Prakash Narain, J.
(1) This petition under Articles 226 and 227 of the Constitution of India is directed against the imposition of house-tax by the New Delhi Municipal Committee on a building known as 'Kanchenjunga' in plot No. 18, Barakhamba Road, New Delhi, under the provisions of the Punjab Municipal Act, 1911 as applicable to New Delhi for the year April 1, 1973 to March 31, 1974.
(2) The petitioners are a partnership firm and its partners, who, in collaboration with certain others claim to be engaged in the business of development and construction of multi-storeyed buildings. They have constructed and developed a multi-storeyed building known as Kanchenjunga located as aforesaid. The petitioners are also owners of an area measuring 1023 sq. ft. on the 10th floor of this building. It is admitted that the said building is situate within the jurisdiction of the New Delhi Municipal Committee. The petitioners on construction of the building applied for a completion certificate in the form given in Schedule Ii in accordance with the provisions of the aforesaid Act and the bye-laws made there under. This completion certificate was not issued until July 21, 1973 when only an occupation certificate was issued by the Committee. On January 18, 1973, however, the Committee issued a notice to the petitioners under section 65 of the Act staling that in compliance with its resolution No. 137(975) dated December 29, 1972 the annual value for the purposes of house-tax in respect of the said area owned by the petitioners was proposed to be assessed at Rs. 24,552. The petitioners filed objections to the assessment, inter alia, raising the objection that the building was not complete or fit for occupation. The Committee by its resolution No. 39 dated March 8, 1973 resolved that the said building was complete and as such house-tax was chargeable for the year next ensuring, viz., April 1, 1973 to March 31, 1974. The petitioner thereupon filed an appeal to the Deputy Commissioner, Delhi, as provided by Section 84 of the Act and contended :-
(A)that the building as it stood on April 1, 1973 did not fall within the definition of 'building' contained in Section 3(2) of the Act;
(B)the building was not complete or fit for occupation on April 1, 1973 inasmuch as water and electricity connections and sewage arrangements had not been made and also lifts could not be worked to reach the 10th floor. It was further pleaded that till a completion certificate was issued or an occupation certificate granted, the building could not be regarded fit for occupation ;
(E)that non-issue of completion certificate or occupation certificate resulted in a prohibition for the building to be occupied and so, it did not attract the incidence of house-tax;
(D)that as the building was incomplete the annual value as defined by Section 3 of the Act could not be fixed in respect of the area owned by the petitioners; and that, in any case, assessment of the annual value was unreasonable, arbitrary and highly exaggerated.
The appeal filed by the petitioners was heard by an Additional District Magistrate who rejected all the contentions raised by the petitioner but upheld the contention regarding the quantum of assessment. He remanded the case back to the N.D.M.C. for fresh assessment in accordance with the provisions of law. This order is challenged on various grounds, which will be noticed hereafter. The petitioners, thereforee, contend that a writ of certiorari or any other appropriate writ, order or direction be issued quashing the order of the Additional District Magistrate dated May 30, 1975 and the New Delhi Municipal Committee be restrained from recovering any house-tax for the year 1973-74.
(3) In the return filed on behalf of the New Delhi Municipal Committee it is pleaded that the petition is not competent as disputed questions of fact are involved, that the premises are assessable as the same are covered by the definition of the word 'building' as given in Section 3 of the said Act, that the absence of the completion certificate cannot be availed of by the assessed for non-payment of house-tax, that if the petitioners' premises remained unproductive of rent they can claim a rebate in accordance with the provisions of the Act but cannot question the assessment, that the petitioners have not challenged Resolution No. 39 dated March 8, 1973 passed by the Committee and so, that has become final and binding, that no case has been made out striking down the assessment, and that the assessment was on the lesser side than the market rent and so, no case is made out for interference. The propositions of law pleaded by the petitioners are disputed.
(4) Section 61 of the Punjab Municipal Act enumerates the taxes which may be imposed by a Municipal Committee covered by the said Act. Section 62 lays down the procedure to impose the taxes. Section 63 to Section 68 lay down the procedure for assessing immoveable properties for payment of what is commonly known as house-tax. The first step to be taken is that the Committee shall cause an assessment A list of all buildings and land on which any tax is imposed to be prepared containing the particulars set out therein. When the assessment list has been completed the Committee is required under section 64 to give public notice thereof and indicate the place where the list or a copy thereof may be inspected. Every person claiming to be either owner or occupier of property included in the list, has liberty to inspect the same. Section 65 speaks of public notice of time fixed for revising assessment list and contemplates objections to the valuation proposed. Section 66 lays down that the list will be settled after hearing objections. Section 67 allows amendment of the list adopted or settled by inserting the name of any person or property left out of the list in certain circumstances. It is under these provisions that the petitioners' property is sought to be taxed.
