Law:

Section:

Section 23 of the Income-tax Act, 1961 [Corresponding to section 9(2) of the Indian Income-tax Act, 1922] - Income from house property - Annual value - Whether only natural and proper construction which could be placed upon expression "levy" used in third proviso to section 9(2) is "impose" and not "collect" - Held, yes - Assessee society let out certain buildings owned by it to tenants and claimed deduction of half of urban immovable property tax imposed by Bombay Finance Act, 1932 for purpose of determining annual value of property - Whether in view of abovesaid construction of expression "levy", assessee was not entitled to relief which he had sought - Held, yes FACTS The assessee-society owned certain buildings. These buildings were let out to tenants. The assessee claimed that half of the urban immovable property tax imposed by Bombay Finance Act, 1932 was deductible under section 9(2) while determining annual value of the property. The ITO refused to allow any deduction in working out the gross annual value. On appeal, the Tribunal allowed the assessee's claim. On reference the Department contended that "levy" in the context of third proviso to section 9(2) of 1922 Act means "impose" while the assessee contended that "levy" means "collect". HELD The language used by the Legislature in the case of the Explanation to section 9(1)(iv) and in the third proviso to section 9(2) is significant. In the case of the Explanation the Legislature has dealt with the tax imposed by any of the three authorities; a local authority, a State Government or the Central Government. In the case of the third proviso to section 9(2) it has confined itself to the tax levied by a local authority. It was urged that there was no reason why the expression 'levy' should not be construed as meaning 'collect'. In the first place, it is difficult to understand why the Legislature should have emphasised the question of collection of a tax. It seems to be immaterial as to which is the agency selected for the collection of a tax. What is more material and more relevant is to consider the authority which imposes the tax, and therefore from that point of view it is impossible to accept the…

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