i IN THE HIGH COURT OF Ai NEW DELHI Reservedon: 19^^May, 2008 Dateoforder:2"^* July,2008 LPA No. 408/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal & Mr. Alok Singh, Advocates versus M.M. DEVELOPERS Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S. MURALIDHAR ORDER This appeal is dismissed in terms of the common judgment of 2nd July 2008 passed in LPA No. 319 of 2007 titled "Municipal Corporation of Delhi v. N.K, Gupta" and connected matters. Registry is directed to place on record a copy of the judgment passed in LPA No. 319 of 2007. CHIEF JUSTICE July 02, 2008 S. MURALIDHAR, J. dn • ^ Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified •L-v IN THE HIGH COURT OF DELHI: NEW DELHI LPA No. 319 of 2007 Reservedon: 19"^May, 2008 Date ofjudgment:July 02, 2008 MUNICIPALCORPORATIONOF DELHI ..... Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus N.K. GUPTA Respondent ThroughMr. SanjayGoswamyandMr. Ajay Kumar, Advocatesfor the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. With LPA No. 373/2007 MUNICIPALCORPORATIONOF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Ml-. Sanjeev Sabharwal and Ml-. Alok Singh,Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. LPA No. 374/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S.Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPA No.319/2007 Page 1 of 25 KEY POINT Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. IramMajidand Ms. ZubedaBegum,Advocates for RespondentGNCTD. LPA No. 376/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S.Phoolka,SeniorAdvocate Mr. SanjeevSabharwaland Mr. Alok Singh, Advocates versus K.K. ENTERPRISES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. Iram Majidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 377/2007 MUNICIPALCORPORATIONOF DELHI Appellant Tlirough: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. Iram Majidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 378/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabhai-wal and Ml-. Alok Singh, Advocates versus LPANo.319/2007 Page2of25 K,K. ENTERPRISES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. Iram Majidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 380/2007 MUNICIPALCORPOIUTIONOF DELHI Appellant Tlirough: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus GARIMAAGGRAWAL Respondent ThroughMr. SanjayGoswamyand Mi% AjayKumar, Advocatesfor theRespondents. Ms. IramMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 381/2007 IVtUNlClPALCORPORATIONOF DELHI Appellant Tlirough: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh,Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. IramMajidand Ms. ZubedaBegum,Advocates for RespondentGNCTD. LPA No. 382/2007 MUNICIPALCORPORATIONOF DELHI .....Appellant Through: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES .....Respondent . ThroughMr. SanjayGoswamyand Mr. AjayKumar, LPANo.319/2007 Page3of25 Advocatesforthe Respondents. Ms. IraniMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 383/2007 MUNICIPALCORPORATIONOF DELffl Appellant Through: Mr.H.S.Phoolka,SeniorAdvocate Mr. Sanjeev Sabharwal and Ml'. Alok Singh, Advocates versus VARDHMANPROPERTIES .....Respondent ThroughMi". SanjayGoswamyandMr. AjayKumar, Advocatesfor the Respondents. Ms. IramMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 384/2007 MUNICIPALCORPORATIONOF DELffl ..... Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDKMANPROPERTIES .....Respondent ThroughMi-. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 385/2007 MUNICIPALCORPORATIONOF DELffl Appellant Through: Mr.H.S. Phoolka, Senior Advocate Ml". Sanjeev Sabharwal and ]Vh-. Alok Singh, Advocates versus HARI SINGHBUILDER&PROMOTRS Respondent ThroughMr. SanjayGoswamyandMr. Ajay Kumar, LPA No.319/2007 Page4of25 yr Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. LPA No. 386/2007 MUNICIPALCOItPORATIONOF DELHI AppeUant Tlirough; Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharvvaland Mr. Alok Singh, Advocates versus ICAMALICISHOREAGGRAWAL Respondent Tlii'oughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms, Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 387/2007 