When actual annual rent can be taken as annual rateable value of property for assessment of property tax?

The same principle was reiterated by this Court in Dewan Daulat Rai Kapoor and Ors. v.
NDMC and Ors: [1980]122ITR700(SC) . After quoting the above passage from The
Corporation of Calcutta v. Smt. Padma Debi and Ors., (Supra), this Court held that the actual
rent payable by a tenant to the landlord would, in normal circumstances, afford reliable
evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless
the rent is inflated or depressed by reason of extraneous considerations such as relationship,
expectation of some other benefit etc. There would ordinarily be, in a free market close
approximation between the actual rent received by the landlord and the rent which he might
reasonably expect to receive from a hypothetical tenant.
7. In the case of Dr. Balbir Singh and Ors. etc. v. Municipal Corporation, Delhi and Ors.,:
[1985]152ITR388(SC) , also this Court reiterated the test laid down in the above two cases and
repeated that in a free market there would ordinarily be a close approximation between the
actual rent received by the landlord and the rent which he might reasonably expect to receive
from a hypothetical tenant. See also East India Commercial Co. Pvt. Ltd. v. Corporation of
Calcutta [1998]2SCR543 .
8. Therefore, the annual rent actually received by the landlord, in the absence of any special
circumstances, would be a good guide to decide the rent which the landlord might reasonably
expect to receive from a hypothetical tenant. Since the premises in the present case are not controlled by any rent control legislation, the annual rent received by the landlord is what a
willing lessee, uninfluenced by other circumstances, would pay to a willing lessor. Hence,
actual annual rent, in these circumstances, can be taken as the annual rateable value of the
property for the assessment of property tax. The municipal corporation is, therefore, entitled to
revise the rateable value of the properties which have been freed from rent control on the basis
of annual rent actually received unless the owner satisfies the municipal corporation that there
are other considerations which have affected the quantum of rent.”
IN THE HIGH COURT OF DELHI AT NEW DELHI

LPA No. 185 of 2011

Judgment delivered on: 5th July, 2011
NAKUL KAPUR 

VERSUS
NDMC & ANR 
CORAM:
HON’BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJIV KHANNA

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What are basis principles for assessment of property tax?

When the Corporation is assessing the property for taxation, the rateable value has to be determined by keeping in view what rent the property could fetch if it is let. The probable rental has to be kept in mind and that is to be considered in view of rule 91 which reads:-

"In order to fix the rateable value of any building or land assessable to a property tax there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year a sum equal to ten percent of the said annual rent, and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever."

In addition to this, the location in which the said building exists has to be kept in mind. It is to be understood reasonably as to what it would fetch if let and keeping that in view, due consideration has to be given to the material which has been used in construction and use of the said premises. There has to be equal assessment in respect of similar premises and if there happens to be any equality, the rateable value so concluded should be a reasonable conclusion. There is a process of keeping in view all relevant factors while determining rateable value of a property. The word "determined" means that there has to be rational process adopted for the purpose of coming to the conclusion that particular amount is the rateable value and for that there is a process of determination which includes the application of mind in the judicious way. Abrupt and irrational assumption of rateable value cannot be treated to be within judicial process.

Bombay High Court

The Municipal Corporation Of The ... vs Haridas Govinddas Gujrati on 7 January, 2002

Equivalent citations: 2002 (4) BomCR 260, (2002) 3 BOMLR 779, 2002 (2) MhLj 215

Bench: J Chitre

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Whether municipal taxes can be imposed retrospectively?

