1981 (4) TMI 158

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....xes in respect of ta newly constructed building in the first year of occupation even though the Municipal tax assessment had not been made within the previous year. The Tribunal found by its order dt. 27-7-1979 that the actual figures of Municipal tax was available by the time the assessment was made and, therefore, the deduction of the Municipal tax levied was possible. How ever, the Tribunal observed that the annual value itself being notional net income, the Municipal taxes leviable which could be easily ascertained was deductible even though the section referred to "tax levied". 3. In the case of Shri Sampathamal Chordia (ITA Nos. 2301 and 326 (Mds)/79) the Municipal tax had been enhanced not only for the previous year but for the ea....

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....e. In the case of Sampathlal Chordia, it was held that the "taxes levied" in s. 23(1) must mean the actual tax demanded irrespective of whether it relates to the previous year or not. The Revenue requires a reconsideration of that decision on the ground that the annual value must be considered to be a notional income of the previous year only and, therefore, the taxes levied must be restricted to the tax attributable to the previous year. But, we do not think that the decision in case of Habeebur Rahman supports this contention. In that case, the question was whether the assessee could anticipate the tax that could be levied and claim deduction even though the municipal tax assessment has not been made in the previous year. That question is....

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.... include the enhancement in respect of earlier assessment years. Since the earlier assessments cannot be reopened for the purpose of deducting the extra demand, the amount so levied has to be allowed as a deduction only in the year in which it is levied. This is especially so because the expression 'levied' has to be given its full meaning. We are, therefore, of the considered opinion that under the proviso to s. 23(1), the assessee is entitled to the deduction of the taxes levied by a local authority in respect of the property while determining is annual value notwithstanding that the tax so levied may comprise any sum attributable to a period beyond the previous year. 7. In the light of the above position in law, we may now consider th....