NEW DELHI MUNICIPAL COMMITTEE Vs. NAND KUMAR BUSSI

JUDGEMENT

(1.) (Oral). In this case the plaintiff filed a suit to challenge the legality and validity of the assessment of house tax for the year 1968-69 in respect of the ground floor of House No. 38, situated in Jor Bagh Nursery, New Delhi. The house tax had been fixed for the assessment year 1966-67 in accordance with the rent which was actually being fetched in respect of the property and the Municipality had merely adopted the same basis for tax in the year 1968-69. It was claimed by the plaintiff that in the previous year the property had been let out to tenants and the rent being fetched was Rs. 850 per month. Before 1st April, 1968, the tenants were claimed to have left and, thereafter, the property was in self occupation. The claim of the plaintiff was that the assessment could not be made on the basis of the rent being fetched in the previous year. The suit was dismissed by the trial court but on appeal a decree was passed in favour of the plaintiff. The decision of the Additional Senior SubJudge who decided the appeal is to the following effect:-

(2.) The principle on which house-tax is to be collected by the Municipality is contained in Sec. 3 of the Punjab Municipal Act, 1911 which defines annual value to mean in the case of any house or building; "the gross annual rent at which such house of building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year, subject to the following deductions etc.," Thus, in calculating the annual value of any property the actual rent that is received from the tenant is not the criteria at all. What has been to be determined is the amount of rent that might be fetched from the property if the property was let out. The provisions of the Income-tax Act, 1961 corresponding to this section are Section 23 and subsequent sections. In Section 23 the annual value is defined thus :--

(3.) It is these principles which have to be applied when a case like the present one is to be dealt with. We have in the year 1967, evidence that the property was let to a tenant and was fetching Rs. 850 per month. In the subsequent year it was not with a tenant but was self-occupied, thus no rent was received. However, the principle of notional rent and the principle of hypothetical tenant paying hypothetical rent has to be applied for the year 1968. Thus, it has to be held that even in the year 1968 the housetax has to be determined on the assumption that the property could be let out to a tenant at the same rent as it had been let out in the previous year. Thus, according to the established principles for determining the annual value or rateable value, the same rateable value has to be fixed whether the property is occupied by a tenant or not. Consequently, there is no doubt that the standard for imposing the house-tax for the year 1967 would also apply for the year 1968, whether the property was occupied by a tenant or not at all, or occupied by the owner himself. The rateable value or annual value is not at all dependant on whether the property is in occupation of a tenant, or is vacant, or whether the property is occupied by the owner himself.