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of <h1>Deduction for urban land tax only in year of payment, not demand issuance. Tribunal to address income classification and interest taxability.</h1> The court held that the deduction for urban land tax liability can only be claimed in the year of payment, not in the year of demand issuance. The court ... Deduction, House Property Issues:1. Deductibility of urban land tax liability under section 24(1)(vii) in the year of demand.2. Classification of income from hire charges of printing machinery and motor vehicles under the head 'Other sources' or 'Business.'3. Taxability of interest amounts under section 41(1) of the Income-tax Act, 1961.Analysis:The first issue revolves around the deduction of urban land tax liability under section 24(1)(vii) in the year of demand. The assessee contended that the liability accrues as soon as the demand is issued, entitling them to the deduction in the year of demand issuance. However, the court, citing CIT v. M. CT. Muthiah [1979] 118 ITR 104 (Mad), held that deduction can only be claimed in the year of payment for urban land tax, as specified in the Income Tax Act. The court rejected the assessee's argument that the provision contemplates different treatment for land revenue and other taxes, emphasizing that payment is the basis for deduction for both categories. Consequently, the court dismissed the request for a reference on this issue, as it had already been addressed in a previous case.Moving on to the second and third issues, the court found that these questions arose from the Tribunal's order. Therefore, the court directed the Tribunal to refer questions regarding the classification of income from hire charges and the taxability of interest amounts under section 41(1) of the Income-tax Act, 1961, for the court's opinion. The court dismissed the reference application concerning the first issue and ordered no costs to be incurred. This comprehensive analysis highlights the court's interpretation of the relevant provisions and its decision on each issue raised by the assessee, providing clarity on the deductibility of urban land tax, income classification, and taxability of interest amounts.
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