THE NEW PIECEGOODS BAZAR CO., LTD., BOMBAY versus THE COMMISSIONER OF INCOME-TAX, BOMBAY

Citation: [1950] 1 S.C.R. 553 · Decided: 26-05-1950 · Supreme Court of India · Bench: M. PATANJALI SASTRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

, 
$.c.R. 
SUPREME COURT REPORTS 
553 
deposited with the respondents 
did not require 
regis-
tration and was properly admitted in evidence to prove 
the creation of the charge. 
The appeal fails and is dismissed with costs. 
Appeal dismissed. 
Agent for the appellant: Tarachand Brijmohanlal. 
Agent for respondent No. 1 : S. P. Varma. 
I 
THE NEW PIECEGOODS BAZAR CO., LTD., 
BOMBAY 
ti. 
THE COMMISSIONER OF INCOME-TAX, 
BOMBAY 
[SAIYID FAZL ALI, PATANJALI SASTRI, 
MEHR CHAND MAHAJAN and 
, MUKHERJEA JJ.] 
Indian Income-tax Act (XI of 1922), s. 9(1) (iv)-Income from 
pt"Operty-Computation-Deductions-"Annual 
charge .not 
being 
capital 
charge"-"Annual charge" ·and 
'~capital .charge", 
mean-· 
ittgi of-Charge for. municipal . property tax and urban immoveable 
pro,,my tax-Whether deductible--City of Bombay Municipal Act, 
1888, s. 212--,-Bombay Finance Act, I 932, s. 22. 
The charge created in respect of municipal property tax by 
s. 212 af the City of Bombay Municipal Act, 1888, is an "annual 
charge not being a capital charge" within the meaning of s. 9 ( 1) 
(it) of the Indian Income-tax Act, 1922, and the amount of such 
charge should therefore be deducted in computing the income from 
such property for the purposes of .s- 9 of the Indian Income tax Act. 
The charge in . respect 
of urban 
immoveable property tax 
created by the Bombay Finance Act, 1932, is similar in character 
and the amount of such charge should also be deducted_ 
Tl* expression 
"capital charge" 
in s. 
9 (1) (iv) means 
a 
charge created for a capital sum, that is to say, a charge created to 
secure the discharge of a liability of a capital nature; and an 
"annual charge" means a charge to secure an annual liability. 
1950 
R~ 
Mfl"'qj 
v. 
· Bliagwandas 
Daruka 
AtttJ Othm 
P atanjali Sastri J. 
1950 
May26 
1950 
.N n11 Pieugoods 
Baz;ar Co. Lid. 
v. 
Co.unissioner 
.of lnamu-lax, 
Bomb47 
Ma/iqjan ]. 
554 
SUPREME COURT REPORTS 
APPELLATE 
LXVI of 1949 . 
JuR1so1cnoN: 
Civil 
Appeal 
(1950} 
No. 
Appea~ from 
the 
High Court of Judicature, 
Bombay, 
m a reference under section 
66 of the 
Indian Income-tax Act,. 1922. 
K. M. Munshi (N. P. Nathvani, 
with him), 
for 
the appellant. 
M. 
C. Setalvad, 
Attorney-General 
for 
India 
(H. J. Umrigar, with him), for the respondent. 
1950. 
May 26. 
The judgment of the Court was 
delivered by 
MEHR 
CHAND 
MAHAJAN J.--This 
is an appeal 
against a judgment of the High Court of Judicature at 
Bombay in an income-t:\X 
matter 
and 
it raises 
the 
question whether municipal property tax and urban 
immoveable property tax payable 
under the 
relevant 
Bombay Acts are allowable deductions under section 9 
(1) (iv) of the Indian Income-tax Act. 
The assessee company is an investment 
company 
deriving its income from properties in the city of 
Bombay. 
For the assessment year 
1940-41 
the net 
income of the assessee under the head "property" 
was 
computed 
by the Income-tax Officer 
in the 
sum 
of 
Rs. 6,21,764 after deducting from gross rents certain 
payments. 
The company had paid during the releva 
year 
Rs. 
1,22,675 
as 
municipal 
property tax 
Rs. 32,760 
as urban property tax. 
Deduction of t 
two sums was claimed under the provisions of section 9 
of the Act. 
Out of the first item a deduction in the 
sum of Rs. 48,572 
was allowed on the ground that this 
item represented tenants' burdens paid by the assesscc, 
-0therwise the cl.aim was disallowed. 
The appeals of 
the assessee to the Appellate Assistant Commissioner 
and to the Income-tax 
Appellate Tribunal were un-
successful. 
The Tribunal, · however, · agreed to refer 
two questions of law to the High Court 
of Judicature 
at Bombay, namely,-
· 
(1) Whether 
the 
munic;ipal taxes pai(l by 
the 
:;ipplicant-company are an an~wable deductio11 under 
, 
S.C.R. 
SUPREME COURT REPORTS 
555 
the provisions 
of section . 9 ( 1) 
(iv) 
of the 
Indian 
Income-tax Act ; 
(2) Whether 
the urban 
immoveable 
property 
taxes paid by the applicant-company are an allowable 
deduction under section ? (1) (iv) or under section 9 
(1) (v) .of the Indian Income-tax Act. 
A supplementary reference was made covering a 
third question which was not raised before us and it 
is not therefore necessary 
to 
refer to it. 
The 
High 
Court answered all the three questions in the . negative 
.and hence this appeal. 
The question for- our determination is whether the 
municipal property tax 
and 
urban 
immovable 
pro-
perty tax can b~ deducted as an alfowance

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