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2012 DIGILAW 1837 (PNJ)

Tarsem Chand v. Municipal Committee

2012-12-13

G.S.Sandhawalia

body2012
JUDGMENT Mr. G.S. Sandhawalia, J.:- The present writ petition has been filed under Articles 226/227 of the Constitution of India for issuance of a writ in the nature of Certiorari quashing the assessment proceedings of House Tax regarding shop No.11/W-6 situated at Dhuri. The order dated 15.4.1988 (Annexure P-1) whereby annual rental value had been proposed at Rs. 16,200/- and thereafter determined at Rs. 18,000/- vide order dated 16.11.1988 (Annexure P-2) and dismissal of the appeal against the said orders dated 13.12.1991(Annexure P-4) are also subject matter of challenge in the present writ petition. 2. The pleaded case of the petitioner is that he is owner of shop No.11/W-6 comprising of area 16' X 18' situated at Dhuri which is owned by the petitioner and his brother namely Harbans Lal and during the assessment for the year 1988-89, a notice dated 15.4.1988 had been issued to him proposing the annual rent value for the purpose of house tax at Rs. 16,200/-. The petitioner had filed objections before the Municipal Committee, Dhuri and order dated 16.11.1988 had been passed whereby annual rental value had been fixed at Rs. 18,000/-. 3. In appeal, the Additional Deputy Commissioner, Sangrur vide order dated 13.12.1991 dismissed the appeal of the petitioner and accordingly the present writ petition was preferred on various grounds including that the annual rental value has to be determined under Section 3 (1)(b) of the Punjab Municipal Act, 1911 in accordance with the Rent Control Legislation for the purpose of house tax. The annual rental value had not been fixed in accordance with Section 4 of the East Punjab Urban Rent Restriction Act, 1949 (hereinafter referred to as “the 1949 Rent Act”) and, therefore, the orders could not be sustained. 4. The respondent committee has chosen not to file written statement to defend the orders passed by the authorities. 5. Since, the assessment is for the year 1988-89, therefore, unamended provisions are applicable and the annual rental value of the house or building is to be determined on the amount at which the house or the building may reasonably be expected to be let out from year to year subject to certain deductions. The relevant un-amended provisions of the Act read as under:- “Annual value” has been defined in clause (1) of Section 3 of the Punjab Municipal Act, 1911. The relevant un-amended provisions of the Act read as under:- “Annual value” has been defined in clause (1) of Section 3 of the Punjab Municipal Act, 1911. Sub-clause (b) of the clause (1) is relevant for the purposes of the question arising in the present petition and the said Sub-clause (b) reads, prior to its amendment in the year 1994, as under:” (1) “annual value” means - (a) ***** (b) In the case of any house or building, the gross annual rent at which such house or building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year subject to the following deductions: (i) such deduction not exceeding 20 per cent of the gross annual rent as the committee in each particular case may consider a reasonable allowance on account of the furniture let therewith; (ii) a deduction of 10 per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. The deduction under sub-clause shall be calculated on the balance of the gross annual rent after the deduction (if any) under Sub clause (i); (iii) where land is let with a building, such deduction, not exceeding 20 per cent of the gross annual rent, as the committee in each particular case may consider reasonable on account of the actual expenditure, if any, annually incurred by the owner on the upkeep of the land in a state to command such gross annual rent; Explanation I. - For the purposes of this clause, it is immaterial whether the house or building, and the furniture and the land let for use or enjoyment therewith, are let by the same contract or by different contracts and if by different contracts, whether such contracts are made simultaneously or at different times. Explanation II. - The terms “gross annual rent” shall not include any tax payable by the owner in respect of which the owner and the tenant have agreed that it shall be paid by the tenant.” 6. Explanation II. - The terms “gross annual rent” shall not include any tax payable by the owner in respect of which the owner and the tenant have agreed that it shall be paid by the tenant.” 