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High Court Of Delhi
INDIAN HOTELS COMPANY LIMITED - Appellant
Versus
NEW DELHI MUNICIPAL COUNCIL - Respondent
Decided On : 07/01/1996
PROPERTY TAX - Assessment - Rateable value - Determination - Principles - Hotel building - Applicability of Chapter V of Delhi Rent Control Act, 1958 - Standard rent - Determination - Factors to be considered - Power of Assessing Authority to compel assessee to divulge required information - Legislative amendment to simplify basis of taxation and procedure of assessment - Desirability.
Fact of the Case:
The assessee, Indian Hotels Co. Ltd., challenged an order of assessment fixing the annual rateable value of its hotel property, Hotel Taj Palace Inter-Continental, New Delhi, for the year 1995-96. The assessment was made by reference to Chapter V of the Delhi Rent Control Act, 1958 (DRC Act). The assessee contended that the assessment should have been made in accordance with the principles laid down in Section 6 of the DRC Act, as held by the Supreme Court in NDMC v. East India Hotels and Anr. (1994).
Finding of the Court:
The Court held that the assessment should have been made in accordance with the principles laid down in Section 6 of the DRC Act, as held by the Supreme Court in NDMC v. East India Hotels and Anr. (1994). The Court further held that the Assessing Authority had failed to exercise its powers under Sections 77, 81, 119, and 122 of the NDMC Act to compel the assessee to divulge the required information. The Court also observed that the provision requiring 100% deposit of tax as a condition precedent to hearing by the Appellate Authority may amount to negation of the right of appeal in some cases and deserves to be suitably amended.
Issues: 1. Whether the assessment of the hotel property should have been made by reference to Chapter V of the Delhi Rent Control Act, 1958, or in accordance with the principles laid down in Section 6 of the Act? 2. Whether the Assessing Authority had failed to exercise its powers under Sections 77, 81, 119, and 122 of the NDMC Act to compel the assessee to divulge the required information? 3. Whether the provision requiring 100% deposit of tax as a condition precedent to hearing by the Appellate Authority may amount to negation of the right of appeal in some cases?
Ratio Decidendi: 1. The Supreme Court in NDMC v. East India Hotels and Anr. (1994) has held that a hotel building is a premises and for the purpose of determining the rateable value of the building in which a hotel is running, recourse has to be taken to the principles laid down in Section 6 of the Delhi Rent Control Act and Section 9(4) of the Act cannot be resorted to. 2. The Assessing Authority has the power under Sections 77, 81, 119, and 122 of the NDMC Act to compel the assessee to divulge the required information. 3. The provision requiring 100% deposit of tax as a condition precedent to hearing by the Appellate Authority may amount to negation of the right of appeal in some cases and deserves to be suitably amended.
Final Decision: The Court set aside the impugned order of assessment and directed the Assessing Authority to assess the rateable value of the property afresh in accordance with the principles laid down in the judgment.
( 1 ) LPA 32/96 has been preferred by the Indian Hotels Co. Limited feeling aggrieved by an order dated 28. 2. 96 passed by a learned Single Judge of this Court who has directed a writ petition filed by the appellant challenging an order of assessment fixing the annual rateable value of the appellant s property liable to property tax thereon passed by the Director (Tax) to bedismissed as not maintainable in view of availability of an alternate remedy of appeal.
( 2 ) THE building in question is known as Hotel Taj Palace Inter-Continental and is situated on plot No. 2, Sardar Patel Marg, New Delhi. A collaboration agreement was entered into on 9. 4. 85 between the Delhi Development Authority (the DDA, for short) and the appellant whereunder land admeasuring approximately 6 acres was brought in by DDA as its corporate contribution. The DDA was to contribute Rs. 15 crores for the construction licence and operation of the hotel, including the land. On 31. 7. 90 the DDA informed the Director (Taxation) NDMC of its having contributed land worth Rs, 5 crores for construction of the Hotel under the collaboration agreement.
( 3 ) IN 1983-84, the hotel building was constructed and a five star deluxe hotel has come up. Ever since then the respondent-NDMC has been assessing the hotel- building for property tax from year to year, but the assessment is yet to achieve a finality. For the years 1983-84 to 1991-92, the Assessing Authority has fixed the rateable value by reference to Chapter V of the Delhi Rent Control Act, 1958. All such orders were appealed against and set aside. The appellant has deposited the admitted amount of tax for all these years. For the years 1992-93 to 1994-95 again the hotel building was assessed by reference to Chapter-V of the DRC Act. Appeals have been preferred which are pending before the Appellate Authority. The demand raised by the NDMC has been stayed by the Appellate Authority, permitting the appellant to deposit admitted amount of tax only.
( 4 ) ON 9. 12. 94, the appellant was asked through a letter by the respondent No. I for certain details about the cost of land, construction, amenities and facilities provided in the hotel. Details and information have been furnished on 10. 1. 95. On 8. 1. 95, the respondent-NDMC issued a public notice that the assessment list for the year 1995-96 of the lands and building in the NDMG area had been prepared pursuant to Section 70 read with Sections 72-73 of the New Delhi Municipal Council Act, 1994 (hereinafter NDMC Act, for short ). On 13. 2. 95 detailed objections disputing fixation of the proposed rateable value were filed on behalf of the appellant. Thereafter a hearing took place on 24. 2. 95. On 26. 12. 95, the respondent- NDMC has notified the assessment list of the buildings within the area of NDMC as having been finalised for the year 1995-96. So far as the appellant is concerned an order of assessment has been passed on 18th December, 1995 whereby disposing of all the objections preferred on behalf of the appellant the annual rateable value of the hotel property has been appointed at Rs. 45,90,88,196. 00 less 10%. It may be noticed here itself that this was the annual rateable value appointed also for the year 1994-95 on the basis of Chapter V of Delhi Rent Control Act. This was the rateable value proposed for the year 1995-96 too. It has been maintained finally by the impugned order of assessment dated 18. 12. 95.
( 5 ) AS we have already noticed, writ petition preferred by the appellant has been dismissed in limine by the learned Single Judge.
( 6 ) CWP 894/96 has been filed by the DDA during the pendency of the LPA challenging the same order of assessment dated 18. 12. 95 No. 32/96 which was impugned by the Indian Hotel Company Ltd. in CW 479/96 before the lean-led Single Judge.
( 7 ) WE have carefully perused the order of learned Single Judge. On principle we do not find any fault with the view taken by the learned Single Judge that ordinaril
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