Delhi District Court
M/S. Sharda Builders & Promoters (P) Ltd vs New Delhi Municipal Council on 26 July, 2022
DLND010129402018
IN THE COURT OF ADDITIONAL DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
HTA No. 37/18
M/s. Sharda Builders & Promoters (P) Ltd.
30, Hanuman Road,
New Delhi-110001,
Through its Director Sh. Lalit Agarwal
......... Appellant
Versus
New Delhi Municipal Council,
Through its Chairman
Palika Kendra, New Delhi-110001
........ Respondents
Appeal instituted On : 27.10.2018
Arguments Concluded On : 05.07.2022
Judgment Pronounced On : 26.07.2022
HTA No. 37-18
Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 1 of 11
JUDGMENT
1. By way of the present judgment, the Court proposes to decide the present appeal under Section 115 of New Delhi Municipal Council Act, 1994 (hereinafter, referred to as 'The Act'), by way of which, the appellant has sought setting aside of house tax assessment order dated 10.08.2018 qua property of appellants at P-7/90, Outer Circle, P-Block, Cannaught Place, New Delhi-110001 (hereinafter referred to as "the Property").
FACTUAL MATRIX
2. In brief, the appellant is the owner of the property which is a shop at the ground floor (shop no.7) with flat no.38 on first floor and flat no.62 on the second floor at Block No.90, Cannaught Circus, New Delhi- 110001 and is liable to pay property tax to NDMC. It is stated that the appellant has been paying regular property tax to the respondent and has filed annexure P-1 to P-11 which are copies of self assessment property tax form and house tax receipts for corroboration.
3. However, despite filing of property tax bills regularly notice dated 29.03.2014 under Section 72 of The Act was issued proposing to revise rateable value (hereinafter after referred to as 'RV') to Rs.24,41,300/- w.e.f. 01.04.2010 and Rs.25,69,500/- w.e.f. 01.04.2013 from existing valuable value of Rs.18,000/- on the basis of annual bye law of 2009. HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 2 of 11 The same was duly replied to but the assessment was not finalized and thereafter, again after 4 years another notice dated 16.03.2018 was issued to revise the 'RV' to Rs.24,41,300/- w.e.f. 01.04.2010, Rs.25,69,500/- w.e.f. 01.04.2013 and Rs.3,35,03,000/- w.e.f. 01.04.2017 in comparison with rent of shop no.3/90, P-Block, C.P. under Section 63(1) of The Act. The same was duly replied to 16.04.2018. Again, vide letter dated 27.07.2017, copy of registered lease deed dated 09.07.2018, with tenant M/s. Nalli Silk Sarees was also submitted. However, instead of issuing notice to the appellant, the respondent arbitrarily and illegally joined M/s. Nalli Silk Sarees (tenants) and they submitted registered lease deed dated 02.04.2011/ 29.03.2011 which were taken into account by the Assessing Authority without hearing the appellant on the same while passing assessment order under challenge.
GROUNDS OF APPEAL
a). RV has been fixed over and above the proposed revision as per notice dated 16.03.2018 under Section 72 of The Act.
b). While assessing the RV, the assessing authority has overlooked the covered space of first floor as 115.09 Sq. Mtrs and second floor as 35.02 Sq. Mtrs. and has assessed the same as 172.24 Sq. Mtrs and 53.29 Sq. Mtrs., respectively which is more than the actual.
c). The assessment order has been passed without affording reasonable opportunity to the appellant for being heard on higher RV fixed.
HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 3 of 11
d). Since notice dated 29.03.2014 was not settled in the same assessment year or within 3 years, it became barred by time.
e). The Assessing Authority has ignored that during the assessment period first and second floor of the property was lying sealed and unfit for use so could not be assessed on self-occupation basis.
f). After introduction of unit area method of property tax in the NDMC area by way of New Delhi Municipal Council (Determination of Annual Rent) Bye Laws 2009, assessment of property tax could not be done on comparative rent basis.
g). The Assessing Authority has ignored that the first and second floor was sealed by NDMC vide order dated 04.05.2018 because the same was meant for residential purpose and was being used by appellant for domestic storage, therefore, RV should have been assessed on residential/ self-occupied basis and not commercial.
h). The Assessing Authority has failed to appreciate that occupation factor in case of the appellant should be 1.2 and not 1.5 as taken by the assessing authority while calculating actual RV.
i). The Assessing Authority has illegally taken the unit area value as Rs.1200/- per square mtr. covered space instead Rs. 1,000/- per square mtr. per covered space.