6. A perusal of the order dated 16.11.1988 would go on to show that the Administrator, Municipal Committee, Dhuri had come to the conclusion that since the petitioner was himself running the business, therefore, rent note in his favour was fake and fictitious document and shop being situated in the main bazar of the city, the house tax proposed by the Executive Officer on 15.4.1988 had been correctly made keeping in view the prevailing rate of rent and he accordingly determined the annual rental value at Rs. 18,000/- for the year 1988-89 whereas proposed annual rental value as per the Executive Officer had been Rs. 16,200/-. In appeal, the petitioner had specifically raised the plea that the rental value should be determined in accordance with the principles laid down “in the 1949 Rent Act”, therefore, impugned the order in appeal. The Additional Deputy Commissioner, Sangrur also repeated the order of the Administrator, Municipal Committee and failed to take note of the issue that the procedure provided under “the Rent 1949 Act” had to be followed. 7. The said issue has been authoritatively settled by the Hon’ble Apex Court in Devan Daulat Rai Kapoor etc. vs. New Delhi Municipal Committee and another, AIR 1980 SC 541 and Dr. Balbir Singh and another vs. MCD, AIR 1985 SC 339 . Subsequently, a Full Bench of this Court in Banarsi Dass Mahajan vs. State of Punjab and another, 1990 (1) PLR 1 has held that the principles of rent law have to be taken into account by the Assessing Authority to determine the the figure the building may reasonably be expected to be let out. The relevant paragraph reads as under:- “21. Before leaving this aspect of the case it is significant to note that clause (c) of Section 93 of the Corporation Act has an identical provision as in the Municipal Act and the Supreme Court in Devan Daulat Rai Kapoor’s case (supra) was not unaware of that provision when examining the whole provision. The relevant paragraph reads as under:- “21. Before leaving this aspect of the case it is significant to note that clause (c) of Section 93 of the Corporation Act has an identical provision as in the Municipal Act and the Supreme Court in Devan Daulat Rai Kapoor’s case (supra) was not unaware of that provision when examining the whole provision. Repeatingly and summingly, we hold that the Commissioner must first do the exercise under clause (b) to determine at what figure the building may reasonably be expected to let in accordance with the principles of the Rent Laws, give permissible deductions in the light of the Explanations, deviate to subclause (ii) of the first proviso if he can but keep foothold on his deliberations under clause (b), apply both the provisos in the above manner and then determine the annual rateable value. If he is unable to do so for any substantive reason, then he may take resort to clause (c) again keeping a foothold thereon and applying the provisos when applicable so as to arrive at a just figure. In so far as clause (c) is concerned, it provides determining the estimated present cost of erection of the building minus depreciation and adding to it estimated market value of the site and of any land attached to the building, from which 5 per cent of the sum total represents the gross annual amount. Now it is known that the cost of erection of buildings keeps rapidly changing, the rates of depreciation are minimal and the estimated market value of the site and any land attached to the building goes sky rocketing. The whole thing is inchoate in clause (c). The employment of this clause, as preferred by learned counsel for the Corporation, on the prospect of legitimate expectancies of a higher revenue dividend, and a justified measure to meet the cost of running day to day affairs of the Corporation which, at the Bar, were stated to be bordering on bankruptcy, cannot be permitted. The Legislature designedly made clause (c) apply only in the situation when the gross annual value of a building cannot be determined under clause (b). As stated before, to both clauses do the provisos apply but as an integral part the said two clauses,and that too as safeguards, so that neither the Corporation nor the tax-payer is dealt with unjustly. The Legislature designedly made clause (c) apply only in the situation when the gross annual value of a building cannot be determined under clause (b). As stated before, to both clauses do the provisos apply but as an integral part the said two clauses,and that too as safeguards, so that neither the Corporation nor the tax-payer is dealt with unjustly. In the event of conflict between two successful determinations, the determination which is favourable to the taxprayer would normally have to govern the field, and we hold it so, well settled as it is as a principle.” 8. The said procedure having not been followed and not appreciated by the Appellate Authority, the assessment of the annual rental value for the year 1988-89 cannot be justified. Accordingly, the writ petition is allowed. The assessment order dated 16.11.1988 and the appellate order dated 13.12.1991 dismissing the appeal of the petitioner are quashed with liberty to the Municipal Committee, Dhuri to re-assess the house tax in accordance with the provisions of “the 1949 Rent Act”. Since there is no representation on behalf of the respondents as well as the petitioner, there is no order as to costs. ---------0.B.S.0------------