Law:

Section:

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value - Assessment years 1968-69 and 1969-70 - Whether municipal tax paid by owner in respect of property occupied by him has to be deducted from annual value for computation of taxable income from self-occupied house property - Held, yes FACTS The assessee owned properties at two different towns and both were occupied by the assessee for her own residence. The ITO had not deducted the municipal tax paid by the assessee from annual value for the purpose of arriving at the income from the property. On appeal, the AAC granted the necessary relief. Revenue's further appeal to the Tribunal was dismissed. On reference : HELD The structure and the contents of sub-sections (1) and (2) of section 23 lead to the inference that they cannot be considered in compartments and have to be considered together. In the first place, the main part of sub-section (1) of section 23 dealing with the annual value is applicable to properties in general, whether they are let out or occupied by owners. However, the first proviso to sub-section (1) of section 23 expressly refers to the property being in the occupation of a tenant. But the second proviso to sub-section (1) uses the expression, "the annual value as determined under this sub-section." Admittedly, this expression will take in not only the main part of sub-section (1) of section 23, but also the first proviso to section 23(1). The same expression occurs in section 23(2) also, namely, "the annual value shall first be determined as in sub-section (1)." Consequently, the expression the annual value shall first be determined as in sub-section (1) occurring in sub-section (2) of section 23 will necessarily take in the first proviso to section 23(1), thereby providing for deduction of the municipal taxes paid by the owner. Secondly, even though the first proviso to section 23(1) expressly refers to the property being in the occupation of a tenant, the second proviso dealing with a building comprising of one or more residential units does not contemplate the said residential units being in the occupation of the tenants only. Having regard to the language of…

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