Judgment:
B.N. Kirpal, J.
(1) The challenge in this petition is to the order of the Additional District Judge, Delhi who had allowed the appeal filed by the respondents-owners challenging the fixation of rateable value of the house owned by them.
(2) Respondents I and 2 are owners of house No. 65/1, New Rohtak Road, New Delhi. According to the said respondents they had purchased the said plot by virtue of a sale deed dated 17/11/1976. Construction of a house on the said plot was commenced in the year 1978 and the same was completed in September, 1978. A part of the house was given on rent to State Bank of India and in the rest of the house the said owners resided.
(3) The case of the petitioner is that with effect from 1st September, J978 rateable value of the said house was determined at Rs. 1,12,130.00. This rateable value was not objected to. Subsequently public notice was issued for the year 1984-85 and the said rateable value was maintained despite objections having been filed by the respondents-owners. According to the respondents- owners the rateable value of the premises in question should have been fixed at Rs. 34,960.00 on the basis that the value of the land was Rs. 1,50,000.00 and a sum of rupees three lacs had been spent on constructing the house thereon. For subsequent years the rateable value was proposed to be enhanced by the petitioner-corporation to Rs. 1,26,330.00.
(4) In respect of the assessment year 1984-85, for which the rateable value had been fixed by the Assessor and Collector at Rs. 1,12,130.00, the respondents owners filed an appeal to the Additional District Judge under Section 169 of the Delhi Municipal Corporation Act. By order dated 29/5/1985 the said appeal was allowed. It was observed by the Additional District Judge that the five year period of first letting of a portion of the house had come to an end and, thereforee, the rateable value could not have been fixed on the earlier basis where the rent which was being received had been taken into consideration. The Additional District Judge then proceeded to compute the rateable value. He took into consideration the value of the plot of land purchased in 1976 at Rs. 1,50,000.00 and to that he added the cost of construction of rupees 3 lacs. He then arrived at a figure of Rs. 34,960. The assessment which had been made was set-aside and the rateable value was then fixed by the impugned order at Rs. 34,960.00.
(5) It is the aforesaid order the Additional District Judge which is in challenge in this Court in this petition under Article 226 of the constitution. it was sought to be contendted on behalf of the petitioner that Additional District Judge was of the opinion that the assessment had not been correctly made then the assessment order should have been set-aude and the case remanded. According to the learned counsel there were no particulars given showing that the cost of construction was only rupees three lacs. Furthermore, it is submitted, that the cost of land as in 1976 could not have been the basis because the market price of land which had to be taken into consideration had to be in the year in which the construction commenced.
(6) In my opinion, the submission on behalf of the petitioner is correct. The Supreme Court in the cases of Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee, : [1980]122ITR700(SC) and Dr. Balbir Singh and others v. M.C.D. and others, : [1985]152ITR388(SC) has held that the rateable value cannot exceed the standard rent of the premises in question. It has also been observed that the standard rent has to be determined according to the provisions of Section 6 of the Delhi Rent Control Act. With regard to the premises a portion where of is in self-occupation, it is the provisions of Sub-section (1) of Section 6 which will be applicable while with regard to the premises which have been let out on rent it is the provisions of Sub-section (2) of Section 6 which would have to be applied for a period of five years of the first letng. In the present case, a portion of the house in question was let out to State Bank of India. thereforee, the rent which was received by the owners from State Bank of India was deemed to be the standard rent by virtue of the provisions of Sub-section (2) of Section 6. This was for a period of five years only. As such for a period of 5 years the actual rent received had to be taken into consideration in determining the standard rent. After the period of 5 years elapsed, the portion which was in occupation of the tenant had also to be computed by applying the provisions of Sab-saction (1) of Section 6 and not Sub-section (2) of Section 6. The Additional District Judge was, thereforee, correct is coming to the conclusion that in respect of the year 1984-85 the five year period when the premises had first bean let out had come to an ead and, thereforee, the assessment to tax had to be made by ignoring the actual rent which was received, if that rent was more than the standard rent determinable under Sub-section (1) of Section 6.
(7) Where the Additional District Judge fell in error was that he is assumed that the actual cost of land which was paid at Rs. 1,50,000.00 had necessarily to be the market price of land which had to be taken in computing the standard rent of the house in question. Section 6(1)(3) pf the Rent Control Act categorically states that in computing the standard rent the market price of land has to be taken to be the time when construction begins. The Additional District Judge has found in the present case that the construction commenced in the year 1978. thereforee, the market price of land which should have been taken into consideration in the present case had to be as in the year 1978 when the construction commenced. This aspect was over-looked by the Additional District Judge. It may be that in the year 1978 the market price of land in question may not have exceeded Rs. 1,50,000.00 nevertheless, the market price of land as in 1978 had to be determined in the present case, Secondly, in determining the cost of construction the Additional District Judge has based his conclusion on the valuation report which was submitted before him. The learned counsel for the petitione,r rightly contends that no such report was submitted before the assessing authority. That being so, there was no opportunity given to the petitioner-herein to rebut the correctness of the same. It was for the respondents to have adduced evidence before the assessing authority with regard to the cost of construction. The Additional District Judge, thereforee, ought not to have taken it in evidence before him for the first time and the better course open would have been to set aside the assessment order and send back the case for fresh deternaiaation.
(8) There is no doubt that the assessment order is not correct. This is for the reason that the period of 5 years of first letting of portion of the house to State Bank of India had come to an end and, thereforee, the rateable value had to be computed afresh by the Assessor & Collector by applying the provisions of Sub-section (1) of Section 6 of the Rent Control Act .and the principles enunciated by the Supreme Court in the aforesaid cases. The Additional District Judge also fell in error in seeking to determine the rateable value himself whereas the better course would have been to set-aside the order of assessment and remanded the case to the Assessor & Collector.
(9) I, thereforee, allow the writ petition and quash that part of the order of the Additional District Judge where he has determined the rateable value of the property in question. I also quash the order-of assessment dated 26/6/1984 and direct the Assessor & Collector to recompute the rateable value of the property in question after giving a fresh notice to the owners.
(10) As no one has appeared on behalf of the respondents, the petitioner will bear its own costs.