2003 Supreme(Del) 387

High Court Of Delhi
STATE TRADE CORPORATION OF INDIA LIMITED - Appellant
Versus
NEW DELHI MUNICIPAL COUNCIL - Respondent
Civil Writ 7152 of 2001
Decided On : 04/25/2003

Headnote:Delhi Rent Control Act, 1958 - Section 3, 6 — Property tax — Rateable value — Determination — Rateable value shall not exceed the annual amount of standard rent fixed under the Delhi Rent Control Act, 1958 whether the property is rented or self-occupied — All properties whether rented out or not will have the rateable value to be determined in accordance with the provisions of Section 6 of Delhi Rent Control Act — Petitioner perpetual lessee — Sub-letting with permission of Lesser on payment of 25% rent — Not misuse charges — Different parameters adopted by municipal authorities to be avoided — Matter remanded — New Delhi Municipal Council Act, 1994, Section 63.

       Held :

       The concept of vacancy remission and self-occupation are two different concepts. This aspect has to be examined in the facts of each case. The concept of self-oc-cupation is when a property is in self use of the owner. This period may be short or long, but that is not material. The concept of vacancy remission is when the property remains vacant and unproductive of rent. In such a case vacancy remission is granted as a benefit on account of the property being unproductive of rent. The two concepts cannot be mixed or interposed and are not inter-dependent.

       There is another category of cases, which is of the properties constructed after 1988. There is no dispute that if these properties are let out, it is the rental value, which would form the basis. However, the dispute arises in cases where such properties are self-occupied. In terms of Section 3(d) of the Rent Act for a period of 10 years from completion of such construction of the premises, constructed after the commencement of the Amendment Act, the premises does not fall within the purview of the Rent Act. Thus, for this specific period of time of 10 years, the premises are taken outside the purview of the Rent Act.

       The object of amendment to Section 3 of the Rent Act cannot be ignored while interpreting even Clause (d) of Section 3. The object was to encourage construction and renting out. The renting out may not have occurred in a case where the premises are in self-occupation, but construction is carried out. Though such property Would fall outside the purview of the Rent Act, the same would be the position, strictly speaking, even the properties which were self-occupied and constructed prior to 1988 and the rateable value of which is determined on the basis of Section 6 of the Rent Act.

       Even for the properties which are under self-occupation and constructed after the Amendment Act of 1988, the rateable value is liable to be determined in terms of the provisions of Section 6 of the Rent Act.

       The result of the aforesaid is that all properties, residential or commercial, con-structed pre-1988 or post-1988, whether rented out for some period or not, which are in self-occupation, will have the rateable value determined in accordance with the provisions of Section 6 of the Rent Act.

       The determination of house-tax for self-occupied properties is to be calculated on the basis of the provisions of Section 6 of the Rent Act by applying a fiction as has been done in the past in pursuance to the judgments of the Supreme Court and not that provision of the Rent Act would apply as a self-occupied property is not a rented property to which the Rent Act applies. Thus, this will not make a difference to the method of calculation of the rateable value for self-occupied properties.

       In the particular case in question, one further issue arises for consideration, which is on account of payment of 25% charges by the petitioner to the Union of India, which is the perpetual Lesser of the property in question. The petitioner is a public sector enterprise. In terms of the clause of the perpetual lease deed, the property was to be in self-occupation. However, the property could be rented out after taking permission of the perpetual Lesser, but 25% of the rent has to be paid to the perpetual Lesser.

       The contention of the petitioner that though it is described as a misuse charges, the same is actually an amount to be remitted to the Government out of the gross rent and only the net rent remains with the petitioner.

       The same cannot really be called misuse charges on account of the fact that it is not a result of misuse of the property in question, that charge is being levied. If it has been a misuse charge, then the same would have no impact on the determination of the rateable value. However, this is a permissible activity after obtaining permission from the perpetual Lesser on payment of certain percentage of the rent, which is 25%. This is, of course, subject to actual payment by the petitioner and submission of proof of the same to the respondent. It is the net value, in case such amount is remitted to the Government of India, which should be the rent realised for the property in question and, thus, the rateable value would be liable to be determined after discounting the rental realisation to the extent of the amount remitted to the Government of India.

       Though Delhi is one city, different parameters are being followed by municipal authorities in the same town. It is only for purposes of convenience that jurisdiction have been divided among NDMC, MCD and Delhi Cantonment Board. The least that is expected is that all these municipal authorities should act at tandem and follow similar principles in determination of rateable value. Merely because the house of one person falls in one area or the other, which may even be adjacent, and a different municipal authority is dealing with the issue of determination of rateable value, should not imply totally different concepts in determination of such rateable value. It is appropriate that all the municipal authorities must meet and consider this aspect to bring a uniformity in the system of determination of the rateable value in parts of Delhi when they fall within one jurisdiction or the other. This is more so as the provisions under said Act and the DMC Act are para materia. The MCD, in fact, now proposed to apply a different concept of a unit method of taxation, but so far, the NDMC has not finalised any proposal in the same terms.

       The matters are liable to be remanded back to the assessing authority to redetermine the rateable value in accordance with the aforesaid principles with the hope that at least now it will bring an end to this unending litigation.