1989 (3) TMI 171

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....assessee had an income of Rs.31,714 under all other sources put together before the deduction available under Chapter VI-A, he restricted the income of the self-occupied property at Rs.3,171 being 10% of this income. From this figure, he allowed a deduction for repairs and arrived at an income of Rs.2,643. 3. The assessee's contention was that in arriving at the income from self-occupied properties, the municipal tax payable in respect of that property should also have been deducted. The claim for deduction was Rs.1,718. Before the Appellate Asstt. Commissioner, the assessee pressed this claim basing himself on the decision of the Gujarat High Court in the case of CIT v. Arvind Narottam Lalbhai Dalpatbhai Vada [1976] 105 ITR 378. The App....

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....e of property local or municipal taxes cannot be deducted. This Full Bench decision therefore is the basis of the Bombay High Court decision. As a matter of fact, the Bombay High Court Full Bench decision in New Piece Goods Bazar Co. Ltd.'s case has been reversed by the Supreme Court and the Supreme Court's decision in New Piece Goods Bazar Co. Ltd. v. CIT [1950] 18 ITR 516. The Supreme Court has held that in computing the income from property under s. 9 of the Indian Income-tax Act, 1922 an assessee is entitled to deduct under s. 9(1)(iv) the municipal tax paid. In view of this, it would be safer to follow the ratio laid down by the other two High Courts and hold that in computing the annual letting value of a self-occupied property, the m....

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....ermined : (1) For the purposes of section 2, the annual value of any property shall be deemed to be-- (a) the sum for which the property might reasonably be expected to let from year to year ; or (b) where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable : Provided that where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the exident such taxes are borne by the owner, be deducted in determining the annual value of the property." It would be seen from the above that in case where the property is let out the taxes levied by....