MUNICIPALCOI^ORATIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharvvaland Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent Tlii-oughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 388/2007 MUNICIPALCORPORATIONOF DELHI Appellant Thi'ough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mi*. Alok Singh, Advocates versus BASANTPROJECTSLTD Respondent TliroughMr. SanjayGoswamyandMr. Ajay Kumar, LPANo.319/2007 Page 5 of 25 Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. LPA No. 389/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 391/2007 MUNICIPALCORPORATIONOF DELffl Appellant Tlirough: Mr.H.S.Phoolka, Senior Advocate Ml*. SanjeevSabharwaland Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 394/2007 MUNICIPALCORPORATIONOF DELFH Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPANo.319/2007 Page6 of 25 VARDHMANPROPERTIES. ....'.Respondent TliroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. IraniMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 395/2007 MUNICIPALCOiy>OlUTIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharvvaland Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES .....Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 396/2007 MUNICIPALCOIU'ORATIONOF DELHI ..... Appellant Tlirough: Mr.H.S.Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus MANISHAGGIUWAL Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesforthe Respondents. Ms. Iram Majid andMs. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 400/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S.Phoolka, Senior Advocate Ml". Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPA No.319/2007 Page7 of25 rp \ VAiUDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocates for the Respondents. Ms. IramMajidandMs. ZubedaBegum,Advocates for RespondentGNCTt). LPA iNo. 401/2007 MUNICIPALCORPORATIONOF DELHI ..... Appellant Through; Mr.H.S. Phoolka, Senior Advocate Mr. SaiijeevSabharwaland Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocatesforthe Respondents. Ms. Iram Majid andMs. Zubeda Begum,Advocates for RespondentGNCTD. LPA No. 402/2007 MUNICIPALCORPORATIONOF DELHI Appellant Tlirough: Mr.H.S.Phoolka,SeniorAdvocate Ml'. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. IramMajidand Ms. ZubedaBegum,Advocates for RespondentGNCTD. LPA No. 403/2007 MUNICIPALCORPORATIONOF DELffl Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPANo.319/2007 Page8of25 0> versus VARDFIMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. IraniMajidaridMs. ZubedaBegum,Advocates for RespondentGNCTD. LPANo. 405/2007 MUNICIPALCORPOIUTIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Smgh, Advocates versus UNITYPROJECTSLIMITED .....Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. IraniMajidandMs. ZubedaBegum,Advocates for Respondent GNCTD. LPANo. 406/2007 MUNICIPALCORPORATIONOF DELHI Appellant Thi'ough: Mr.H.S.Phoolka,SeniorAdvocate Mr. SanjeevSabharwaland Mr. Alok Singh, Advocates versus KEYPOINT Respondent ThroughJSii-. SanjayGoswamyand Mr. AjayKumar, Advocatesforthe Respondents. Ms. IraniMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. LPA No. 407/2007 MUNICIPALCORPORATIONOF DELHI Appellant riirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page9of25 versus VARDHMANPROPERTIES .....Respondent ThroughMi\ SanjayGoswamyand Mr. AjayKumar, Advocatesfor theRespondents. Ms. IraittMajidand Ms. ZubedaBegum,Advocates for Respondent GNCTD. i:^ANo. 408/2007 MUNICIPALCORPORATIONOF DELHI ..... Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus M.M. DEVELOPERS Respondent ThroughMi-. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majidand iVIs. ZubedaBegum,Advocates forRespondentGNCTD. LPA No. 1051/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S.Phoolka, Senior Advocate Mr. Sanjeev Sabharwai and Mr. Alok Singh,Advocates versus VARDHMANPROPERTIES ;....Respondent ThroughMr. SanjayGoswamyand Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. ZubedaBegum, Advocates for RespondentGNCTD. LPA No. 1057/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwai and Mr. Alok Singh, Advocates LPA No.319/2007 Pagel0of25 versus VARDHMANPROPERTIES Respondent ThroughMr. SanjayGoswamyand Mi\ AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. LPA No. 1058/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: IVIi-.H.S.Phoolka, Senior Advocate Mr. Sanjeev Sabharvvaland Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES ... ..Respondent ThroughMr. SanjayGoswamyandMr. AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1059/2007 MUNICIPALCORPORATIONOF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Ml-. