COMMISSIONER OF INCOME TAX1 Vs. PARACHURI SIVA LAKSHMI

JUDGEMENT

(1.) This is a reference at the instance of the Revenue. It relates to the assessment year 1980-81. The question referred to us for our opinion by the Income-tax Appellate Tribunal is as follows :

(2.) The assessee is an individual. He has income from various sources including from house property. Out of the total income for the said assessment year he claimed deduction of Rs. 48,834 being the amount of municipal tax paid by him for the accounting year as well as for earlier three years. His claim for deduction of tax for the earlier years corresponding to the respective assessment years was negatived by the assessing authority on the ground that the deduction could be allowed only in the year in which tax would be paid, and the Income-tax Officer disallowed the deduction of Rs. 28,555 which relates to the period 1977-78 and 1978-79. The assessee preferred an appeal against the order of assessment before the Appellate Assistant Commissioner who upheld the order of the Income-tax Officer. On further appeal to the Income-tax Appellate Tribunal, it was held that the amount in question was a permissible deduction in computing the income from the house property in the assessment year in question and thus allowed the appeal on 22/10/1985. It is from that order that the abovesaid question has arisen.

(3.) Mr. J. V. Prasad, learned standing counsel for the Income-tax Department, contends that the proviso to section 23(1) of the Income-tax Act, 1961 (for short "the Act"), as it stood in the relevant assessment year, did not permit deduction of the municipal tax in a year other than the year in which the liability has arisen, so the Income-tax Appellate Tribunal has erred in allowing the appeal of the assessee.