WP 6945 of 1982
Construction law, multiple taxation
A writ petition was filed by Common Cause, requesting the clarification of ambiguity within the provisions of the Delhi Municipal Corporation Act of 1957.
A 3-judge bench examined the provisions of the Delhi Municipal Corporation Act of 1957 for the purpose of ascertaining the manner of determination of "rateable value" which was necessary for making assessment of property tax under the Act. For the same purpose, properties were classified into four categories:
Initially an application was made by Common Cause, specifically for the clarification on the fourth category. Later the Corporation itself made an application for the same purpose and the Government Servants Cooperative House Building Society became a party. The issue in this matter was identified as:
How the rateable value of premises, where the property has been constructed in stages, is to be determined when the premises at the various stages of construction are to be assessed for rateable value?
The Court discussed that when any subsequent addition is made to a premise, three different situations may arise:
It was observed that the formula set out in Section 6(1)(A)(2)(b) and 6(1)(B)(2)(b) cannot be applied for determining the standard rent of a subsequent construction, as if that addition was the only structure standing on the land. The assessing authorities cannot determine the standard rent of the additional structure by taking the reasonable cost of construction of the additional structure and adding to it the market price of the land and applying the statutory percentage of 7-1/2 to the aggregate amount.
The market price of the land cannot be added twice over & the formula under Section 6 is applicable only in relation to the premises as a whole. Court categorically decided that the market value of land is not to be added over again & there is no ambiguity which requires clarification apart from that.