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus SUNDERCONSTRUCTIONCO. Respondent ThroughMr. SanjayGoswamyandMr. Ajay Kumar, Advocatesforthe Respondents. Kls. Iram Majidand Ms. ZubedaBegum,Advocates for RespondentGNCTD. LPA No. 1060/2007 MUNICIPALCORPORATIONOF DELHI Appellant Through: Mr.H.S.Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and LPA No.319/2007 Pagellof25 Mr. Alolc Singh, Advocates versus VARDFDv/IANPROPERTIES Respondent ThroughMr. SanjayGoswamyandMr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1061/2007 MUNICIPALCOiy^ORATIONOF DELHI Appellant Through: IVIi-.H.S.Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent Through Mr. SanjayGoswamyand Mr. AjayKumar, Advocatesfor the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. AND LPA No. 1285/2007 MUNICIPALCOI^ORATIONOF DELm Appellant Tlirough: Mr.H.S.Phoolka, SeniorAdvocate Ml'. Sanjeev Sabharwal and Mr. Alok Singh,Advocates versus SURYABUILDWELLLIMITED Respondent TliroughMl-. SanjayGoswamyand Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. Coram: HON'BLE THE CHIEF JUSTICE LPA No.319/2007 Page 12 of25 HON'BLE DR. JUSTICE S. MURALIDHAR 1. Whether Reporters of local papers may be / o allowed to see the judgment? 2. To be referred to the Reporter or not? - 3. Whether the judgment should be reported U: in Digest? JUDGMENT Dr. So Muralidhan J. 1. These appeals are directed against the common judgmentdated 13^*^ March, 2007 passed by the learned Single Judge ofthis Court in Writ Petition(Civil) No. 8161 of 2005 and Batch. The writ petitions challengedthe validityof the noticesissued by the Collectorof Stamps under Section 40 of the Indian Stamp Act, 1899 ('Stamp Act') demanding transfer duty as well as deficient stamp duty and penalty equalto ten timesof the deficientduty. 2. The demand for transfer duty was made in respect of the conveyanceofplotsofland in favourofthe appellantswho successfially bid for them in auctions held by the Delhi DevelopmentAuthority ('DDA')/ Municipal Corporation of Delhi ('MCD'). Consequently, perpetuallease deeds were executedand registeredin their favour. The writ petitionershad also paid the appropriatestamp duty and transfer duty in termsofthe certificateissuedby the CollectorofStampsin each of the cases. 3. On 29"" August2004 ageneralorderwas issuedby the Divisional LPANo.319/2007 Page 13 of25 Commissioner,Delhi stating that the Collectorsof Stamp of different districtshad adoptedvaryingmethodsofcalculationofduty in respectof perpetualleases which had resultedin the duty being short levied and collected.This conclusionwas reachedonan interpretationofArticle35 of Schedule 1 (A) to the Stamp Act as applicableto Delhi and Section 147 to the Delhi Municipal Coi-poration Act, 1957 ('DMC Act'). Consequently,the impugned notices were issued in February 2005 to eachof the appellantscallinguponthem to pay the deficientduty as well as the penalty equaling ten times of the deficient duty. In respect of Vardhman Properties, for instance, the auction purchaser had paid Rs.12,42,215as stamp duty. This was now recomputed as Rs.13,30,604 being the aggregate of Rs.10,79,772 as stamp duty and Rs.2,00,832 as transfer duty. In re-working the duty, the total consideration for the perpetual lease was taken as the aggregate of the premium amount of Rs.1,91,11,000and the aimual rent calculatedas a percentageof the premium amount. In addition a penalty of Rs.8,88,389 (being ten times of the deficient duty) was also demanded. 