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PETITIONER: COMMISSIONER OF INCOME-TAX, U.P.

       Vs.

RESPONDENT: GAPPUMAL KANHAIYA LAL

DATE OF JUDGMENT: 26/05/1950

BENCH: FAZAL ALI, SAIYID BENCH: FAZAL ALI, SAIYID SASTRI, M. PATANJALI MAHAJAN, MEHR CHAND MUKHERJEA, B.K.

CITATION:  1951 AIR    5            1950 SCR  563

ACT:     Indian Income-tax Act (XI of 1922), s.9 (1) (iv)--income from  property--Computation  of annual  value--Deduction  of "annual   charges  not  being  capital   charges"--Municipal house-tax  and watertax--Whether deductible--Nature of  such charges--U.P. Municipalities Act (II of 1916), ss. 128, 149, 177.

HEADNOTE:     The  amount  of house-tax and the  amount  of  water-tax imposed by the municipal board of Allahabad under s. 128  of the  United Provinces Municipalities Act, 1916, and paid  by the  owner  as  a lessor under s. 149 of the  said  Act  are "annual  charges  not  being capital charges  to  which  the property is subject," within the meaning of s. 9 (1) (iv) of the  Indian Income-tax Act, 199.2, and should  therefore  be deducted  from  the bona fide annual value of  the  property determined  under  sub-sections (1) and 12) of s. 9  of  the Indian Income-tax Act. Judgment of the Allahabad High Court affirmed.     New  Piecegoods  Bazar  Co,  Ltd.  v.  Commissioner   of Income-tax, Bombay ([1950] S.C.R. 553) followed.  (1)  I.L,R. 1943 Bom. 628. 73 564

JUDGMENT:  APPEAL from the High Court of Judicature at Allahabad (Civil Appeal No. VI of 1949).     This was an appeal from the High Court, Allahabad (lqbal Ahmad  C.J.  and Allsop J.) dated 31st August,  1944,  in  a reference  under  section 66 of the Indian  Income-tax  Act, 1922. The facts are set out in the judgment.     M.  C. Setalvad, Attorney-General  for India (H. J. Umrigar, with him), for the appellant.    Gopi  Nath Kunzru (K. B. Asthana, with him),  for  the respondent.     1950.  May 26.  The judgment of the Court was  delivered by

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 MEHR CHAND MAHAJAN J.--This appeal from a judgment of  the High  Court  of Judicature at Allahabad.dated  31st  August, 1944, raises the same points as have been discussed in Civil Appeal No. 66 of 1940 (1).  The Income-tax Appellate  Tribu- nal referred four questions to the High Court of  Judicature at Allahabad under section 66 ( 1 ) of the Indian Income.tax Act.  These  questions  related to the  year  of  assessment 1930-40.   The High Court answered two of the  questions  in the affirmative and two in the negative.  The two  questions relating  to the appeal are those that were answered in  the affirmative and are as follows :--     "Whether (1) the amount of house-tax and (2) the  amount of  water-tax, imposed by the Municipal Board  of  Allahabad under  section  128, sub-section (1) clauses  (i)  and  (x), respectively  of  the United provinces  Municipalities  Act, 1916, and paid by the owner as a lessor under section 149 of that  Act should be deducted as an allowance from  the  bona fide  annual  value of the property  determined  under  sub- section  (1) read with sub-section (2) of section 9  of  the Act,  on  the ground that such amount is an  annual  charge, which  is  not  a capital charge to which  the  property  is subject within the meaning of clause (iv) of sub-section (1) of section 9 of the Act." (1)  New  piecegoods  Bazar  Co.  Ltd.  v.  Commissioner  of Income-tax, Bombay [1950] S.C.R. 553. 565     Under section 128 of the United Provinces Municipalities Act, 1916, the municipality can impose a tax in the whole or any  part of the municipality on the annual value of  build- ings or land or of both, and a water-tax on the annual value of  buildings  or land or of both.  Every such  tax  on  the annual value of buildings or land or both is leviable on the actual  occupier of the property upon which the  said  taxes are  assessed, if he is the owner of the buildings or  lands or holds them on a building or other lease from the Crown or from the Board, or on a building lease from any person.   In any  other case the tax is leviable from the lessor, if  the property is let (vide section 149).  Section 177 enacts that all sums due on account of a tax imposed on the annual value of  buildings or lands or both shall, subject to  the  prior payment  of  the land revenue, i.f any, due to  His  Majesty thereupon, be a first charge upon such buildings or lands.     It  is  apparent therefore that the  provisions  of  the United Provinces Act in respect of the levy of the taxes are substantially  similar to the provisions of the  Bombay  Act discussed  in Civil Appeal No. 66 of 1949 (1). For the  rea- sons  given in that appeal and as a result of that  decision this appeal stands dismissed with costs and we consider that the High Court of Allahabad has answered the questions above mentioned correctly. Appeal dismissed. Agent for the appellant:  P.A. Mehta. Agent for the respondent:  S.P. Varma. (1) [1950] S.C.R. 553. 566