COMMISSIONER OF INCOME TAX Vs. PODDAR PROJECT LTD

JUDGEMENT

(1.) In this reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, the Tribunal has referred the following question for the opinion of this court :

(2.) The assessee-company is assessed to income-tax under the heads "Income from house property" and "Income from other sources". This reference relates to the income-tax assessment of the assessee-company for the assessment years 1978-79 and 1979-80. In respect of those two years, the assessee-company was originally allowed deduction in respect of municipal taxes in computing its income under the head "Income from house property" in the sums of Rs. 4,11,352 and Rs. 4,16,337, respectively. Subsequently, the Income-tax Officer issued notice under Section 154 of the Income-tax Act, 1961, and sought to rectify the deduction allowed in respect of municipal taxes by substituting the figure of Rs. 2,08,254 in each of the said two years, in place of the original figure of Rs. 4,11,352 and Rs. 4,16,337, respectively. According to the Income-tax Officer, the actual tax levied for each of the said two years was Rs. 2,08,254 only. A perusal of the original assessment orders passed in respect of the said two years shows that the deduction in respect of municipal tax was originally allowed in the sum of Rs. 4,11,352 and Rs. 4,16,337 respectively, calculated at 33 1/2 per cent. of the gross rent receivable less 10 per cent. thereof.

(3.) On appeal by the assessee against the said two orders passed by the Income-tax Officer under Section 154 of the said Act, the Commissioner of Income-tax (Appeals) found that from the final bill issued by the Calcutta Municipal Corporation in January, 1985. it was apparent that the municipal tax falling to the share of the assessee-company was Rs. 4,13,912 in respect of each of the said two years as against the sum of Rs. 2,08,254 allowed by the Income-tax Officer through his said two orders passed under Section 154 of the said Act. The Commissioner of Income-tax (Appeals), therefore, directed the Income-tax Officer to recompute the assessee-company's income from house property in respect of each of the said two years by allowing deduction in the sum of Rs. 4,13,912 by way of municipal tax in place of Rs. 2,08,254 allowed by the Income-tax Officer through his said two orders passed under Section 154 of the said Act, in each of the said two years.