S. Sankarasubban, J.
These appeals are filed by the revenue against the common order passed by the Tribunal, Cochin Bench, in IT Appeal Nos. 246 to 249 (Coch) of 1996. The assessment years are 1987-88 to 1990-91. The question of law raised in these cases is 'whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction in respect of the payments made to the Co-operative Society Ltd., Bombay, on account of water charges, security charges, society management expenses, etc., under section 24(1)(iv) of the Income Tax Act, 1961 ?' The facts of the case are as follows:
2. The assessee was having one-third ownership in a flat in Anand Kamal Co-operative Housing Society Ltd., Bombay. While filing the return of income, the assessee claimed Rs. 25,560 as co-operative society's dues for the assessment years 1987-88 and 1988-89 and Rs. 92,052 for the other two assessment years in computing income from house property. These dues were towards the municipal taxes, water charges, security, society management expenses, repairs, etc. These returns were processed under section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Thereafter, the assessing officer initiated proceedings under section 154 of the Act on the ground that the co-operative society's dues claimed by the appellant cannot be allowed as a deduction in computing the income from house property.
3. The assessee objected to this proposal stating that the dues paid by the appellant are allowable under section 24(1)(iv) of the Act as being annual charges. The assessing officer did not accept this contention and rectified the intimation issued earlier. While doing so, the assessing officer disallowed the co-operative society's dues but allowed 1/6th of the rental value for repairs.
4. Against the above, appeals were filed. In the appeals, the appellate authority gave deduction of municipal taxes, while computing the income from house property. Thus, municipal tax was allowed to be deducted. Against that, an appeal was filed before the Tribunal. In paragraph 3 of the order of the Tribunal, it is stated as follows :
'Now, we find that this issue stands covered by the order of this Tribunal in the case of Smt. Mary Joseph, Trivandrum in ITA No. 355/Coch./94 dated 16-2-1996 for the assessment year 1991-92 wherein this Tribunal has held that there was no reason to disallow the payment made by the assessee to the housing co-operative society as she was liable to pay such maintenance charges as per clause (c) of the agreement entered into between her and the tenants and also the municipal taxes paid by her in accordance with the municipal rules. The facts being similar, we also hold that the assessee is entitled to get deduction in respect of the payments made to the Co-operative Housing Society Ltd.'
The order passed in IT Appeal No. 355 (Coch.) of 1994 is produced as Annexure D. In paragraph 6 of the order, it is stated thus: 'In accordance with the judgment of the Calcutta High Court in the case of CIT v. Russell Properties (P) Ltd. : [1982]137ITR473(Cal) , service and maintenance charges recovered from the lessees included any provision made for lifts and other services rendered by the assessee. Such charges are allowable deductions in computing the net rent received and such payments can also be considered as allowable deductions under section 24(c)'.
5. Before us, the agreement between the owner and the tenant was produced. Clause 6(c) of the licence agreement says thus :
'6. The licensers hereby jointly and severally covenant as follows:
(a) and (b)** ** **
(c) to regularly and punctually pay all existing and future rents, rates, taxes, cesses, assessments or other outgoings, Central, State or municipal, assessed charged, imposed, levied or payable in respect of the said flat or any part thereof including all charges for maintenance or other outgoings levied or recovered by the said society in respect of the said flat and any charges that may be levied or recovered by the said society for or in connection with the grant by the licensers to the licensee of this licence to use the said flat.'
6. The question that arises for consideration is whether the amount paid to the co-operative society can be deduced under section 24(1)(iv).
Section 24(1)(iv) as it stood at that time states as follows :
'24. Deductions from income from houseproperty.(1) Income chargeable under the head 'Income from house property' shall, subject to the provision of sub-section (2), be computed after making the following deductions, namely:
(1) to (iii) ** ** **
(iv) where the property is subject to an annual charge, (not being a charge created by the assessee voluntarily or a capital charge), the amount of such charge;'
The question is whether the property is subject to annual charge. In the decision of the Supreme Court in New Piece Goods Bazar Co. Ltd. v. CIT : [1950]18ITR516(SC) , the Supreme Court was considering the case of tax and held that it was an annual charge. The Supreme Court held as follows :
'The determination of the point whether the taxes in dispute fall within the ambit of the phrase 'annual charge not being a capital charge' depends on the provisions of the statutes under which they are levied. Section 143 of the City of Bombay Municipal Act, 1888, authorises the levy of a general tax on all buildings and lands in the city. The primary responsibility to pay this property tax is on the lessor (vide section 146 of the Act). In order to assess the tax, provision has been made for the determination of the annual rateable value of the building in section 154. Section 156 provides for the maintenance of an assessment book, in which entries have to be made every official year of all buildings in the city, their rateable value, the names of persons primarily liable for payment of the property tax on such buildings and of the amount for which each building has been assessed. Section 167 lays down that the assessment book need not be prepared every official year but public notices shall be given in accordance with sections 160 to 162 every year and the provisions of the said sections and of sections 163 and 167 shall be applicable each year. These sections lay down a procedure for hearing objections and complaints against entries in the assessment book. From these provisions, it is clear that the liability for the tax is determined at the beginning of each official year and the tax is an annual one. It recurs from year-to-year. Sections 143 to 168 concern themselves with the imposition, liability and assessment of the tax for the year. The amount of the tax for the year and the liability for its payment having been determined, the Act then prescribes for its collection in the chapter 'The collection of taxes'. Section 197 provides that each of the property taxes shall be payable in advance in half-yearly instalments on each first day of April and each first day of October. The provision as to half yearly instalment necessarily connotes an annual liability. In other words, it means that the annual liability can be discharged by half-yearly payments. Procedure has also been prescribed for recovery of the instalments by the presentment of a bill, a notice of demand and then distress, and sale. Finally section 212 provides as follows: 'Property taxes due under this Act in respect of any building or land shall, subject to the prior payment of the land revenue, if any, due to the provincial government thereupon, be a first charge ........upon the said building or land .... It creates a statutory charge on the building.'
Unfortunately, from the orders of the Tribunal and the assessing authorities, it is not clear on what basis the recurring expenses are paid. Unless we know the provisions on the basis of which the liability is created, it may not be possible for us to answer the question of law raised. The assessee is directed to produce the relevant Co-operative Societies Act or the relevant Act and the bye-laws, which make it compulsory to pay the expenses and to prove that the amount is an annual charge. The assessee has got further contention that since these are the expenses incurred and are to be paid by the tenant, it is not to be included as income. It is also a contention, which the assessee can put forward before the Tribunal.
7. In the above view of the matter, we set aside the judgment of the Tribunal and direct the Tribunal to consider the appeals afresh in the light of the above direction.
8. The appeal is disposed of as above.