4. Before the learned Single Judge the respondents contended that they were not challenging the re-working of the stamp duty since the question of interpretationof Article 35 of Schedule 1(A) of the Stamp Act was debatable. Their challenge was, therefore, confined to the penalty imposed under the Stamp Act as well as the DMC Act with regard to the stamp duty and transfer duty respectively as well as the LPANo.319/2007 Page 14of 25 dues in the transfer duty as demanded in the impugned notices. 5. On the question of penalty, the learned Single Judge came to the conclusion that in terms of Section 40 of the Stamp Act, the power to impose a penalty was consequential upon the Collector of Stamps impounding an instrument. Since no instrument had yet been impounded by the Collector, the question of imposition of any penalty did not arise. To the extent, therefore, that the impugned notices sought to levy penalty, they were held to be unsustainable in law. 6. The next questionbefore the learned Single Judge concernedthe interpretation of the relevant entry in Section 147 (2) (b) (v) DMC Act. After referringto the decisionof the learnedSingleJudge of this Court in Niagara Hotels &Builders (P) Ltd. v. Union ofIndia 65 (1997)DLT 826, the learned Single Judge concluded that the words 'amount' and 'value' in Section147 (2) (b) (v)DMC Act did not referto the premium collectedfor the grantofthe lease.The learnedSingleJudgerejectedthe contentionof the MCD that the word 'amount'referredto premiumand the word 'value' refeiTedto the rent. It was held thatthey referredto the quantumof the rent for the first fifty years of the lease. Consequently, transferduty would be leviableon one-sixthofthe rent for the first fifty years of the lease. Althoughthe lease referredto only the first thirty years, the learned Single Judge held that "the transfer duty has to be computedon the basis of1/6^''ofthe rent payableat presentfor the first LPA No.319/2007 Page 15 of25 30 year period but computed for the first fifty years". 7. The petitions were accordingly partly allowed holding that no penalty could be imposed in respect of the transfer duty under the DMC Act since that was a debatable issue. A direction was issued to re-work the transfer duty in terms of the judgment of the learned Single Judge. It was ftirther held that no further stamp duty in addition to the amounts already paid was payable nor was any penalty chargeable. 8. Aggrieved by the judgment of the learned Single Judge, the MCD has filed the present appeals. 9. It is contended by Mr. H.S.'Phoolka, the learned senior counsel appearing for the MCD that in the sense and in the context in which the word 'rent' is used in Section147 (2) (b) (v) DMCAct, it had to connote the total consideration payable under the lease deed. His submission was that unless the total consideration as shown on the lease deed was paid by the lessee, the executionof the perpetuallease deed could not have takenplace. Therefore,the word 'rent'would includethe premium paidby the auctionpurchaserfor obtainingthe lease. In otherwords,the expression 'rent' meant 'rent + premium' and not the rent alone. Referencewas made to the definitionofthe word 'premium'in Black's Law Dictionary,6"^ Edition (page 1181). Mr. Phoolka then submitted that everyword occurringin Section147 (2) (b) (v) DMC Act had to be LPANo.319/2007 Page 16 of25 >jCK^ given full effect to keeping in view the context in which the word occurs. Thereforethe disjunctive'or' had to be read as a conjunctive 'and'. Since the lease could not have been executed without the premium being paid, the legislativeintent was to levy transfer duty on the amount equal to one-sixth of the entire considerationpayable in respect of the lease which, in any event, has been set forth in the instrument. Mr.Phoolka contended that since the annual rent payable is calculated as a percentage of the premium paid, it is a measure of the premium itself. Consequently,thereit was logicalto includethepremiumamountaspart of the rent for the purposes of computingthe transfer duty. 10. In support of his contention that all words in the statute have to be given full effect Mr.Phoolkareferredto the judgmentsof the Supreme Court in Shin-Etsu ChemicalCo. Ltd. v. Aksh OptifibreLtd. (2005) 7 see 234, Manohar Lai v/ Vinesh Anand (2001) 5 SCC 407, Noorie Manure Mill v. Commissioner Trade Tax (2007) 10 SCC 478, Associated Cement Co. Ltd. v. State of MP (2004) 9 SCC 727 and Indcon Structurals (P) Ltd. v. Commissionerof CentralExcise (2006) 6SCC786.