N KURIAN GEORGE Vs. TAHSILDAR KOTTAYAM

JUDGEMENT

(1.) A notice issued under S. 15(1) of the Kerala Buildings Tax Act, 1975 (for short "the Act") for rectification of an order of assessment already completed and the notice of demand issued after rectification of the assessment are under challenge in this O. P. filed by the two joint owners of a 4-storey building in Kottayam Town.

(2.) Admittedly, the building has 4-stories, each having a plinth area of 307 square metres. Construction of the building was completed in October, 1985. According to the petitioners the building was entrusted to a partnership firm called M/s. Nisha Continental for running a hotel on the basis of an unregistered deed fixing a monthly rent of Rs. 8,000/-. The firm was one admittedly constituted by the petitioners and their minor children as partners as per a Partnership Deed registered with the Registrar of Firms with Registration No. 2340/85 on 26-7-1985. A hotel is being run in the building in question called Hotel Nisha Continental. The building is seen entrusted to the firm on the basis of a document called agreement of licence entered into between the first petitioner, who is referred to as the owner of building, and Hotel Nisha Continental, a partnership firm represented by its Managing Partner, the second petitioner described as the licensee of the building. The firm is allegedly running a hotel called Hotel Nisha Continental in the building.

(3.) On completion of the building, petitioner No. 1 submitted Ext. P1 return in Form No. II prescribed under the Kerala Building Tax Act and the Rules. In the return, first petitioner alone was shown as the owner of the building. The date of occupation of the building was shown as 4-11-1985. Capital value of the building was shown as Rs. 9,60,000/-. The building was shown as rented and the monthly rent was shown as Rs. 8,000/-. The annual value of the building fixed by the local authority was shown as Rs. 1,06,832/- (proposed). House tax levied by the local authority was indicated as Rs. 12,736.80 (proposed). On receipt of Ext. P 1 return, the respondent got the details verified through the Revenue Inspector. The Revenue Inspector after making local inspection and conducting necessary enquiries submitted his report dated 19-4-1989. In the report the Revenue Inspector reported that the building was constructed on the basis of sanction order obtained on a joint application submitted by the two petitioners. The land on which the building is put up belongs to the two petitioners jointly. In the return the first petitioner alone was shown as the owner of the building. It was further pointed out by the Revenue Inspector that since the building is seen let out to a firm in which the only partners are the two petitioners and their minor children, it may not be proper and reasonable to fix the capital value on the basis of the rent mentioned in the licence agreement entered into between the petitioner and his wife as the owner and licensee of the building. Revenue Inspector further reported that there are altogether 12 rooms in the 2nd and 3rd stories of the building which are being used as lodge. The rooms in the lodge portion of the building can be treated as being let out for 20 days in a month. On enquiry, the Revenue Inspector found that the rent received for an ordinary room is Rs. 40/-per day and that for an air-conditioned room the rent actually collected is Rs. 100/- per day. On the basis of the above details, the Revenue Inspector estimated the probable rent which can reasonably be expected for the ground floor at Re. 1/- per sq. ft. and for the 1st floor rooms at Rs. 2/- per sq. ft. Thereafter, an assessment order was passed accepting the capital value of the building shown in the register books kept by the local authority as it was found to be more than the capital value calculated on the basis of the monthly rent of Rs. 8,000/- shown in the return. On that basis a total amount of Rs. 80,582/- was fixed as building tax as per Ext. P 2 dated 27-11-1989. Ext. P 2(a) demand notice was also issued to the petitioners based upon Ext. P 2 assessment order directing the petitioners to remit the amounts in 4 quarterly instalments. The petitioners have remitted the amount in full as permitted by Ext. P 2(a) demand notice.