COMMISSIONER OF INCOME-TAX Vs. MAHOMEDBHOY IAROWJI

JUDGEMENT

(1.) This is a reference made by the Commissioner of Income-tax under Section 66(2), Indian Income-tax Act, 1922, raising the question : Whether under the provisions of Section 9 of the Act the assessee is entitled to a deduction of Rs. 16,370, being the municipal general tax paid to the Bombay Municipality in respect of the immoveable property belonging to him?

(2.) Section 9 of the Indian Income-tax Act deals with the heading "Income from property," and directs that the tax shall be payable by an assessee under that head in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, subject to certain allowances. The only allowance, which, it is suggested, applies to this case, arises under Sub-clause (iv), which was amended in the year 1939. The sub-clause reads : Where the property is subject to a mortgage or other capital charge, the amount of any interest on such mortgage or charge.

(3.) Then the following words were added in 1939 : Where the property is subject to an annual charge not being a capital charge, the amount of such charge. Now, the question is whether any municipal taxes payable under the City of Bombay Municipal Act come within the words "an annual charge not being a capital charge." In order to answer that question one must, in the first place, look at the Municipal Act to see the nature of the taxes imposed.