TMI Blog1964 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee claimed to be entitled to deduct these amounts in computing his income under this head of income from property. The Income-tax Officer, while accepting the position that the income under this head as per the Burma assessment order was only ₹ 17,275, refused to allow the deduction of the municipal tax, as no particulars regarding the claim were made available. On appeal the Appellate Assistant Commissioner observed that the income from property situate in Burma has to be computed in accordance with section 9 of the Indian Income-tax Act, and, in doing so, tax, cess, etc., levied by a local authority must be taken to mean tax, cess and levy made by the corresponding authority in Burma. He accordingly allowed the deduction claimed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, the tax in respect of such income shall be payable by an assessee in respect of the bona fide annual value of the property. Certain allowances are indicated in the various sub-clauses of section 9(1). Sub-clause (iv) further provides that where the property is subject to an annual charge not being a capital charge, the amount of such charge should be deducted. What an annual charge meant in the context was the subject of a difference of opinion among the several High Courts. The question was set at rest by the decision of the Supreme Court in New Piece Goods Bazar Co. Ltd. v. Commissioner of Income-tax [1950] 18 I.T.R. 516; [1950] S.C.R. 553. It was decided herein that municipal taxes paid under the Bombay Municipal Act and the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tenant, a deduction shall be made equal to that part, if any, of the tenant's liability which is borne by the owner. Clearly then, this proviso permitted a deduction of a certain amount equivalent to one-half of the local tax in determining the annual value of the property. This section was further amended by Act 13 of 1960. Clause (a) of the third proviso extracted above was amended thus: (a) in the case of a property the construction of which was completed before the 1st day of April, 1950, the total amount of such taxes, and in the case of any other property, one-half of the total amount of such taxes, shall, notwithstanding anything contained in such law, be deemed to be the tenant's liability for such taxes..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther claims that the foreign revenue laws must be ignored in applying any local law. In that view also, the fact that a foreign revenue law imposes any tax such as the municipal tax cannot be a relevant factor for determining a tax liability under the Indian Income-tax Act. Even following the above line of argument advanced by the learned counsel for the department, it seems to us that the expression local authority , appearing in the third proviso to section 9(2), must be interpreted in the context in which it appears. The fact that that expression is not defined in the Income-tax Act can only mean that there can be no rigid restraint in interpreting that expression. When we turn to the General Clauses Act, we find that the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust mean that local authority which can exercise the power of levying tax in respect of that property. In the context, therefore, we are at a loss to see how a restricted interpretation, as contended for by the learned counsel for the department, can be placed upon the expression. We are not convinced that any assistance can be derived from the Explanation to section 9(1), wherein the words local authority are also used. We may point out that this Explanation is intended to apply only to clause (iv) of sub-section (1) of section 9 and whatever inferences may be drawn from the use of that expression in the context in which it appears therein cannot be utilised for the purpose of interpreting the third proviso to section 9(2). Mr. Bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax cannot be enforced. That is far different from saying that a legislature cannot take into account the liability of an assessee to pay other taxes in foreign States in respect of property or transactions which result in the accrual of income from outside the taxable territory. If the Indian legislature taxes such income, there is nothing to prevent it from making due provision for such liabilities as may attach to that income in the places wherefrom such income has been derived. The authority is no guide to the interpretation of the proviso which we are examining. Another decision relied upon by the learned counsel is Chockalingam Chettiar v. Commissioner of Income-tax [1945] 13 I.T.R. 122. That was a case where an assessee purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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