WRITTEN OBJECTIONS
4. In response, NDMC has stated as under:
a) The appeal is not maintainable for non-compliance of 116(b) of HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 4 of 11 The Act.
b) It is denied that the assessment was barred by the limitation and submitted that the assessment order had decided notices issued under Section 72 of The Act on 23.03.2011, 29.03.2014 and 16.03.2018.
c) It is stated that the appellant has been afforded reasonable opportunity but it attempted to mislead NDMC as in the property tax return in the year 2016-17 and 2017-18, the property was shown to be self-occupied. Further, it is stated that it was submitted on behalf of the appellant that the property was leased to the tenant at a total rent of Rs.5,65,110/- per month w.e.f. 01.04.2017 on oral lease whereas the tenant submitted registered lease deed dated 02.04.2011 and 28.05.2018.
It is explained that since the appellant was not disclosing the factual circumstances, it became imperative for the assessing authority to join the actual occupier.
d) It is stated that the information provided by the appellant on inspection, on 02.08.2018, was found to be incorrect as it was gathered that the tenant was occupying ground floor, mezzanine floor with vacant land of backyard.
e) It is stated that there is no prescribed period of limitation for assessment as per the Act and the matter is sub - judice.
f) It is further stated that there has been an 84% increase in the rent as per the lease deed between the appellant and its tenant between 2011 to 2017 and for the year 2014-17, on the basis of aforesaid enhancement, RV from 01.04.2014 to 31.03.2017 has been fixed by increasing the rent of 2011 by only 42%.
HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 5 of 11 ARGUMENTS
5. The Court has heard the submissions on behalf of both the parties which essentially were reiteration of ground already pleaded. During the course of arguments, the plaintiff relied upon the following judgments.
1) Smt. Jayshree Kumar vs. New Delhi Municipal Council 105(2003) Delhi Law Times 967.
2) Lucky Star Estate (I) P. Ltd. vs. Municipal Corporation of Delhi 144(2007) Delhi Law Times 20.
3) State of Punjab & Others vs. Bhatinda District Co-operative Milk Producers Union Ltd. (2007) 11 SCC 363.
4) Mr. Ved Marwah vs. New Delhi Municipal Council and Anr.
Decided on 23.03.2018 W.P.(C) 188/2018, C.M. Appl. 772/2018 decided on 23.03.2018 by Delhi High Court.
REASONING AND APPRECIATION OF MATERIAL ON RECORD
6. In order to appreciate the contentions of appellant, it would be appropriate to refer to the provisions of The Act. Chapter 8 of The Act provides for the manner in which tax has to be levied. The first Section (Section 60) of this chapter lists the various kinds of taxes which NDMC is entitled to levy. The property tax is one of the taxes for which further procedure is laid down in Section 61 to 81 of the Act. The detailed HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 6 of 11 provisions are contained in this part of the Act but the charging Sections are 61 and 62 which lays down the foundation of the charge of property tax. It is Section 63 of the Act which is relevant for the present proceedings which is re-produced as under :
"......63. (1) The rateable value of any lands or building assessable to any property taxes shall be the annual rent at which such land or building might reasonably be expected to let from year to year less a sum equal to ten per cent of the said annual rent which shall be in lieu of all allowances for cost of repairs and insurance, and other expenses, if any necessary to maintain the land or building in a state to command that rent :
Provided that in respect of any land or building the standard rent of which has been fixed under the Delhi Rent Control Act, 1958 (59 of 1958) the ratable value thereof shall not exceed the annual amount of the standard rent so fixed.
(2) The rateable value of any land which is not built upon but is capable of being built upon and of any land on which a building is in process or erection shall be fixed at five per cent of estimated capital value of such land.'
7. The rateable value of the property is the most important feature which needs to be ascertained / determined before property tax is to be levied. If this value is assessed, rest is a mere calculation of tax liability in accordance with the prescribed rates. The rateable value is determined or say assessed every year, therefore for that year it is annual ratable value which is the root of assessment. The Act has provided ARV would be "annual rent at which such land or building might reasonably be expected to let from year to year less or sum equal to ten per cent of the said annual rent.
8. Section 70 of the Act provides that NDMC will publically notify HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 7 of 11 its intention to change the ARV of the properties and provide an opportunity of being heard and thereafter, final assessment of ARV would be notified/ made. Considering all eventualities, Delhi Municipal Corporation (Determination of Annual Rent Bye-Laws 2009 were notified which provided for filing of self assessment of property tax by the tax payer. These Bye Laws contains detailed provisions to arrive at annual rateable value based on number of factors such as user type of structure, location as well as its age. It is relevant to refer article / item no. 2 of notification dated 24.02.2009 which is extracted as under :
'.....2. Determination of Annual Rent : For the purposes of sub- section (1) of section 63 of the New Delhi Municipal Council Act, 1993, the annual rent for which lands and Buildings are expected to let from year to year basis shall be determined as under :-'
9. As regards the ground that the demand of house tax is barred by limitation, since the issue is seized of by the Apex Court as appeal against order dated 23.03.2018 in Ved Marwah (Supra) is pending, this Court shall refrain from commenting on the same.
