RAJA RAM KUMAR BHARGAVA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE two separately numbered references, in fact, constitute one single reference. Under Section 66(1) of the Indian Income-tax Act (hereinafter referred to as the Act the Income-tax Appellate Tribunal referred the 'following question for the opinion of this Court:--

(2.) THE assessee is a Hindu undivided family deriving income from house property and various types of businesses carried on by the family including the business of taking contracts for supply of goods to the Government. During the assessment for the assessment year 1945-46, questions arose relating to several deductions claimed by the assessee. One deduction claimed was a sum of Rs. 10,144/- which was sought to be excluded from the taxable income accruing from the assessee's properties on the ground that this sum had been paid for house and water taxes. THE Income-tax Appellate Tribunal rejected this claim, holding that it was inadmissible in view of the explanation to Sub-section (1) of Section 9 of the Act introduced by the Indian Income-tax Act (Amendment) Act, 1950 (Act No. LXXI of 1950) (hereinafter referred to as the Amending Act). Section 9 of the Act lays down the principles for computing taxable income from property and Clauses (i) to (vii) of Sub-section (1) of that section lay down the various allowances that are permitted to the owner as deductions when computing such income. One of the allowances deductible in computing income from property mentioned in Clause (iv) of Sub-section (1) of Section 9 of the Act, where the property is subject to an annual charge not being a capital charge, is the amount of such charge.

(3.) IN this connection, learned counsel for the Department drew our attention to a sentence in the judgment of their Lordships of the Supreme Court in Commissioner of Excess Profits Tax, Madras v. N.M. Rayaloo Iyer and Sons, 1961-41 ITR 671 :(AIR 1961 SC 692) where it was said;