Actual payment test governs deduction of urban land tax arrears from house property income.

Urban land tax arrears are deductible in computing income from house property when they are actually paid, because section 24(1)(vii) focuses on "any sums paid" on account of land revenue or other State tax rather than the year to which the liability relates. The Tamil Nadu Urban Land Tax Act, 1966 was noted as requiring demand and collection by reference to Fasli years, with liability becoming enforceable on demand. On that basis, tax paid in arrears for earlier years was treated as deductible on actual payment, and the issue was answered in favour of the assessee.

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Issues: Whether urban land tax paid in arrears for earlier years is deductible under section 24(1)(vii) of the Income-tax Act, 1961 while computing income from house property.

Analysis: The deduction provision for house property income distinguishes between items where allowance is tied to the amount relatable to the relevant year and items where the statute focuses on actual payment. In clause (vii), the controlling words are "any sums paid" on account of land revenue or other tax levied by the State Government in respect of the property. The emphasis is therefore on payment and not on the year to which the tax liability relates. The scheme of the Tamil Nadu Urban Land Tax Act, 1966 also shows that urban land tax is demanded and collected by reference to Fasli years, and liability becomes enforceable only on demand, reinforcing that the statutory language permits deduction when the sum is actually paid.

Conclusion: Urban land tax arrears, when actually paid, are deductible under section 24(1)(vii) even if they relate to earlier years, and the question was answered in the affirmative in favour of the assessee.

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