- 11. Mr.SanjayGoswamy, learned counsel appearingon behalfof the respondents submitted that a taxing statute admits of only strict interpretation.If the intentionof the legislaturewas to tax the premium paid for the obtainingof a perpetuallease, then certainlythe wordingof LPANo.319/2007 Page 17 of25 o <7^ the provision should expressly indicate it. Reliance is placed on Section 105 of the Transfer of Property Act, 1882 ('TP Act') where the words 'premium' and 'rent' have been separately defined. Relying on the judgment of the Supreme Court in Commissioner of Income Tax v. Panbari Tea Company AIR 1965 SC 1871, it is submitted that the expression 'premium' and 'rent' have to be separately understood and one cannot include the other in the context in which it is used in the deed of perpetual lease in the instant case. The word 'rent' can only refer to the actual rent indicated in the lease deed and not the premium. Reference is also made to the decisions in Govind Ram v. Rajphul Singh AIR 1973, Punjab & Haiyana 94 and S. Venkataraman Swami V. S. Abdul Wahab AIR 1969 Madras 473. 12. In order to appreciatethe respectivecontentions,a referencemay be made firstto Section147 (2) (b) (v) of the DMCAct whichreads; "147. Duty on transfer of property and method of assessment thereto.- (1) Save as otherwiseprovidedin this Act, the Corporation shall levy a duty On transfersof immovablepropertysituatedwithin the limitsof Delhi in accordancewith the provisionshereafterin this section contained. (2) The said duty shallbe levied- (a) in the form of a surchargeon the duty imposed by the Indian Stamp Act, 1899 (2 of 1899) as in force for the time being in the Union Territory of Delhi, on every instrument of the description specified below, and (b) at such rate as may be determined by the Corporation not exceedingfive per cent, on the amount specifiedbelow againstsuch instruments- . LPANo.319/2007 Page 18 of25 Description of instrument Amount on which duty should levied (i) Sale of immovable property The amount or value of consideration for the sale, as set forth in instrument. (ii) Exchange of immovable property The value of the property of the greate value, as set forth in the instmment. (iii) Gift of immovableproperty The value of the property, as set forth the instrument. (iv) Mortgage with possession immovable property The amount securedby the mortgagei set forth in the instrument. (v) Lease in pei-petuity immovable property The amount equalto one-sixthof the whole amount or value of the rent which would be paid or delivered in respect of the first fifty years of the le; as set forth in the instrument, (emphasis supplied) (v) Contract for transfer of immovable property Ninety per cent of the value of the consideration for the transfer as set out in the contract." 13. In Niagara Hotels & Builders (P) Limiteda learnedSingleJudge of this Courtheld thatthe word 'or' in Section147 (2) (b) (v)DMC Act could not be read in a mannerso as to enableMCD to levy the transfer duty on an aggregate both the premium amount as well as the rent. In the impugned order in the instant cases, the learned Single Judge has heldthatthe expression"amount'or 'value' both qualified"rentand rent alone" and, therefore,the rent (and not the premium)could alone form the basis for calculatingthe transfer duty. 14. Depending on the context, the word 'premium' can have both a broad as well as a narrow meaning. The definition of premium in the Law Lexicon by P. Ramanatha Aiyar, Second Edition reads as under: LPANo.319/2007 Page 19 of 25 '/M ll '^Premiutnilleafisa sum of money paid as considerationforgrantof lease.It represents 'cajpitAlized rent which in fact is the difference between the actual rent and the rent wMch might otherwisebe obtainedby the lessor. ''Premium Or other Like Sums", "are sums paid in excess of the agreed rent in consideration of grant, continuance or renewal ofthe tenancy" In Black's Law Dictionary, Sixth Edition, premium is defined as capitalizedrent"paidin lumpsumat thetimeofleaseis granted." 