COMMISSIONER OF INCOME TAX BOMBAY CITY Vs. ZOROASTRIAN BUILDING SOCIETY LTD
LAWS(BOM)-1954-8-3
HIGH COURT OF BOMBAY
Decided on August 25,1954

COMMISSIONER OF INCOME-TAX, BOMBAY CITY Appellant
VERSUS
ZOROASTRIAN BUILDING SOCIETY LTD., BOMBAY Respondents


Cited Judgements :-

KARNANI PROPERTIES LTD VS. CORPORATION OF CALCUTTA [LAWS(CAL)-1973-4-12] [REFERRED TO]


JUDGEMENT

- (1.)THE question that arises in this reference is whether the assessee is entitled to deduct half the urban immovable property tax for the purpose of determining the bona fide annual value of the property belonging to the assessee. This question can be determined on a construction of the third proviso to section 9 (2) of the Indian Income-tax Act and that provides :-
"provided further that where the property is in the occupation of tenant and the taxes levied by any local authority in respect of the property are, under the law authorising such levy, payable wholly by the owner or partly by the owner and partly by the tenant : (a) one-half of the total amount of such taxes or one-eight of the annual value of the property, whichever is less, shall, notwithstanding anything contained in such law, be deemed to be the tenant's liability for such taxes, and (b) in determining the annual value of the property with reference to the rent payable by the tenant, a deduction shall be made equal to the part, if any, of the tenant's liability which is borne by the owner. "

(2.)THEREFORE, before a deduction can be made for the purpose of ascertaining the bona fide annual value, the conditions necessary are : (1) that there must be a tax levied by a local authority, (2) to tax must be levied by the local authority under some law which authorities the local authority to levy the tax, and (3) that exemption which can only be up to one-half, can only be claimed provided the landlord discharges any part of the tenant's liability with regard to that tax, which is deemed to be one-half.
(3.)NOW, the whole question turns on the meaning to be given to the expression "levied". It is contended by the Department that "levy" in this context means "impose" and it is contended on behalf of the assessee by Mr. Palkhivala that "levy" means "collect". It is undoubtedly true that "levy" has been used in both senses depending upon the context in which the expression is used, and what we have to decide is whether in the context in which this expression is used it means "collect". or it means "impose". Now, this urban immovable property tax in respect of which exemption is claimed by the assessee was imposed by the Bombay Finance Act, 1932, and the charging section is section 22 which provides that there shall, subject to the provisions of section 23, be levied and paid to the Provincial Government a tax on buildings and lands hereinafter called the urban immovable property tax. The Legislature having levied this tax, it set up a machinery for the collection of the tax and the agent that it appointed for collection of the tax was the Bombay Municipality. Section 24aa provides :
"the collection of the urban immovable property tax under section 24 and the recovery of the penalty under section 24a on behalf of any municipality shall be made by the appropriate municipal authority appointed to collect the property tax on behalf of such municipality under the law under which such municipality is constituted. "



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