1998 Supreme(SC) 1168

1998(8) Supreme 570
Supreme Court of India
(From Allahabad High Court)
S.B. Majmudar and M. Jagannadha Rao, JJ.
Municipal Board, Saharanpur -Appellant
versus
Shahdara (Delhi) Saharanpur Light Rail Co. Ltd. -Respondent
Civil Appeal No. 1219 of 1976
Decided on 24-11-1998
Counsel for the Parties :
For the Appellant : Dinesh Kr. Garg, Advocate.
For the Respondent : R.F. Nariman, Sr. Advocate, Ravinder Narain, Ms. Monica Singal, Mrs. Deepa Rathor, Ratnesh and T. Sridharan, Advocates.

Headnote:(i) Uttar Pradesh Municipalities Act, 1916-Sections 140(a) and 140(b) read with Section 129-Water tax-Buildings situated with­in common compound-All buildings situated within common compound which belong to same owner should be treated as one unit for purpose of assessing water tax and not only those buildings which are situated within radious of 600 feet from the nearest water-stand pipe. (Paras 3 to 6)

       (ii) Uttar Pradesh Municipalities Act, 1916-Section 40(a) and (b) read with Section 128-House tax -Buildings situated within common compound-All buildings situated along with their appurtenant lawns in ‘common compound’ belonging to same owner cannot be treated as one unit for the purpose of imposing house tax under Section 128(1) (i)-If the common compound in which housing complex belonging to common owner is situated is not appurtenance to several buildings within that complex then the said land cannot be said to be a part and parcel of the building for purpose of house tax.

       Held : In view of the provisions of Section 128 it has to be held that the appellant Board, subject to special orders of the State Govern­ment, is entitled to impose tax on the annual value of buildings or lands or of both. It, therefore, becomes clear that in the complex belonging to the respondent as number of buildings are situated in the “common compound”, house tax can be levied by the appellant both on the buildings and also on the other open land in which such buildings are situated. These open lands surrounding the buildings if not appur­tenant to such buildings would be a separate subject of house tax while buildings with their appurtenant land would form another subject of house tax. Charge of house tax will settle on all these buildings and lands not comprised in these buildings. This becomes clear if we view Section 2 sub-section (2) of the Act which defines “buildings”. The said definition has to be read with the definition of the term “compound” under Section 2, sub-section (5). On a conjoint reading of these provisions therefore, it becomes clear that before the appellant Board can impose house tax under Section 140(a) on any property situated within its municipal limits if it is a “building” the unit of tax would be the building concerned including its compound wall and the compound wall would also cover within it the land situated in the said compound provided it is appurtenant to the building or a “compound” appurtenant to the several buildings. It is, therefore, obvious that if the “common compound” in which the housing complex belonging to the common owner is situated is not an appurte­nant to several buildings within that complex, then the said land cannot be said to be a part and parcel of the building for the purpose of house tax. For imposing house tax on buildings under Section 140(1)(a) it has to be shown that the buildings with their common appurtenant land or the land in common appurtenance to several build­ings situated nearby are available for imposing such a tax thereon. It is only such appurtenant land which can form part of the buildings for attracting house tax assessment proceedings. But if the “common com­pound” in which such buildings with appurtenant lands are situated also includes land which cannot be said to be a common appurtenance to several buildings situated therein or separately appurtenant to any given building, such land would be outside the sweep of the term “building”. Such land, however, on its own could be legitimately made the subject matter of separate levy of house tax as an independent unit being open land. As seen from Section 140(1)(b) itself as the Board can impose the tax on annual value of lands which may not be covered by the sweep of the definition of the term “building”. Once that conclusion is reached, it becomes obvious that all the buildings situated along with their appurtenant lands in one “common compound” belonging to the same owner cannot be treated as one unit for the purpose of imposing house tax under Section 28(1)(i). (Para 7)

       (iii) Uttar Pradesh Municipalities Act, 1916-Section 140(1) read with Section 128(1)(i)-House tax-Annual value-Determination of-While estimating present cost of errecting building assessing autho­rity has to keep in view life of building and also fact as to when it was constructed, in what state building is and what will be cost of er­recting a new building-Depreci­ated value has to be determined-Cost of errection at time of assessment has to be sliced down by giving due weight to depreciation.

       Held : It becomes obvious in the light of the aforesaid provision of Section 140 that up to the limit of 5 per cent of the annual value, the Board can impose house tax on immovable properties, like railway stations, hotels, colleges, schools, hospitals etc. mentioned in the said provision but for doing so the estimated present cost of erected buildings concerned has to be kept in view and also the estimated value of the land appur­tenant thereto is also to be taken into consi­deration. Now, the phrase “estimated present cost of erecting the building” is entirely differ­ently worded as compared to the phrase “estimated value of the land appurtenant thereto”. The value of the building as well as the land appurtenant once arrived at will have to be added for computing 5 per cent ceiling up to which by rules the Municipal Board can impose house tax on the buildings concerned. It becomes at once clear that when appurtenant land is to be valued it’s valuation has to be made as per its market value obtaining at the time of assessment. But so far as the value of the building to which such land is appurtenant goes, the computation has to be made on the estimated present cost of erecting the building to be subject to the tax. Meaning thereby, at the time of assessment the cost of construction of such building in its existing state is to be kept in view. Hence such cost must be arrived at by keeping in view the then existing state of the building and the cost which would be incurred for erecting such a building. Consequently it becomes obvious that while estimating the present cost of erecting the building concerned, the assessing authority has to keep in view the life of the building and also the fact as to when it was earlier constructed and in what present state the building is and what will be the cost of erecting a new building so as to result into erection of such an old building keeping in view its life and wear and tear from which it has suffered since it was put up. It is obvious that if the building is an old one the present cost of erecting such a building would necessarily require further consideration to what would be the depreciated value of such a building, if a new building is erected at the time of assessment. Such cost, obviously, has to be sliced down by giving due weight to the depreciation so as to make estimation of present cost of the new building to ultimately become equal to the erection cost of the building concerned in its depreciated state. Consequently, it cannot be said that 10 per cent depreciation allowed by the District Magistrate and as confirmed by the High Court on the total estimated cost of the building for bringing it within the as­sessable tax net of house tax was an exercise which was ultra vires provisions of the Act or beyond the jurisdiction of the assessing authority. (Para 9)

       On the facts governing the case, it is seen that the rail­way station belonging to the respondent, was as old as 1905, there may be other buildings within the complex which might have seen the light of the day years before the time of assessment. Naturally, they would not be new buildings which could have said to have been put up only at the time of assessment proceedings. They were obviously old buildings. It is not the case of the appellant or any of them that these buildings were new buildings recently constructed when assess­ment proceedings were initiated. Consequently, a flat rate of 10 per cent depreciation as granted by the District Magistrate while comput­ing the annual value for house tax purposes, in the present case, cannot said to be an unauthorised exercise. (Para 9)