Municipal house tax deduction turns on the year of actual levy, even when the charge covers an earlier block period.

Municipal house tax is deductible under the proviso to Section 23(1) of the Income-tax Act in the year it is actually levied by the local authority, even where the levy relates to an earlier block period. The Tribunal applied the meaning of "levied" as the actual municipal levy, and treated the liability as allowable in the assessment year in which that levy first occurred. On that basis, the assessee's entire house-tax liability for the relevant period was deductible in the assessment year 1979-80.

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Issues: Whether house-tax levied by the municipal corporation for a block period could be deducted in the assessment year in which the levy was first made.

Analysis: The allowance claimed turned on the proviso to Section 23(1) of the Income-tax Act, 1961, which permits deduction of tax levied by a local authority in respect of the property. The Tribunal followed the view that the expression "levied" refers to the actual levy by the municipal authority, and the deduction becomes available in the year of such levy. Since the municipal corporation had levied the tax for the entire period for the first time during the relevant year, the liability was treated as deductible in that year.

Conclusion: The assessee was entitled to deduct the entire house-tax liability of Rs. 20,648 in the assessment year 1979-80.

Ratio Decidendi: Under the proviso to Section 23(1) of the Income-tax Act, 1961, municipal tax is deductible in the year in which it is actually levied by the local authority, even if the levy covers an earlier multi-year period.

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