Law: Income Tax Act (XI of 1922)

Section: 9, 10 & 12

Income tax Act (XI of 1922)---   -- Ss. 9, 10 & 12 Business expenditure Income from lease of talkies Nature of such income Municipal tax-- Whether allowable,   The assessee leased out his talkie together with the cinema equipment, machinery and furniture. He realised a sum of Rs. 26,295 by his lease during the assessment year 1955 56 and claimed a deduction of Rs. 2,870, being the municipal tax paid for the property. His income was assessed under section 12 of the Income tax Act, 1922, as income from other sources and not as business income :   Held, that the claim for municipal tax paid was an allowable expenditure under section 12(2) of the Act.   The several clauses of section 12 which provide for allowances are not mutually exclusive.   The fact that municipal tax on property was an involuntary item of expenditure which the relevant statute enjoined upon the assessee to pay does not render it any the less an allowable expenditure.   Quaere : Whether when an assessee lets out his own building along with machinery, plant and furniture, also belonging to him, the assessment would not fall under section 9.   Isabella Coal Co. v. Commissioner of Income tax A I R 1926 Cal. 396 fol.   Commissioner of Income tax v. Maharani Janki Kuar Sahiba (1956) 29 I T R 10 distinguished.   Jyoti Prasad Singh Deo In re A I R 1921 Pat. 103 ref. JUDGMENT   SRINIVASAN, J. The question referred to us is :   "Whether on the facts and in the circumstances of the case, the claim for municipal tax paid was allowable expenditure under section 12 (2) of the Income tax Act ?"   The assessee is the owner of the property known as the Maharani Talkies. He leased out this property together with the cinema equipment, machinery and furniture. During the assessment year 1955 56, the sum realised by this lease was Rs. 26,295. The assessee claimed a deduction of Rs. 2,870, being the municipal tax paid for this property. His request that the income should be assessed as income from business was rejected. The department proceeded to assess this income under section 12 of the Act as income from other sources. Certain allowances…