Law:

Section:

Section 30, read with section 40(a)(ii) of the Income-tax Act, 1961 [Corresponding to section 10(2)(ix), read with section 10(1) of Indian Income-tax Act, 1922] - Rent, rates, fares, repairs and insurance for buildings - Assessment year 1961-62 - Professional tax was paid to municipality under section 150A of Bihar and Orissa Municipal Act, 1922 and it the impugned tax paid to municipality, was not paid on profits or gains or on basis of any such profits or gains of business but was paid for carrying on business by assessee in particular premises - Whether said amount would be, in substance, a municipal tax in respect of business premises and was allowable under section10(i) - Held, yes Words and phrases : Expression in respect of as occurring in section 10(2)(ix) of the Indian Income-tax Act, 1922 FACTS For the purpose of determination of taxable income, the assessee, an individual, carrying on wholesale business in cloth, claimed deduction on account of payment made to the municipality as professional tax under section 150-A of the Bihar and Orissa Municipal Tax Act, 1922, for the assessment year 1961-62. Both the ITO and the AAC disallowed the deduction. On second appeal, the Tribunal allowed the deduction under section10(1) on the ground that the tax paid to the Municipality was not a personal tax levied on the profits or gains of any business or assessed in proportion to or otherwise on the basis of any such profits or gains but was a tax paid under section 160A read with section 82(1)(ff) of the Bihar and Orissa Municipal Act, 1922, in relation to the premises where the business was carried on, and, as such, the payment did not fall under section 10(4). On reference : HELD The impugned tax paid to the Municipality, was not paid on profits or gains or on the basis of any such profits or gains of the business but was paid for carrying on the business by the assessee in the particular premises the monthly valuation of which was more than Rs. 250. Therefore, payments made as professional tax under Serial (c) of the Fourth Schedule of the Municipal Act could be regarded as a payment on the gains or profits, but payment under Serial (b), to which category this…

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