JUDGMENT
Vijender Jain, J.
(1) This petition has been filed by the petitioner aggrieved by the order passed by Addl. District Judge on 31st March, 1995. The petitioner was allotted commercial building cite measuring 2,438.10 sq. mts. by Dda for construction of twelve storied building. The plot of land was lying vacant from 1989 till 1993. The total consideration which was paid by the petitioner to the Dda for purchase of the plot of land on perpetual leasehold basis was Rs. 25,33,69,689.00 plus two and a half percent annual ground rent.
(2) Mr. Rohtagi, learned Counsel for the petitioner has contended that the impugned judgment of the learned Addl. District Judge as well as that of Assessing Authority is not in consonance with Section 116(2) of Delhi Municipal Corporation Act. He has further contended that the total amount paid by the petitioner to the Dda would not constitute the “estimated capital value” in terms of Sub-section (2) of Section 116 of Dmc Act. He has further contended that a contiguous plot of land measuring 295.08 sq.mts. at the same site was allotted by the Dda at the rate of Rs. 21,000.00 per sq. mtr. and 295.08 sq.mts. at the same site was allotted by the Dda at the rate of Rs. 21,000.00 per sq. mtr. invited the attention of this Court to Annexure ‘E’ of the writ petition. This rate works out to be lower and than the rate for the plot in question. Yet another contention has been raised by Mr. Rohtagi that the Central Government issued notified rates of different localities in Delhi and taking into consideration any of the above parameters, the order of the Assessing Authority ought to have been set aside by the learned Additional District Judge. He has further contended that no material whatsoever has been taken into consideration by the learned Addl. District Judge while deciding the appeal. Mr. Rohtagi has vehemently contended that the estimated capital value of the land, which has been paid by the petitioner to the Dda included consideration for construction of twelve stories on the plot in question and it was not the cost of land. In substance what Mr. Rohtagi has contended is that capital value is to be arrived at after taking into consideration the cost of the land and land alone. In support of his contention he had cited , Dr. Balbir Singh and Others v. Mcd and Others, and on the basis of Dr. Balbir Singh’s case, Mr. Rohtagi has contended that the legislative intention in enacting Sub-section 1 of Section 116 as well as Sub-section 2 of Section 116 was to determine the annual value of the property. In the case of former it was land and building and in relation to the later, it was vacant land: Mr. Rohtagi has also contended that the valuation of the assessment on the basis of estimated capital value in the absence of any formula given under the Act has to be on the basis of Contractor’s method and in his support has cited Godhara Borough Municipality v. Godhara Electricity Co. Ltd., . On the basis of these averments Mr. Rohtagi has contended that the findings arrived at by learned Addl. District Judge that the amount in question, which was paid by the petitioner amounting to Rs. 25,33,69,689.00 as market value of the land in question was bad.
(3) Mr. Madhu Tewatia, learned Counsel for the respondents has vehemently argued that the estimated market value can be nothing but the cost which the petitioner has incurred in getting perpetual lease-deed executed in its favour. She has further contended that the price of the land depends on how much ‘FAR’ is allowed and if the petitioner is allowed to construct twelve storied building, on account of such an Far, the price of the land would be higher. If the petitioner would have been allowed to construct four storied building, then the premium on the land would have been much lesser. Learned Counsel for the respondent has contended that the amenities, facilities, Far have direct bearing on the cost of the land and these are basic ingredients and petitioner cannot be allowed to say at this stage that the cost of the land was different than what has been paid by the petitioner to the Dda, taking into consideration the Far of the land and the land use. Ms. Tewatia has cited in her support Division Bench Judgment of this Court reported in 1995 Vol. Iii Apex Decision (Delhi) 1109 Delhi Urban House owner’s Welfare Association and Others v. Union of India and Others. She has contended from Abbots Dictionary the meaning of ‘Capital’ as “estimated value of a business, property etc.” and has contended that for all intent and purposes the amount paid by the petitioner would be the estimated capital value and has stoutly defended the impugned order. In support of her contention she has further cited K. Posayya and Others v. Special Tahsildar, .
(4) I have given my careful consideration to the arguments advanced by learned Counsel for both the parties. The provision of the statute which require adjudication is Section 16 of Delhi Municipal Corporation Act, which is as follows : “116.Determination of rateable value of lands and buildings assessable to property taxes- (1) The rateable value of any lands or building assessable to property taxes be the annual rent at which such land or building might reasonably be expected to let from year to year less- (a) a sum equal to ten percent of the said annual rent which shall be in lieu of all allowances for costs of repairs and insurance, and other expenses, if any, necessary to maintain the land or building in a state to command that rent, and (b) the water tax or the scavenging tax or both, if the rent is inclusive of either or both of the said taxes; Provided that if the rent is inclusive of charges for water supplied by measurement, then, for the purpose of this section, the rent shall be treated as inclusive of water tax on rateable value and the deduction of the water tax shall be made as provided therein; Provided further that in respect of any land or building the standard rent of which has been fixed under the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952), the rateable value thereof shall not exceed the annual amount of the standard rent so fixed. (Explanation.-The expression “water tax” and “scavenging tax” shall mean such taxes of that nature as may be levied by an appropriate authority.) (2) The rateable value of any land which is not built upon but is capable of being built upon and of any land on which a building is in process of erection shall be fixed at five percent of estimated capital value of such land.”
