Alfred Henry Lionel Leach, C.J.
1. The assessee who is a resident of Tellicherry owns immovable property of considerable value in the City of Bombay. In respect of the financial year 1940-41 he contended that he was entitled to deduct, when calculating his income assessable under Section 9 of the Income-tax Act, the sum of Rs. 10,880 which he had been compelled to pay by the Government of Bombay as Urban Immovable Property Tax on his properties within the City of Bombay. The Income-tax authorities rejected his contention and the Appellate Tribunal, Calcutta Bench held that they were right. Thereupon the assessee asked the Tribunal to state a case to this Court under Section 66(1). The Tribunal acceded to this request and the question referred is in these words:
Whether the sum of Rs. 10,880 (or any portion of it) being Urban Immovable Property Tax ,paid under the Bombay Finance Act is not an admissible deduction under Section 9(1)(iv) or 9(1)(v) in computing the income from property under Section 9 of the Income-tax Act?
2. (Sub-section (1) of Section 9 says that the tax shall be payable by an assessee under the head ' Income from property ' in respect of the bona fide annual value of property consisting of buildings or lands appurtenant thereto, of which he is the owner, other than such portions of the property as he may occupy for the purpose of his business, profession or vocation. The sub-section proceeds to set out what deductions can be made. Clause (iv) of Sub-section (1) allows inter alia a deduction where the property is subject to an annual charge not being a capital charge, the deduction being the amount of the charge. Clause (v) allows an assessee to deduct any sums paid 'on account of land revenue.' The assessee says that he is entitled to make the deduction under one or other of these clauses.
3. The Bombay Finance (Amendment) Act, 1939, added a new chapter to the Bombay Finance Act, 1932. The new chapter contains a provision with regard to the imposition of the urban immovable property tax on lands and buildings in the City of Bombay and in other parts of the Bombay Presidency. The tax in the City of Bombay is 5 per cent. on the annual letting value. By the Bombay Finance (Second Amendment) Act, 1939, certain further amendments were made in the Act of 1932. One of these amendments was the insertion of Section 24-B in the Chapter relating to the urban immovable property tax. This section reads as follows:
Notwithstanding anything contained in any law and notwithstanding any rights arising out of any contract or otherwise howsoever, all sums due on account of the urban immovable property tax levied under Section 22 or as a penalty imposed under Section 24-A for failure to pay such tax, in respect of any building or land, shall, subject to the prior payment of the land revenue, if any, due to the Provincial Government thereon, be a first charge upon the said building or land and upon the movable property, if any, found within or upon such building or land and belonging to the person liable for such tax or penalty.
4. In the first place the assessee says that as a charge is created by this section he is entitled to the deduction under Clause (iv) of Sub-section (1) of Section 9 of the Income-tax Act. To accept this contention would mean that municipal taxes are deductible under this clause because the amounts due in respect of municipal taxes levied are likewise made a charge on the property. Municipal taxes are not deductible under Section 9 and Mr. Subbaraya Ayyar, on behalf of the assessee, has accepted this. In a recent case heard by the Bombay High Court it was suggested that the municipal taxes represent an annual charge upon the property within the meaning of Section 9(1)(iv), but this contention was rejected. See Commissioner of Income-tax Bombay v. Mahamedbhoy Rowji (1943) 320 I.T.R. 24 B of the Bombay Finance Act, 1932, does not create ' an annual charge ' upon the property. It operates to create a charge should the owner of the property fail to pay the urban immovable property tax. That is not an annual charge within the meaning of Section 9 of the Income-tax Act. There is no substance in the first contention.
5. The second contention, that based on Clause (v) is perhaps more arguable, but here again we consider that the proper view was taken by the Appellate Tribunal. The term ' land revenue ' is not defined in the Income-tax Act, or, as far as we are aware, in any other statute. In Dakshina Mohan Roy Chowdhury v. Saroda Mohan Roy Chowdhury Lord Macnaghten in delivering the judgment of the Privy Council observed,
The Government revenue represents that portion of the produce of the land which from time immemorial has been considered in eastern countries to belong as of right to the sovereign power in the state. In India payment in kind has long since been commuted for a money payment, which in some cases is fixed permanently and in others is liable to revision by periodical settlements. Sometimes the Government revenue is spoken of as quit-rent, sometimes as a land tax. But, however, it may be described and however it may have been assessed, it is the first and paramount charge upon the land, and if default is made in payment the estate is sold in a summary way.
6. The Legislature of the Bombay Presidency clearly does not regard the urban immovable property tax as constituting ' land revenue.' This is shown by Section 24-B which makes the charge subject to the prior payment of the land revenue, if any, due to the Government. Mr. Subbaraya Ayyar has contended however, that we should ignore what is said in Section 24-B because in the City of Bombay lands are held in freehold and part of the tax must be allocated to the land. A tax on land must, he says, be regarded as being land revenue. He admits that this argument will not apply to lands held outside the City of Bombay, because such lands already pay revenue to Government. We cannot accept this argument. If the tax does not constitute ' land revenue ' within the meaning of Section 9(1)(v) of the Income-tax Act in respect of lands outside the City of Bombay it does not constitute land revenue within the city. In our opinion the Urban immovable property tax of the Bombay Presidency is in no way different so far as the Income-tax Act is' concerned from taxes levied by a municipality. Moreover the Bombay Act itself distinguishes it from 'land revenue'.
7. For these reasons the answer to the reference is that the assessee is not entitled to any deduction. The assessee must pay the costs of the reference--Rs. 250.