- (1.) This is an appeal against a judgment of the High Court of Judicature at Bombay in an income-tax matter and it raised the question whether municipal property tax and urban immovable property tax payable under the relevant Bombay Acts are allowable deductions under S. 9(1) (iv), Income tax Act.
(2.) The assessee company is an investment company deriving its income from properties in the city of Bombay. For the assessment year 1940-41, the net income of the assessee under the head "property" was computed by the Income-tax Officer in the sum of Rs. 6,21,764 after deducting from gross rents certain payments. The company had paid during the relevant year Rs.122,675 as municipal property tax and Rs. 32,760 as urban property tax. Deduction of these two sums was claimed under the provisions of S. 9 of the Act. Out of the first item, a deduction in the sum of Rs. 48,572 was allowed on the ground that this item represented tenants' burdens paid by the assessee, otherwise the claim was disallowed. The appeals of the asseseee to the Appellate Assistant Commissioner and to the Income-tax Appellate Tribunal were unsuccessful. The Tribunal, however, agreed to refer two questions of law to the High Court of Judicature at Bombay, namely, - (1) Whether the municipal taxes paid by the applicant company are an allowable deduction under the provisions of S. 9 (1) (iv), Income-tax Act; (2) Whether the urban immovable property taxes paid by the applicant-company are an allowable deduction under S. 9 (1) (iv) or under S. 9 (1) (v), Income -tax Act.
(3.) A supplementary reference was made covering a third question which was not raised before us and it is not therefore necessary to refer to it. The High Court answered all the three questions in the negative and hence this appeal.;