COMMISSIONER OF INCOME TAX Vs. CHITNAVIS M G

JUDGEMENT

(1.) THIS reference raises a short question of law. The question as formulated is: "Whether the conservancy tax and the water rate are taxes levied in respect of property (payable wholly by the owner or partly by the owner and partly by the tenant) within the meaning of the words of the third proviso to Section 9(2) of the Indian Income -tax Act?"

(2.) NOW , the assessee in this case is one Mr. M. G. Chitnavis, who owns several properties most of which are in the city of Nagpur, and the matter was dealt with by the income -tax authorities and by the Tribunal on the footing that all properties were in Nagpur. The Income from property was computed under Section 9 of the Income -tax Act. For the year of account ending with 31 -5 -1950 the assessee's gross receipts amounted to Rs 1,00,840/ -.

(3.) NOW , on the one hand, Mr. Palkhiwala for the assessee has argued that the words "in respect of the property" in the third proviso to Section 9, Sub -Section (2) mean nothing more or less than a property tax and do not include within its scope any other tax in relation to property; on the other hand, Mr. Amin for the Income -tax Commissioner has attempted to argue that the words "in respect of the property" include all taxes which have any relationship to the property at all. It appears to us that for the purposes of deciding this particular reference it will not be necessary for us to determine the exact scope of the words "in respect of the property" used in the third proviso to Section 9 (2); but we are certainly not prepared to accept the very wide proposition canvassed for by Mr. Palkhiwala that the words do not mean anything more than a property tax. A property tax was well known and has been well known in this country for very many years; and merely as a matter of legislative history the proviso was put in, in order to get over a judicial decision that a property tax had to be deducted from the annual value.