Commissioner of Income-Tax, U.P. Vs.
Gappumal Kanhaiya Lal  INSC 17 (26 May 1950)
FAZAL ALI, SAIYID SASTRI, M. PATANJALI
MAHAJAN, MEHR CHAND MUKHERJEA, B.K.
CITATION: 1951 AIR 5 1950 SCR 563
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.
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
New Piecegoods Bazar Co, Ltd. v. Commissioner
of Income-tax, Bombay ( S.C.R. 553) followed.
(1) I.L,R. 1943 Bom. 628. 73 564
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
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 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 Tribunal 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 subsection (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 piece goods Bazar Co. Ltd. v. Commissioner of Income-tax,
Bombay  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 buildings 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 reasons 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
Agent for the appellant: P.A. Mehta.
Agent for the respondent: S.P. Varma.
(1)  S.C.R. 553.