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2011 DIGILAW 770 (DEL)

Municipal Corporation of Delhi v. Padma Devi

2011-08-12

HIMA KOHLI

body2011
JUDGMENT Hima Kohli, J. 1. The present petition is filed by the Petitioner/MCD praying inter alia for setting aside the common judgment and order dated 1.8.2003 passed in HTA Nos. 152-153/2002, both entitled "Padma Devi v. MCD", wherein the learned ADJ set aside the assessment order dated 20.08.2001 relating to property No. W-85, Greater Kailash-II, New Delhi assessed at a rateable value of 4,27,100/-w.e.f. 22.6.2001. 2. The brief facts of this case are that the Respondent/Assessee acquired the subject plot of land in the year 1974, on which basement, ground floor, first floor and second floor were got constructed between the years 1980-87. The total covered area of the basement was 3178 sq. ft., out of which 1200 sq. ft. was admittedly under self use for commercial purpose and the remaining area was under self residential use, where household goods were stated to be stored. The rest of the floors of the premises were being used for residential purposes. Since there was a change in use of the basement from residential to commercial self-use, vide assessment order dated 20.08.2001, the Joint Assessor and Collector revised the rateable value of the basement by applying commercial land rates to that portion of the basement which was being put to non-residential/commercial use and the rateable value was accordingly assessed at 4,27,100/-w.e.f. 22.6.2001. 3. Aggrieved by the aforesaid assessment order, the Respondent/Assessee approached the learned ADJ in appeal. In the impugned judgment and order dated 1.8.2003, it was held that the Petitioner/MCD could only levy tax at commercial rates in respect of such portion of the basement which was in commercial use of the Respondent/Assessee, but it could not revise the rateable value for the entire basement by applying commercial land rates. It was further observed that Bye law 2(1)(b)(ii) of the DMC (Determination of Rateable Value) Bye Laws 1994 had no application to the case at hand because as per Building Bye Law No. 14.12.1.2, a basement could not be used for residential purposes, and hence the former Bye law would apply only where the premises in question were originally meant to be used for residential purposes. Therefore, it was held that as the use of the basement had not changed from residential to non-residential, hence the levy of tax at commercial rates would be unjustified. Aggrieved by the aforesaid judgment and order, the Petitioner/MCD has preferred the present petition. 4. Therefore, it was held that as the use of the basement had not changed from residential to non-residential, hence the levy of tax at commercial rates would be unjustified. Aggrieved by the aforesaid judgment and order, the Petitioner/MCD has preferred the present petition. 4. Learned Counsel for the Petitioner/MCD contended that in the first place, the Building Bye-laws have no relevance for the purpose of calculating property tax, and determination of property tax is governed by DMC (Determination of Rateable Value) Byelaws 1994. She further stated that even assuming that the Building Bye-laws would have some relevance, the issue at hand stands squarely covered by the decision of a coordinate bench of this Court in the case of MCD v. Manohar Lal and Anr. reported as 101 (2002) DLT 292, which she submits has attained finality as it has not been challenged further. 5. Per contra, learned Counsel for the Respondent/Assessee sought to support the impugned judgment and order by adopting a similar line of reasoning as taken by the learned ADJ that since the Building Bye laws do not permit the basement to be used for residential purpose, there is no question of Bye-law 2(1)(b)(ii) of the DMC (Determination of Rateable Value) Bye Laws 1994 being applicable, hence the rateable value could not have been revised by applying commercial land rates. He further argued that the decision in the case of Manohar Lal (supra) would not have any application to the facts of the present case, as the facts in the aforesaid case were entirely different. He submitted that in that case the entire building which was meant for residential purposes was being put to use for commercial purposes and there was no basement existing in the building, hence it was a clear case of change in use from residential to commercial. To support his contention that that the impugned order should be upheld on the ground that where for a taxing statute, two interpretations are possible, one beneficial to the Assessee should be taken, he placed reliance on the decision in the case of Hindustan Lever Ltd. v. Municipal Corporation of Greater Bombay and Ors. reported as (1995) 3 SCC 716 . 6. This Court has considered the submissions of both the parties and carefully perused the material placed on record. reported as (1995) 3 SCC 716 . 