the revenue. The assessee will be entitled to his costs. Counsel's fee is fixed at Rs. 500.