(5) Section 3(1) defines 'annual value' and reads as under :-
'annual value' means-
(A) in the case of land, the gross annual rent at which it may reasonably be expected to let from year to year: Provided that, in the case of land assessed to land-revenue
Or of which the land-revenue has been wholly or in part released, compounded for, redeemed or assigned, the annual value, shall if the (State) Government so direct be deemed to be double the aggregate of the following amounts, namely :-
(I) the amount of the land-revenue for the time being assessed on the land, whether such assessment is livable or not; or when the land-revenue has been wholly or in part compounded for or redeemed, the amount which, but for such composition or redemption, would have been leviable; and
(II)when the improvement of the land due to canal irrigation has been excluded from account in assessing the land-revenue, the amount of owner's rate or water advantage rate, or other rate imposed in respect of such improvement :
(b) in the case of any house or building, the gross annual
Rent at which such house or building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year, subject to the following deductions :-
(I) such deduction not exceeding 20 per cent of the gross annual rent as the committee in each particular case may consider a reasonable allowance on account of the furniture let therewith;
(II)a deduction of 10 per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. The deduction under this sub-clause shall be calculated on the balance of the gross annual rent after the deduction (if any) under sub-clause (i);
(III)where land is let with a building, such deduction, not exceeding 20 per cent of the gross annual rent, as the committee in each particular case may consider reasonable on account of the actual expenditure, if any annual incurred by the owner on the upkeep of the land in a state to command such gross annual rent:
ExplanationN1.-For the purposes of this clause it is immaterial whether the house or building, and the furniture and the land let for use or enjoyment therewith, are let by the same contract or by different contracts, and if by different contracts, whether such contracts are made simultaneously or at different times.
ExplanationNII.-The term 'gross annual rent' shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by the tenant.
(C)in the case of any house or building, the gross annual rent of which cannot be determined under clause (b), 5 per cent, on the sum obtained by adding the estimated present cost of erecting the building, less such amount as the committee may deem reasonable to be deducted on account of depreciation (if any) to the estimated market value of the site and any land attached to the house or building:
Provided that- (i) in the calculation of the annual value of any premises no account shall be taken of any machinery thereon;
'(II) when a building is occupied by the owner under such exceptional circumstances as to render a valuation at 5 per cent, on the cost of erecting the building, less depreciation, excessive, a lower percentage may be taken.'
(6) Section 3(2) defines the word 'building' which reads as under:-
'(2)'building' means any shop, house, hut, out-house, shed or stable, whether used for the purpose of human habitation or otherwise and whether of masonary, bricks, wood, mud, thatch, metal or any other material whatever; and includes a wall and a well.'
(7) Section 72 which speaks of remission of tax on unoccupied immoveable property reads as under :-
'72(1) When any property assessed to a tax under sub-clause (a) of clause (1) of Section 61], which is payable by the year or by Installments, has remained unoccupied and unproductive of rent throughout the year or the period in respect of which any Installment is payable, the committee shall remit the amount of the tax or of the Installment, as the case may be :
Provided that no such remission shall be granted unless notice in writing of the circumstances under which it is claimed has been given to the committee within the first month after the expiry of the period in respect of which it is so claimed.
(2)When any such property as aforesaid-
(A) has not been occupied or productive of rent for any period of not less than sixty consecutive days, or
(B)consists of separate tenements, one or more of which has or have not been occupied or productive of rent for any such period as aforesaid, or
(E)js wholly or in greater part demolished or destroyed by fire or otherwise, the committee may remit such portion (if any) of the tax or Installment as it may think equitable,
'(3)The burden of proving the facts entitling any person to claim relief under this section shall lie upon him.
(4)For the purposes of this section neither the presence of a care-taker nor the mere retention in an otherwise unoccupied dwelling house of the furniture habitually used in it shall constitute occupation of the house.
(5)For the purposes of this section a house shall be deemed to be productive of rent if let to a tenant who has a continuing right of occupation thereof, whether it is actually occupied by such tenant or not.'
(8) Sections 188, 189, 190 and 199 give the power to frame byelaws under which bye-laws have been framed. The only relevant byelaw is Bye-Law No. 10 and it is not in dispute that the same has statutory force. This bye-law reads as under :-
'10.No person shall occupy or allow any other person to occupy any new building or part of a new building for any purpose whatsoever until such building or part has been granted the completion certificate i.e. has been certified by an officer of the Committee authorised to give such certificates, to be in his opinion in every respect complete according to the sanctioned plans and fit for the use for which it is erected. Provided that the Committee may in exceptional cases allow temporary occupation of a building or a part of a building for a period to be specifically stated. Provided further that the Committee may in its discretion withdraw such a permission.
NOTE:-THEapplicant shall apply for the grant of completion certificate in the form given in Schedule Ii Form-A obtainable free from the New Delhi Municipal Committee Office after getting the signatures of Registered Architect on the application Form B obtainable free from New Delhi Municipal Committee office. The Committee shall decide and intimate to the applicant 'within 30 days of the receipt of the application whether the application for completion certificate is accepted or rejected. In case the application is accepted the completion certificate shall be issued in the form given in Schedule Ii provided the building is in accordance with the sanctioned plans.