6. This Court has considered the submissions of both the parties and carefully perused the material placed on record. The main argument of the counsel for the Petitioner/MCD is that the learned ADJ erroneously applied Bye-law No. 14.12.1.2 of the Building Bye-laws to hold that since a basement could not be used for residential purposes, hence Bye-law 2(1)(b)(ii) of the DMC (Determination of Rateable Value) Bye Laws 1994 would have no application to the present case, and the rateable value for calculating the property tax for the same would not be liable to be assessed at commercial land rates. At this stage, it is important to analyse the intent and purpose behind the enactment of the Building Bye-laws in Delhi. In the case of Dr. B.L. Wadhera v. Govt. of NCT of Delhi and Ors. reported as 105 (2003) DLT 1, where the purpose behind the enactment of Building Byelaws was dealt with at length, it was observed as below: 7. Building Byelaws, 1983 for Union Territory of Delhi are made applicable to all building activities under the jurisdiction of Delhi Development Authority (hereinafter referred as DDA in short) as also Municipal Corporation of Delhi ( hereinafter referred as M.C.D. and New Delhi Municipal Council (hereinafter referred as N.D.M.C.) Person erecting a building or any structure for whatever purpose and of whatever material and every part thereof whether used as human habitation or not which includes foundation, plinth, walls, roofs, chimneys, plumbing and building services, fixed platforms, verandahs, balcony, cornice or projection part of a building or anything affixed thereto or any wall enclosing or intended to enclose any land or space and signs and outdoor display structures, monuments, memorials or any contrivance of permanent nature/stability built under or over ground has to follow Building Byelaws. It is equally the duty of the authorities to strictly enforce these Building Byelaws. 7. The Building Byelaws, 1983 were brought into force by the Delhi Development Authority, in exercise of the powers conferred upon it under Sub-section (1) of Section 57 of the Delhi Development Act, 1957. A perusal of these Bye-laws shows that the field governed by them is that of building activity in Delhi. 7. The Building Byelaws, 1983 were brought into force by the Delhi Development Authority, in exercise of the powers conferred upon it under Sub-section (1) of Section 57 of the Delhi Development Act, 1957. A perusal of these Bye-laws shows that the field governed by them is that of building activity in Delhi. Byelaw 3 of the Building Byelaws lays down the applicability of the Byelaws, to state as below: 3.1 In addition to the provision of Delhi Development Act, 1957, the building bye-laws shall apply to the building regulation activity, in the Union Territory of Delhi under the jurisdiction of the Delhi Development Authority as given in clause under 3.2 to 3.6. 3.2 Where a building is erected, the Bye-law applies to the design and construction of the building. 3.3 Where the whole or any part of building is removed, the Bye-laws applies to all parts of the building whether removed or not. 3.4 Where the whole or any part of the building is demolished the Bye-laws apply to any remaining part and to work the involved in demolition. 3.5 Where a building is altered (See-Bye-laws No. 6.4 and 6.4.1), the bye-laws apply to the whole building whether existing or new except that the Bye-law applied only to part if that part is completely self contained with respect to facilities and safety measures required by the Bye-law. 3.6 Where the occupancy of a building is changed, the Bye-law applies to all parts of the building affected by the change. 3.7 Existing Approved Building-Nothing in the Bye-law shall require the removal, alteration or abandonment, nor prevent continuance of the use or occupancy of an existing approved building, unless in the opinion of the Authority, such building constitutes a hazard to the safety of the adjacent property or the occupants of the building itself. 8. Building Bye law 14 which provides for the "Requirements of parts of Buildings", falls under a Chapter with the heading "General Building Requirements". Bye-law 14.12.1.2, considered by the court below falls under this Chapter. A perusal of all of the above shows that the applicability of Building Bye-laws is limited in scope to overseeing regulated construction of buildings in Delhi in an authorized manner, following the requirements of the Master Plan of Delhi and other enactments governing the field. 9. Bye-law 14.12.1.2, considered by the court below falls under this Chapter. A perusal of all of the above shows that the applicability of Building Bye-laws is limited in scope to overseeing regulated construction of buildings in Delhi in an authorized manner, following the requirements of the Master Plan of Delhi and other enactments governing the field. 