Case: Municipal Board, Saharanpur Vs. Shahdara (Delhi) Saharanpur Light Rail Co. Ltd

for a sum less than its fair letting value, might reasonably be expected to let from year to year." It becomes obvious in the light of the aforesaid provision that up to the limit of 5 per cent of the annual value, the Board can impose house tax on immovable properties, like railway stations, hotels, colleges, schools, hospitals etc. mentioned in the said provision but for doing so the estimated present cost of erected buildings concerned has to be kept in view and also the estimated value of the land appurtenant thereto is also to be taken into consideration. Now, the phrase "estimated present cost of erecting the building" is entirely differently worded as compared to the phrase "estimated value of the land appurtenant thereto". The value of the building as well as the land appurtenant once arrived at will have to be added for computing 5 per cent ceiling up to which by rules the Municipal Board can impose house tax on the buildings concerned. It becomes at once clear that when appurtenant land is to be valued its valuation has to be made as per its market value obtaining at the time of assessment. But so far as the value of the building to which such land is appurtenant goes, the computation has to be made on the estimated present cost of erecting the building to be subject to the tax. Meaning thereby, at the time of assessment the cost of construction of such building in its existing state is to be kept in view. Hence such cost must be arrived at by keeping in view the then existing state of the building and the cost which would be incurred for erecting such a building. Consequently it becomes obvious that while estimating the present cost of erecting the building concerned, the assessing authority has to keep in view the life of the building and also the fact as to when it was earlier constructed and in what present state the building is and what will be the cost of erecting a new building so as to result into erection of such an old building keeping in view its life and wear and tear from which it has suffered since it was put up. It is obvious that if the building is an old one the present cost of erecting such building would necessarily require further consideration as to what would be the depreciated value of such a building, if a new building is erected at the time of assessment. Such cost, obviously, has to be sliced down by giving due weight to the depreciation so as to make estimation of present cost of the new building to ultimately become equal to the erection cost of the building concerned in its depreciated state. Consequently, it cannot be said that 10 per cent depreciation allowed by the District Magistrate and as confirmed by the High Court on the total estimated cost of the building for bringing it within the assessable tax net of house tax was an exercise which was ultra vires provisions of the Act or beyond the jurisdiction of the assessing authority. On the facts governing the case, it is seen that the railway station belonging to the respondent, was as old as 1905, there may be other buildings within the complex which might have seen the light of the day years before the time of assessment. Naturally, they would not be new buildings which could have said to have been put up only at the time of assessment proceedings. They were obviously old buildings. It is not the case of the appellant or any of them that these buildings were new buildings recently constructed when assessment proceedings were initiated. Consequently, a flat rate of 10 per cent depreciation as granted by the District Magistrate while computing the annual value for house tax purposes, in the present case, cannot said to be an unauthorised exercise. The third point for determination, therefore, has to be answered in the affirmative against the appellant and in favour of the respondent. Point No. 4: 9. As a result of the aforesaid discussion, this appeal succeeds so far as the first point is concerned. However, it stands rejected so far as the last two contentions are concerned. The appeal is partly allowed accordingly and the Judgment and Order of the Division Bench will stand modified in terms of this judgment in favour of the appellant Board. Before parting with this appeal, we may mention that during the pendency of this appeal, by an interim order dated 20th January, 1977, a three-Judge Bench of this Court, directed as under : "There will be stay of restitution pending the disposal of the appeal.The appellant undertakes not to press the demand for the recovery of the amount of Rs. 98,950/- and any future dues from the respondent during the pendency of the appeal in this Court.The hearing of the appeal is expedited and the same shall be listed for hearing along with C.A.1218/76." 10. It is obvious that the aforesaid order insofar as the interim stay deals with the right of the appellant Board to impose water-tax on all the buildings situated within the "common compound" of the respondent is concerned, now there will remain no occasion for the appellant Board to grant any restitution to the respondent so far as recovery of water-tax for the relevant time in dispute is concerned. It will also be open to the appellant Board to press for payment of reconvey of water-tax which has remained unpaid by the respondent for the relevant year subject to assessment of all buildings as separate units of taxation. However, as the appellant fails on the question of levy of house tax as decided against it while answering point No. 2, so far as house tax levy is concerned, it will abide by the result of this appeal which is partly decided against the appellant and will be assessed accordingly for the relevant years.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]For imposing house tax on buildings under Section 140(1)(a) it has to be shown that the buildings with their common appurtenant land or the land in common appurtenance to several buildings situated nearby are available for imposing such a tax thereon. It is only such appurtenant land which can form part of the buildings for attractingassessment proceedings. But if the "common compound" in which such buildings with appurtenant lands are situated also includes land which cannot be said to be a common appurtenance to several buildings situated therein or separately appurtenant to any given building, such land would be outside the sweep of the term "building". Such land, however, on its own could be legitimately made the subject matter of separate levy of house tax as an independent unit being open land. As seen from Section 140(1)(b) itself as the Board can impose the tax on annual value of lands which may not be covered by the sweep of the definition of the term "building". Once that conclusion is reached, it becomes obvious that all the buildings situated along with their appurtenant lands in one "common compound" belonging to the same owner cannot be treated as one unit for the purpose of imposing house tax under Section 128(1)(i). The reasoning of the High Court in this connection cannot be found fault with on the scheme of the Act. It is pertinent to note that "common compound" which is relevant for theas per Section 129 of the Act to which we have made a detailed reference while deciding the companion appeal No. 1218 of 1976 is conspicuously absent in connection with imposition of house tax on the annual value of buildings or lands or both as found in Section 128(1)(i). We, therefore, endorse the reasoning of the Division Bench of the High Court which rejected this contention of the appellant Board. Point No. 2 is, therefore answered in the negative against the appellant and in favour of theis obvious that if the building is an old one the present cost of erecting such building would necessarily require further consideration as to what would be the depreciated value of such a building, if a new building is erected at the time of assessment. Such cost, obviously, has to be sliced down by giving due weight to the depreciation so as to make estimation of present cost of the new building to ultimately become equal to the erection cost of the building concerned in its depreciated state. Consequently, it cannot be said that 10 per cent depreciation allowed by the District Magistrate and as confirmed by the High Court on the total estimated cost of the building for bringing it within the assessable tax net of house tax was an exercise which was ultra vires provisions of the Act or beyond the jurisdiction of the assessing authority. On the facts governing the case, it is seen that the railway station belonging to the respondent, was as old as 1905, there may be other buildings within the complex which might have seen the light of the day years before the time of assessment. Naturally, they would not be new buildings which could have said to have been put up only at the time of assessment proceedings. They were obviously old buildings. It is not the case of the appellant or any of them that these buildings were new buildings recently constructed when assessment proceedings were initiated. Consequently, a flat rate of 10 per cent depreciation as granted by the District Magistrate while computing the annual value for house tax purposes, in the present case, cannot said to be an unauthorised exercise. The third point for determination, therefore, has to be answered in the affirmative against the appellant and in favour of theis obvious that the aforesaid order insofar as the interim stay deals with the right of the appellant Board to imposeon all the buildings situated within the "common compound" of the respondent is concerned, now there will remain no occasion for the appellant Board to grant any restitution to the respondent so far as recovery offor the relevant time in dispute is concerned. It will also be open to the appellant Board to press for payment of reconvey ofwhich has remained unpaid by the respondent for the relevant year subject to assessment of all buildings as separate units of taxation. However, as the appellant fails on the question of levy of house tax as decided against it while answering point No. 2, so far as house tax levy is concerned, it will abide by the result of this appeal which is partly decided against the appellant and will be assessed accordingly for the relevant years.