15. The question whether the 'rent' payable under the deeds of perpetual lease in the instant cases includes the 'premium' paid will depend on the context in which the word is used. This distinctionis adoiowledgedin the definitionsof the terms 'premium' and 'rent' in Section 105 of the TP Act as well. 16. The decision of the Supreme Court in Panbari Tea Company supports the contentionof the respondentthat, given the context, the word 'rent' in Section 147 (2) (b) (v) DMC Act has to have a narrow meaning. The question that arose in the said case was "whether the premium collected as a lump sum (although payable in instalments) couldalso be consideredto be arevenuereceiptin the same manneras the rent collected"? In the said case a registeredlease deed had been executedby the AssesseeCompanyby whichtwo tea estateswere leased out to a firm. The considerationfor the lease was a combinationof LPANo.319/2007 ^ on ^'.- Page20of2:^ premiumin the sum ofRs.2,25,000ofthe annualrentofRs.54,000. The premium was to be paid in the following manner: Rs.45,000 as lump sum at the time of execution of the lease deed and the balance of Rs.1,18,000in sixteenhalfyearly instalmentsof Rs.l1,250 before the 31'' January and 31'' July of each year. The annual rent of Rs.54,000 was payablein the followingmanner:Rs.1,000 per month to be paid on or beforelast date of each month,thus, makingin all Rs.12,000per year and the balanceofRs.42,000to be paid on or before 31'' Decemberof each year. In the assessmentyear for 1952-53,the income tax officer treated the instalment of Rs. 11,250paid towards premium as a revenue receipt. This assessment was upheld by the Appellant Assistant Commissioner as well as the Tribunal. The High Court reversed the Tribunal and held that the sum of Rs.l 1,250was a capital receipt and not a revenue receipt. The Departmentthen appealedthe Supreme Court. The Supreme Court referred to the decisions in Kamakshya Narain Singh Vo CommissionerofIncomeTax (1943)II ITk 513, Memberfor the Board of Agriculture v. Commissioner of Income Tax (1957) 32 ITR 169 and Chintamani Saran Nath Sah v. Commissioner ofIncome Tax AIR 1961 SC 732 to underscore the distinction between the premium and rent. It pointed out that a one-time payment of premium for the grant of a lease was known as 'salami' which is in the nature of a capital receipt in the hands of the lessor. The Supreme Court then referred to Section 105 TP Act and observed as under: "The section, therefore, brings out the distinction LPANo.319/2007 Page21of25 between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the so-called premium is in fact advance rent and in others rent is deferred price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the Court, having regard to the other circumstances, to ascertain the intention of the parties." On an analysisof the relevantclausesin the lease deed, it was held that the amount paid as premium could not be construed as rent and, such premium was a capital receipt in the hands of the lessor. 17. In Hotel Kings v. Sara Farhan Lukmani (2007) 1 SCC 202, the SupremeCourtemphasizedthe importanceofa contextualinteipretation and heldthatwhilethe permittedincreaseinrentcan serveas ayardstick for the landlord to increase the rents it did not make such peoTiitted increase"a partofthe rentthoughit may be aconsiderationfor the grant of lease." 18. The lease deed in the instantcasesa makesreferenceto the annual rent that wouldbe payablein future. This is not apre-determinedfigure but is to be workedout as a percentageofthe premiumamount. This is set out in the lease deed. For instance in the lease deed dated 1'' LPANo.319/2007 Page22 of25 December,2003 in favour of M/s N.K. Gupta, the fourth paragraphof the preamble reads: "NOW THIS INDENTURE WITNESSETH that, in consideration of the amount of Rs. 1,31,04,000/-(RupeesOne CroreThirtyOne lacs and Four thousand only) paid towards premium before the execution of these presents (the receipt where of the Lessor hereby aclmovvledges) and of the rent hereinafter reserved and of the covenants on the part of the lessee hereinafter contained, the Lessor doth hereby