Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the following questions of law have been referred at the instance of the assessee : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee was not entitled to the deduction of Rs. 46,867 being the interest on debenture loans under Section 24(1) of the Income-tax Act, 1961, in the computation of the asses-see's income from house property ? 2. Whether, on the facts and in the circumstances of the case and on a correct interpretation of the first proviso to Section 23(1) of the Income-tax Act, 1961, the Tribunal was correct in holding that the deduction on account of municipal tax was allowable only to the extent of Rs. 1,20,909 as claimed by the assessee ?"
(2.) The facts relating to the first question are that the assessee owns a house property and derives income by way of rent and service charges from the tenants. In the assessment for the assessment year 1971 -72, the assessee claimed deduction of a sum of Rs. 46,867 on account of interest on debentures in the computation of its income from house property, This deduction was claimed under Section 24(l)(iv) of the Act. The Income-tax Officer disallowed the claim on the ground that the charge created under the trust deed dated June 24, 1936, was a capital charge and was created thereunder voluntarily.
(3.) In the appeal before the Appellate Assistant Commissioner, the assessee challenged, among others, the aforesaid disallowance of deduction of Rs. 46,867 in the computation of the income from house property. The Appellate Assistant Commissioner held that the finding of the Income-tax Officer that the charge was created voluntarily and was a capita! charge remained unrebutted. He, accordingly, confirmed the disallowance of the deduction of Rs. 46,867 claimed by the assessee in the computation of the income from house property.;