The main legal point established in the judgment is that the determination of rateable value for property tax assessment should be based on the annual rent which the owner may reasonably expect to get if the premises were let out to a hypothetical tenant, while also considering the standard rent as the upper limit to avoid wide disparity between the rateable value of old and newly-constructed premises.

Judgment

D.P. WADHWA, J.- The appellant in Civil Appeal No. 4104 of 1998 is aggrieved by the judgment dated 7-7-1997 of the Division Bench of the Delhi High Court dismissing his writ petition wherein he had sought setting aside the order of assessment dated 12-3-1991 assessing the rateable value of his property for the purpose of property tax under Section 1161 of the Delhi Municipal Corporation Act, 1957 (for short "the Act"). The property of the appellant comprised of his house constructed on a plot of land bearing No. II-1787, Chitranjan Park, New Delhi, measuring 311 sq yards. The writ

1 "116. Determination of rateable value of lands and buildings assessable to property taxes.-(l) The rateable value of any land or building assessable to property taxes shall be the annilal rent at which such land or building might reasonably be expected to let from year to year less-

(a) a sum equal to ten per cent of the said annual rent which shall be in lieu of all allowances for costs of repairs and insurance, and other expenses, if any, necessary to main, the land or building in a state to command that rent; and

(b) the water tax or the scavenging tax or both, if the rent is inclusive of either or both of the said taxes:

Provided that if the rent is inclusive of charges for water supplied by measurement, then, for the purpose of this section the rent shall be treated as inclusive of water tax on. rateable value and the deduction of the water tax shall be made as provided therein:

Provided further that in respect of any land or building the standard rent of which has been fixed under the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952), the rateable value thereof shall not exceed the annual amount of the standard rent so fixed. Explanation.-The expression water tax and scavenging tax shall mean such taxes of that nature as may be levied by an appropriate authority. (Inserted by Act 67 of 1993 w.e.f. 1-10-1993.)

(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 of erection shall be fixed at five per cent of the estimated capital value of such land.

(3) All plant and machinery contained or situate in or upon any land or building and belonging to any of the classes specified from time to time by public notice by the Commissioner with the approval of the Standing Committee, shall be deemed to form part of such land or building for the purpose of determining the rateabie value thereof under sub-section (1) but Save as aforesaid no account shall be taken of the value of any plant or machinery contained or situated in or upon any such land or building." petition was dismissed by the High Court relying on its earlier judgment in the case of Ravish Chander Rastogi v. Municipal Corpn. of Delhi decided by the same Division Bench on 29-5-1997. Civil Appeal No. 4105 of 1998 is a against that judgment of the High Court. It would, therefore, be appropriate to refer to the facts in the case of Ravish Chander Rastogi.

2. The appellant Ravish Chander Rastogi is the owner of the property bearing No. 55, Anand Lok, New Delhi. He was served with a notice dated 20-3-1986 under Section 126 of the Act proposing to enhance the rateable value for the purpose of property tax from the existing Rs 1280 to Rs 1,79,000 with effect from 1-4-1985. The reason for increase in the proposed rateable value was that the appellant had made new construction. The appellant filed his objections to the proposed rateable value. The Assessing Officer proceeded to assess the rateable value on the basis that the property was in the self-occupation of the appellant and rateable value, therefore, had to be determined under Section 6( 1)2 of the Delhi Rent Control Act, 1958 (for short "the Rent Act"). For this two components are necessary:

(1) market value of the land on the date of commencement of construction, and (2) reasonable cost of construction. The Assessing Officer arrived at t