JUDGMENT K. Shivashankar Bhat, J.—The question referred to us under section 256(2) of the Income Tax Act, 1961, reads thus : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeals) who allowed deduction of municipal tax of Rs. 93,266 pertaining to earlier years on the ground that the demand was raised during the year 1981-82 ?" 2. We are concerned with the assessment year 1981-82. In other words, during the accounting year ending on March 31, 1981, the assessee had claimed deduction of municipal taxes aggregating to over Rs. 5,00,000 out of which a sum of Rs. 93,266 related to earlier years. According to the assessee, the amount pertaining to the earlier years was demanded only during the present accounting year in question and the assessee paid the same during the said accounting year. This claim of the assessee was negatived by the Income Tax Officer on the ground that the liability towards the municipal tax, i.e., the property tax, arose during the year to which it related, and, merely because it was paid on a subsequent date which was within the accounting year in question, the assessee cannot claim deduction. The Commissioner of Income Tax (Appeals) allowed the appeal filed by the assessee holding that the liability for the tax levied arose when the demand notice was issued to the assessee and, therefore, under the proviso to section 23(1) of the Act, the assessee was entitled to the deduction during the year in which the property tax was demanded, for which purpose a decision of the Madras High Court in Commissioner of Income Tax, Tamil Nadu-V Vs. L. Kuppuswamy Chettiar, (1981) 132 ITR 416 Mad was relied upon. This order of the Commissioner was affirmed by the Appellate Tribunal. 3. There is no dispute that the proviso to section 23(1) of the Act governs the fact situation. According to this proviso, where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the extent to which taxes are borne by the owner, be deducted in determining the annual value of the property in the previous year in which such taxes are actually paid by the owner. In the case of property taxes, actual levy will be when the demands are made. In the instant case, demands were made in respect of the previous years because the rates applicable were not finalised and were subject to consideration by the authorities under the relevant municipal law. The Madras High Court, in the aforesaid decision, has pointed out that the property tax is not an automatic levy so as to require the property owner to go and pay tax voluntarily; therefore, having regard to the language of the proviso to section 23(1) of the Act, it was held therein that the assessee would be eligible for the allowance during the year when there was levy and the tax was paid by the owner of the property. A demand for the tax has to be equated to its levy. We are in respectful agreement with the view expressed by the Madras High Court. The said decision was followed by the same High Court in Commissioner of Income Tax Vs. East India Industries (M) Pvt. Ltd., (1983) 139 ITR 1059 Mad Learned counsel also brought to our notice that the Calcutta High Court has also expressed the same view in the decision in Commissioner of Income Tax Vs. Parekh Kothi Ltd., (1986) 160 ITR 864 Cal. There seems to be no contrary decision so far on this question. 4. In the view we have taken as above, the question is answered in the affirmative and against the Revenue. Reference is answered accordingly.