TMI Blog1947 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... int raised, we sent the matter back to the Tribunal and asked them to frame a further question, in order to cover all the arguments which the assessee desired to raise. The facts of this particular case can be briefly stated. The assessee company's income from property during the relevant year, which is account year Samvat 1995, that is to say the 24th October, 1938, till the 11th November, 1939, was computed by the Income-tax Officer in the sum of ₹ 6,21,764. That sum was made up from the figure of ₹ 9,17,825, which was the gross rents realised as shown in the accounts, in respect of the assessee company's properties. From that were deducted certain payments which ought to have been made and are normally made by tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy in the manner therein set out. By sub-section (2) annual value is defined as being deemed to mean the sum for which the property might reasonably be expected to let from year to year. The two clauses which deal with allowances material to this reference are clauses (iv) and (v) of sub-section (1):- (iv) Where the property is subject to a mortgage or other capital charge, the amount of any interest on such mortgage or charge; where the property is subject to an annual charge not being a capital charge, the amount of such charge; where the property is subject to a ground rent, the amount of such ground rent; and, where the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is subject to an annual charge not being a capital charge, and it is submitted that these municipal taxes by virtue of their character are annual charges not being capital charges. For that proposition Section 212 of the Municipal Act is relied upon, by which property taxes due under the Municipal Act in respect of any building or land shall, subject to the prior payment of land revenue, if any, due to the Provincial Government thereupon, be a first charge upon the said building or land and upon the goods and chattels, if any, found thereon. It is suggested by Mr. Desai, with considerable ingenuity, that, whether or not this is a charge, must be looked at from the creditor's (?) point of view; that is to say, from the point o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be doubtful, but it seems to me plain that it cannot be described as 'annual charge not being a capital charge.' I do not know what meaning can be assigned to the expression in the sub-section ' a capital charge, ' except a charge on capital, though it is not necessary to consider the meaning of the expression except in relation to the charge arising under Section 212 of the Municipal Act. To my mind, such a charge is unquestionably a charge on capital, and, in my view, therefore, one cannot say that the general tax falls within the expression 'an annual charge not being a capital charge,' which has been added to Section 9(1)(iv). And with that judgment Mr. Justice Kania concurred. Our attention has been dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive. The assessee must pay the costs of the Commissioner. CHAGLA, J.- I agree. One of the heads of income which is chargeable to income-tax is Income from Property , and that head is dealt with under Section 9 of the Income-tax Act. The scheme of Section 9 is this: that income from property is charged in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto subject to the allowances mentioned in the following seven sub-clauses; and annual value is defined and explained in Section 9, sub-section (2), to mean the sum for which the property might reasonably be expected to let from year to year. Now in my opinion no better method of finding out what the property might reasonably be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... happens to be the municipal property tax and the urban immovable property tax. It would be entirely erroneous to suggest that a landlord is allowed to deduct from the rent which he receives all the outgoings before the bona fide annual value of the property is arrived at. The bona fide annual value of the property is the rent which the landlord receives. The outgoings are matters for allowances, and if a particular outgoing is a permissible allowance under Section 9, then the Income-tax authorities could grant that allowance to the landlord. With regard to the second point, whether this particular payment falls under Section 9(1)(iv) of the Income-tax Act, I find it very difficult to understand how the payment of municipal property tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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