10. Apropos, the ground that opportunity to be heard has not been granted, as RV more than that proposed RV vide notices dated 23.03.2011, 29.03.2014 and 16.03.2018 have been fixed, this Court is of the opinion that objections were filed by the appellant. It cannot be said that the appellant was provided an opportunity of filing objections, there has been an abrogation of his right to present his case and as such, principle of natural justice when an oral hearing not granted. Further, perusal of the records of NDMC reveals that detailed reply was filed to HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 8 of 11 notice dated 29.03.2014 through the counsel. In fact, even a notice under Section 77 of The Act was issued to the appellant on 09.11.2017 wherein it was intimated to the appellant that on inspection on 03.11.2017, it was found that the shop had been rented out to M/s. Nalli and it was called upon to furnish the requisite information. However, as per property tax return dated 15.12.2017, it was shown that the entire property was self- occupied. Again to notice under Section 72 of the Act, dated 16.03.2018, replies dated 26.03.2018 by the director of the appellant and 16.04.2018 by the lawyer of the appellant were filed. Considering the discrepancies in the reply as the lawyer informed that an oral lease with M/s. Nalli @ Rs.5,65,110/- w.e.f. 01.04.2017 was operational whereas, the director informed that the property was self-occupied, notice under Section 77 of The Act was issued to M/s Nalli seeking details. Thereafter, registered lease deed dated 02.04.2011 and unregistered lease deed dated 28.05.2018 were submitted. However, it is also appearing from record that even the appellant was notified and notice dated 21.05.2018 was served upon the appellant which was duly replied to by the appellant on 07.06.2018 and 27.07.2018. Vide reply dated 27.07.2018, the appellant furnished the copies of lease deeds. As per registered lease deed dated 29.03.2011, the appellant had leased out entire ground floor, mezzanine and vacant land of backyard of property no. P-7/90, Cannaught Circle for three years @ Rs.3,07,125/- per month. As per lease agreement dated 09.07.2018, the rent was enhanced to Rs.5,65,110/- per month w.e.f. 01.04.2017. Therefore, the ground that assessment on enhanced rateable value than proposed was without effective hearing to the appellant is of HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 9 of 11 no substance. Perusal of record shows that house tax returns for the years 2016-17 and 2017-18 were on self-occupation basis and there was concealment of information by the appellant. Ample opportunities had been afforded to the appellant, to make the disclosures but it abstained from doing so and now cannot cry foul that it was not heard. Rather, the assessment order for the ground floor is on the basis of rent, the property itself fetched from 01.04.2011 to 31.03.2014 as per the lease deed, with a depreciation of 15% for the year 01.04.2010 to 31.03.2011, with 42% increase on Rs.307125/- w.e.f. 01.04.2014 to 31.03.2017 as the second lease deed which showed an enhancement of 84% in rent when it was fixed at Rs.565110/- and is reasonable in view of this Court being based upon the document of the appellant, itself. Here, the ground that assessment has been done on comparative rent basis as mentioned in noticed dated 16.03.2018 also has failed because the assessment is not on its basis as the assessment order speaks.
11. Reverting to the assessment qua the first and second floor, it has been stated that the same being sealed for the assessment period was not to be taxed and also, that the assessment should be on self-occupied basis treating them as residential. Further, as regards this portion of the property, it has also been stated that the same was used for storage purpose only and the occupational factor should have been 1.2. However, in this regard, it can be deciphered from record that the property was only sealed on 04.05.2018 pursuant to notice under Section 250 of The Act dated 16.03.2018. It is the own admission of the appellant HTA No. 37-18 Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 10 of 11 that the portion was being used as storage. Therefore, the argument that the property is not liable to house tax is without any merits and perusal of the assessment order shows that it was assessed on a self-occupation basis only. It has been challenged that occupancy factor should have been 1.2. However, it has not been substantiated.
12. The only ground which remains to be considered is whether the covered area for the first and second floor for the assessment period is exaggerated. Whereas the property tax returns stipulate the same to be 115.09 Sq. Mtrs. (for the first floor) and 35.02 Sq. Mtrs. (for the second floor), the same have been considered to be 172.24 Sq. Mtrs and 53.29 Sq. Mtrs. There is no material on record to ascertain the same. Therefore, for this limited question, the matter is remanded back to re- assess the house tax for the aforesaid first and second floor after ascertaining the exact area. It is directed that the exercise be completed within 60 working days.
13. The appeal is accordingly disposed off.
Pronounced in open Court (Vijeta Singh Rawat)
on 26.07.2022 Additional District Judge-01,
New Delhi District,
Patiala House Courts,
New Delhi
HTA No. 37-18
Sharda Builders And Promoters (P) Ltd. Vs. NDMC Page no. 11 of 11