Y. V. ANJANEYULU, J.

( 1 ) THIS reference arises under the Income-tax Act, 1961, and relates to the income-tax assessment years 1975-76 and 1976-77. At the instance of the assessee the Tribunal referred the following question of law for the consideration of this court :"whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that where deduction has to be allowed in terms of the proviso to section 23 (1) of the Income-tax Act, 1961, of municipal taxes, only such amounts for which demand is made for the first time in the accounting period could be allowed as a deduction ?"

( 2 ) FOR the income-tax assessment years 1975-76 and 1976-77, the assessee claimed deduction of Rs. 15,794 and Rs. 15,290, respectively, by way of municipal taxes payable in respect of properties owned by it. The deduction was claimed under the proviso to section 23 (1) of the Act. The tax authorities scrutinised the claim and found that Rs. 4,866 and Rs. 7,400 are allowable for these two assessment years by way of tax. In that view, the claim for deduction was restricted to the abovementioned two sums.

( 3 ) AGGRIEVED by the order of the Income-tax Officer, appeals w

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