(5) The controversy which has arisen is in relation to the computation of the rateable value on the expression as it occurs in Sub-section (2) of the Act “estimated capital value”. The estimated capital value has not been defined under the Act. Even Determination of Rateable Value Bye-laws, 1994 does not define the estimated capital value. From the precedents quoted before this Court, the method of arriving at and determining capital value is as per Godhara Municipality’s case (supra), where the Supreme Court approved the method of determining capital value by Contractors’ method, which is as follows: “Rule 4 of Godhara Municipal Rules, shows what properties are to be valued on the capital basis. What the capital basis is, is not defined. The capital value however can be determined in the way laid down in Gordhandar’s case by adopting the contractor’s method. What that method is, has been explained in Ryde on Rating (Eleventh Edition) Chapter 20.In R. v. School Board for London, (1885) 55 Ljmc 33 on appeal (1886) 17 Qbd 733 Cave, J. applied the contractor’s test to schools. Ryde points out that it was tacitly recognised as applicable in various other cases. The principle on which the contractor’s basis rests are given by the Author at page 439 and the method of its application is given at page 442. The learned author notes that in “applying the contractor’s basis it is possible to discern five stages. The first stage is the estimation of the cost of construction of the building.” There is a difference of view as to whether it is better to take the cost of replacing the actual building as it is, or the cost of a substitute building on the same plan as the actual building but otherwise in an up-to-date form. The second stage is “to make deductions from the cost of construction to allow for age, obsolescence and any other factors necessary to arrive at the effective capital value”. The third stage is to estimate the cost of the land. The fourth stage is to apply the market rate or rates at which money can be borrowed or invested to the effective capital value of the building and the land. The fifth stage is to consider whether the result of the fourth stage really represents what the hypothetical tenant would pay for the annual tenancy on the statutory terms, and to make any adjustments necessary to ensure that no higher rent is fixed as the basis of assessments than that which it is believed, the owner would really be willing to pay for the occupation of the premises.”
(6) The contention of Ms. Tewatia that even taking into consideration the contractor’s method for calculating he estimated capital value, would be the third stage as per contractor’s method that is to estimate the cost of land. The Counsel for the respondent-MCD states that as in this case the total premium which was paid by the petitioner would be the cost of the land and according to the contractor’s method that will be the estimated capital value on which tax has been levied as per law by the respondent.
(7) Ryde on Rating while discussing the contractor’s method in its book at page 519 has summed up in the following words: “The third stage is to estimate the cost of the land. The principle of “rebus sic stantibus” demands that the land be valued as if limited to its exiting use.
(8) In any event of the matter the contractor’s method is a method to determine th e annual value of land, building, public utilities etc. Ryde on Rating in applying the contractor’s method has stated that there are five stages, which were incorporated in Godhara Municipality’s case (supra). Therefore, what the learned Counsel for the respondent has suggested that one has to look at the third stage for determining the estimated capital value is not correct. The method has to go its full circle. Stages 4 and 5 as mentioned in Godhara Municipality’s case has to be undergone for arriving at and determining the estimated capital value. In the instant case, no such exercise has been done by the Assessing Authority. By applying contractors’ method for arriving at capital value, the annual value may go higher or lower. What is of paramount importance is when the statute has provided a different nomenclature for arriving at annual value in relation to vacant land nothing has been brought on record to show as to how the Assessing Authority has calculated the capital value except for the consideration which the petitioner has paid to the respondent, which includes consideration for the price of land and in addition to the said price, something more. That element of something more has to be excluded by the Assessing Authority so as to arrive at the capital value. Learned Counsel for the respondent has also contended that the Division Bench in 1995 Vol. Ill Apex Decision (Delhi) 1109, Delhi Urban House owners’ Welfare Association and Others v. Union of India and 0thers (supra), has held that the capital value will be determined on the basis of the market value or the investment made by the petitioner. In my considered opinion in Delhi Urban House owners’ Welfare Association and Others 1995 Apex Decision (supra). The question which was for determination before the Court was the constitutional validity of the building bye-laws and not the issue relating to capital value. Even otherwise, there is no discussion in the aforesaid judgment on contractor’s method as discussed in the Godhara Municipality’s case (supra) by the Apex Court.
(9) In view of the above observations, I set aside the order of learned Addl. District Judge as well as of the Assessing Authority, I direct the Assessing Authority to determine afresh in the light of the principles enunciated in Godhara Municipality’s case by the Apex Court the annual rateable value of the vacant land and, thereafter, assess the tax in accordance with law. In the circumstances of the case, no orders as to costs.
