Law: Income Tax Act, 1961

Section: 144,144B

(a) Income-tax----Deduction---Draft assessment order---Revised return---Deduction claimed in revised return after passing of draft assessment order---Cannot be entertained---Indian Income Tax Act, 1961, S. 144B. The Tribunal was not right in holding that the claim for deduction under section 80MM of the Income Tax Act, 1961, made in the revised return filed by the assessee after passing of the draft assessment order under section 144B, was valid in law for being considered on the merits. Panchamahal Steel Ltd. v. U.A. Joshi, ITO (1997) 225 ITR 458 (SC) fol. (b) Income-tax--- ----Deductions---House property---Municipal taxes pertaining to earlier year, paid in assessment year in question---Cannot be allowed---Indian Income Tax Act, 1961, S.24. Where, admittedly, the municipal taxes amounting to Rs.15,328 which the assessee paid during the accounting year ending on March 31, 1978, relevant to the assessment year 1979-80 pertained to the period from April 1, 1976 to April 1, 1977, and the demand in respect of the same was also made by the society on June 21, 1977: Held, that the liability was incurred by the assessee not in the previous year relevant to the assessment year under consideration, i.e., 1979-80, but in the earlier year, and the same was not allowable as a statutory deduction in the computation of income from house property of the previous year relevant to the assessment year 1979-80. JUDGMENT DR. B.P. SARAF, J.---By this reference under section 256(1) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal, Mumbai, has referred the following two questions of law to this Court for opinion. At the instance of the assessee: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that municipal taxes of Rs.15,328 paid by the assessee during this accounting year ending on June 30, 1978, was not allowable as statutory deduction while computing its income from house property on the reason that the taxes pertained for a period from April 1, 1976 to April 1, 1977; and the liability had been incurred prior to the accounting period relevant to the assessment year 1979-80?" At the instance of the Revenue: "(2)…

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