9. On the other hand, determination of property tax is a field exclusively governed by the Delhi Municipal Corporation Act and the Byelaws enacted there under. Section 113 of the DMC Act specifies several taxes -property tax being just one of them. Section 116 of the DMC Act deals with the aspect of determination of rateable value of lands and buildings assessable to property taxes. Furthermore, the Corporation is empowered under Section 481 Part A sub Clause (9) to make Byelaws "on any other matter relating to the levy, assessment, collection, refund or remission of taxes under the Act". In exercise of the aforesaid powers, the DMC (Determination of Rateable Value) Byelaws 1994 were enacted. In the case decided on 21.09.2002 in C.W.P. No. 5455 of 2002 entitled, "B.R. Nanda v. UOI", a Division Bench of this Court observed that the scheme of levy of taxes contained in Chapter VIII of the DMC Act including property taxes together with the Bye-Laws is a self-contained one. 10. From the aforesaid discussion, the inevitable conclusion is that the field of assessment of rateable value of lands and buildings and levy of property tax is exclusively governed by the DMC (Determination of Rateable Value) Byelaws 1994 and the provisions of the Building Bye-laws 1983 would not have any application if the same are contrary to the intent and purpose of the former Bye-laws. Therefore, this Court is inclined to accept the contention the learned Counsel for the Petitioner/MCD that Building Bye-laws have no application in the computation of rateable value for the purpose of levying property tax. 11. The next submission made by the counsel for the Petitioner/MCD was that the issue of revision of rateable value by application of commercial land rates is covered by a decision of this Court in the case of Manohar Lal (supra). As a matter of fact, in light of the aforesaid findings of this Court, this issue need not be gone into, however for the sake of laying the controversy at rest, the same is also being dealt with. 12. As a matter of fact, in light of the aforesaid findings of this Court, this issue need not be gone into, however for the sake of laying the controversy at rest, the same is also being dealt with. 12. A perusal of the decision in the case of Manohar Lal (supra) reveals that the facts therein were slightly different, inasmuch as the commercial land rates were applied for determination of rateable value for the purpose of calculation of property tax for an entire building, which was meant for residential purposes but was being put to use for commercial activities. In that case, there was no basement existing in the building. Therefore, the issue arising before this Court was not a subject matter for consideration in the aforesaid judgment and thus, was not specifically dealt with. Further, in that case the learned Single Judge had held in favour of MCD that commercial land rates would apply from the date of change of use of a residential property. Significantly, it was also observed that where only a part of the property was being put to commercial use, commercial land rates were to be taken into consideration only for the proportionate land area being put to such use. In the present case, out of a total covered area in the basement measuring 3178 sq.ft., 1200 sq.ft. was under self commercial use, hence only for this portion of the basement would the assessment of rateable value be based on commercial land rates. 13. This Court therefore agrees with the reasoning laid down in the aforesaid decision and holds that commercial land rates are to be applied for determination of rateable value, proportionately for that part of the building which is put to commercial use, with effect from the date of change in use. This Court also concurs with the observation made by learned Single Judge that owners of residential properties who are misusing them by putting them to commercial use, should not benefit by their wrong, by continuing to be assessed at residential rates, whereas persons legitimately conducting commercial activities in commercial premises be disadvantaged by being assessed at commercial land rates. This Court also concurs with the observation made by learned Single Judge that owners of residential properties who are misusing them by putting them to commercial use, should not benefit by their wrong, by continuing to be assessed at residential rates, whereas persons legitimately conducting commercial activities in commercial premises be disadvantaged by being assessed at commercial land rates. Therefore, argument of the Respondent that since only 7.15 % of the whole building was being used for self-commercial purpose, making the predominant use of the building residential, hence the land rates should continue to be assessed on residential basis, is rejected as being devoid of merits. 14. In light of the aforesaid facts and circumstances, the present petition is allowed by setting aside the impugned judgment and order dated 1.8.2003 and restoring the assessment order dated 20.8.2001.