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TMI Blog1998 (8) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3 of the Delhi Rent Control Act, 1958. These provide that nothing in the said Act shall apply (c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees ; or (d) to any premises constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period of ten years from the date of completion of such construction . On the said provisions coming into force the appellants received notices under Section 126 of the Delhi Municipal Corporation Act for the assessment year 1988-89 and for subsequent years proposing to revise the rateable value of their properties. The footnote to these notices stated that this was in view of the amendments to the Delhi Rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expressions water tax and scavenging tax shall mean such taxes of that nature as may be levied by an appropriate authority.] (2).............. (3).............. To determine the quantum of property tax, therefore, it is necessary to arrive at the rateable value of the land or building. Under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reasonableness. Equally it would be incongruous to consider fixation of rent beyond the limits fixed by penal legislation as reasonable. Under the Rent Control Act, the receipt of any rent higher than the standard rent fixed under the Act is made penal for the landlord. Therefore, where there is legislation fixing the standard rent of the premises, the rent at which the premises could be reasonably expected to be let cannot exceed the statutory ceiling. But where there is no between a willing lessor and willing lessee uninfluenced by any extraneous circumstances, affords a good test of reasonableness. The same principle was reiterated by this Court in Dewan Daulat Rai Kapoor and Ors. v. New Delhi Municipal committee and ors. (198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation, the annual rent received by the landlord is what a willing lessee, uninfluenced by other circumstances, would pay to willing lessor. Hence, actual annual rent, in these circumstances, can be taken as the annual rateable value of the property for the assessment of property tax. The municipal corporation is, therefore, entitled to revise the rateable value of the properties which have been freed from rent control on the basis of annual rent actually received unless the owner satisfies the municipal corporation that there are other considerations which have affected the quantum of rent. It was then submitted on behalf of the appellants that if the annual rent actually received is taken as the basis for determining the rateable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and character of the legislation or its pith and substance. If the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorised field. The Court analysed the provisions of the said Act and observed that in every case the actual profit derived from the property would not necessarily be its annual value. it is possible to conceive of cases in which the property to be taxed does not actually yield any income whatsoever, though every property must have some notional annual value. The method of arriving at the quantum of tax should not be mixed up with the nature of the tax itself. The essential character of the tax was property tax and not a tax on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a tax on land. It is thus well settled that an Act of the State legislature entitling a municipal corporation to levy property tax on the basis of rateable value of land and building calculated by the yardstick of annual rent at which such property can reasonably be leased to a hypothetical lessee, is valid and within its legislative competence. The tax remains property tax and cannot be viewed as a tax on income. (See also Bhagwan Dass Jain v. Union of India and Ors. (1981 [2] SCC 135, Assistant commissioner of Urban Land Tax and Ors. v. The Buckingham and Carnatic Co. Ltd., etc. (1970 [1] SCR 268), and India Cement Ltd. and ors. v. State of Tamil Nadu and ors. (1990 [1] SCC 12). Looking to the charging section of the Delhi Municip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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