INcase there are any deviations during the construction of the building, revised plan will be submitted and got approved before making an application for completion certificate.'
(9) Whenever assessment has to be made of a new building it cannot be disputed that tax is livable for the year next ensuing and that no tax can be levied for part of a year. This is the settled law on the construction of Section 67 of the Act as held in Municipal Corporation of Delhi v. Dr. Kundan Lal, (1973) 1 Delhi 35(1). Indeed, learned counsel appearing for the respondent does not dispute the proposition. So, unless it is held that the building in question attracted house-tax as on April 1. 1973 no tax would be livable for the year 1973-74 and the resolution of the N.D.M.C, or the decision of the Additional District Magistrate to the contrary would be wholly ultra virus and illegal.
(10) This brings me to the question as to what is the meaning of the term 'building' and whether the issue of completion certificate or occupation certificate on July 21, 1973 has any relevance to the tax sought to be imposed. Incidentally, in the context of the building being a multi-storeyed building it will have to be seen whether the absence of an electric or water connection would have any relevance to the assessment of the building for the purposes of house-tax.
(11) Mr, G. P. Pai appearing for the petitioners urges :--
(1)In the definition of the word 'building' the words used are: 'used for the purpose of human habitation or otherwise' which would show that it means capable of 'use whether actually used or not used for human habitation;
(2)The basis of fixing the annual value is rent realised or rent realisable;
(3)The issue of completion certificate is very relevant inasmuch under bye-law 10 there is a prohibition to use a building till at least an occupation certificate is issued;
(4)The scheme of the Act and particularly Section 72 shows that only such buildings are capable of being assessed which can be productive of rent as otherwise there was no sense in allowing a remission of tax where a building is unproductive of rent for a given period.
(12) In The Municipal Corporation of Greater Bombay v. M/s. Polychem Ltd., : 3SCR687 , the court was construing the provisions of the Bombay Municipal Corporation Act, 1888. It was observed that so long as a building is not completed or constructed to such an extent that at least a partial completion notice can be given so that the completed portion can be occupied and let, the land can, for the purpose of rating, be equated with or treated as vacant land. It is only when the building which is being put up is in such a state that it is actually and legally capable of occupation that the letting value of the building can enter into the computation for rating 'Rebus sic Stantibus'. Although, the definition of land, which is rateable, covers three kinds of 'land', yet, for the purposes of rating Section 154 recognises only two categories. thereforee, all 'land' must fall in one of these two categories for purposes of rating and not outside.
(13) The Supreme Court in making the above observations was really approving the decision of the Bombay High Court in M/s. Polychem Ltd. v. The Municipal Corporation of Greater Bombay, 1969(71) BLR 398(3) so far as it held that a building attracts levy only on being completed so as to be fit legally for occupation. The Bombay High Court's decision regarding sterility vis-a-vis land being liable to tax was not approved. But we are not concerned with that aspect. The respondent Committee, as long as the building is not complete may tax land if it can under the law but can tax the building only if it is complete in the legal sense of the word.
(14) It is contended by Mr. Nayyar appearing for the respondents that under Section 3(1)(c) assessment can be made even if the building is not complete. I do not agree. On a reading of proviso to Section 3(1)(c) it is clear that this provision is attracted where a building is otherwise fit for use cannot be assessed on the basis of annual rent, for example, when the building is occupied by the owner himself.
(15) I also cannot persuade myself to agree with the contention on behalf of the respondent that the word 'otherwise' in Sectiop 3(2) connotes a situation where a building may not be fit for human habitation. The word 'Otherwise' is used in contradistinction to the word 'use' for the purpose of human habitation. In other words, it may refer to buildings like cow-sheds, motor garrages and the like. This becomes clear because a wall and a well are also included in the definition of the term 'building'. Surely a well is not used for human habitation but before it can be assessable to tax it must be a well as commonly understood, namely, from where water can be drawn. I am doubtful if a hole dug in the earth which is dry can be called a well, even if it is made like well.
(16) To my mind the guiding factor has to be a building which is fit for being occupied, both factually and in law before it can attract the incidence of tax. The issue of completion certificate or an occupation certificate is certainly a guiding factor. I cannot however, agree that it is only after issue of occupation certificate or completion certificate that the incidence of tax is attracted. There have been cases and can be cases where a building is occupied even without taking a completion certificate. If that is the position it will certainly attract the incidence of tax because the very fact of occupation would establish that the building is fit for occupation. If, however, in a given case the building cannot be occupied unless a completion certificate or an occupation certificate is given then it will not attract the incidence of tax. By way of illustration one may take a multi-storeyed building like the one in the present case. If no electric connection or water connection or arrangement for sewage disposal is available till a completion certificate or an occupation certificate is given then it would not be possible for the building to be occupied, particularly on the 10th floor as in the case of the petitioner.
(17) I, thereforee, set aside the assessment made in respect of the petitioners' premises for the year 1973-74 as well as the impugned order of the Additional District Magistrate who upheld the assessibility of the building. The petitioners will be entitled to their costs. Counsel's fee Rs. 350.