COMMISSIONER OF INCOME TAX Vs. DALHOUSIE PROPERTIES LTD

JUDGEMENT

(1.) This reference arises out of the income-tax assessment of Messrs, Dalhousie Properties Ltd. in the assessment year 1966-67, the relevant previous year having ended on the 31st March, 1966. The facts found and/or admitted in the proceedings are as follows : The assessee is a limited company which owns extensive properties and its income from the rent realised is substantial. In the assessment year in question, the assessee claimed a deduction for Rs. 1,78,784, which represented the tax levied by the Corporation of Calcutta as a deductible item in the computation of its income derived from house property.

(2.) The ITO found that the assessee had raised dispute as to the enhanced taxes levied by the Corporation and that such taxes had not been paid by the assessee who only debited its P & L A/c by Rs. 1,05,764. On the basis of the quantum of municipal tax, the ITO allowed only a sum of Rs. 86,686. He held that the balance, that is, the difference between Rs. 1,05,764 and Rs. 86,686 represented the arrear taxes paid.

(3.) On appeal, the AAC upheld the order of the ITO on the ground that out of the sum of Rs. 1,05,764 debited in the accounts of the assessee only an amount of Rs. 86,686 related to the year under appeal.