 Now I will deal with the aspect in respect of the two categories of cases envisaged under section 82(3). To my mind, it clearly appears that the two categories arise because of the provisions of section 82(1) as it provides for alteration at any time in the assessment list by inserting or altering any entry in respect of any property could be made on three grounds given below viz. (i) that an entry has been omitted, (ii) erroneously made in the assessment list through fraud, accident or mistake or (iii) in respect of any building constructed, altered, added to or reconstructed in whole or in part and where such construction, alteration, addition or reconstruction has been completed after the preparation of the assessment list. The said section provides that if these conditions are fulfilled the standing committee has the right to alter at any time the assessment list by inserting or altering an entry in it. provided of course there is notice given to the aggrieved party and their objections considered. Now the question that arises for consideration is if an entry is thus amended, what is the effect of that amendment? and that is provided by sub-section (3) of section 82 and the said sub-section (3) contemplates three different categories in which a different effect takes place, viz. (i) In the case of a building constructed, altered, added to. or reconstructed, the amendment will take effect from the day on which such construction, alteration, addition or reconstruction was completed; or (ii) On the day on which the new construction, alteration, addition or reconstruction was first occupied whichever of the two occurs first. These two clauses therefore make it clear that the amendment will operate from the date of completion or the date of occupation whichever event occurs first. Then comes the third category of cases, which is a crucial category with which we are concerned, (iii) It is the residuary category. In the cases other than the two mentioned above, the amendment shall become effective 'on the earliest day in the current official year on which the circumstances justifying the entry or alteration existed'. Now therefore though it is true that to the other case the said clause 'on the earliest day in the current official year on which the circumstances justifying the entry or alteration exist' will become applicable, it would clearly mean that the other cases will include the cases which have been entered into because of the omission of the entry or because erroneously they were made in the assessment list through fraud, accident or mistake. Clause (a) in respect of any building constructed, altered, added to or reconstructed in whole or part, where such construction, alteration, addition or reconstruction has been completed after the preparation of the assessment list definitely shows that the said category applies only to the new construction which is made after the preparation of the list. Shri Patankar tried to contend that the new construction admittedly was completed in 1984-85 and it was occupied in 1984 85 itself. Therefore, it is not a new construction which is made after the preparation of the assessment list. It is a construction which was made prior to the preparation of the assessment list, but remained to be included in the assessment list, may be accidentally, fraudulently or for any other reason. If that is so. then it would be included in the category of the other cases and the clause which is under consideration will apply. As. I have already held that sub-rule (3) of Rule 20 which is under consideration, is similar to sub-section (3) of section 82 of the Bombay Municipal Boroughs Act. The said interpretation will apply even in the present case and, therefore, in view of the decision reported in MANU/MH/0143/1971 : 1973 Mh.L.J. 128 =74 BLR 469 which has been approved in MANU/SC/0223/1998 : 1988 (3) SCC 306, view taken by the Appellate Court cannot be said to be erroneous. The Appellate Court has rightly applied the ratio of the said decision and concluded that the amendment could be made only in the current official year and not retrospectively as was sought to be done by the petitioner. The Appellate Court, therefore, was right in setting aside the assessment order and making it effective retrospectively. Hence the petition has no merit and the same will have to be dismissed.

IN THE HIGH COURT OF BOMBAY

W.P. No. 284 of 1990

Decided On: 10.12.1990

Appellants: Pimpri Chinchwad Municipal Corporation, Pimpri
Vs.
Respondent: Shiva Dular Misra, Pune

Hon'ble Judges/Coram:
I.G. Shah, J.

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Whether jurisdiction of civil court is barred in respect of assessment of tax by municipal corporation?

 Dispute in this appeal was in substance relating to the
assessment of the tax for the period from the year 1999 to 2001 which was challenged in the suit. Learned Judge considered the remedy of
appeal statutorily available under Section 406 of the BPMC Act and
held that plaintiff has to move to avail of the statutory remedy of
appeal on the ground that the civil court had no jurisdiction to grant
relief to the plaintiff for want of jurisdiction under Section 9 of Code of
Civil Procedure. The civil suit was held not maintainable and the issue
of jurisdiction was decided against the plaintiff. 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO.1169 OF 2013
WITH
CIVIL APPLICATION NO.2960 OF 2013
IN
FIRST APPEAL NO.1169 OF 2013
GREAVE COTTON LIMITED  V/s. PIMPRI CHINCHWAD MUNICIPAL CORPORATION )
AND OTHERS 

CORAM: A. P. BHANGALE, J.
DATE : 23rd SEPTEMBER, 2013.
Citation;2014(1) MHLJ 655

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