Municipal Corporation Of Delhi vs Lawrence Cold Storage Pvt. Ltd. ...
2002 Latest Caselaw 1311 Del

JUDGMENT

C.K. Mahajan, J.

1. This is a bunch of petitions being taken up together as common question of law arises in all these petitions.

2. These petitions filed by the MCD are directed against the order of the Addl. District Judge holding that the cost of insulations, racks and containers could not be added to the cost of construction of the building for determination of the rateable value of the cold storage as they formed a part of the expression "plant & machinery" in terms of Section 116(3) of the Delhi Municipal Corporation Act (for short "the DMC Act"). The learned Addl. District Judge also held that the registration charges could not be added to the cost of construction of the building for determining the rateable value of the property in question.

3. Counsel for the MCD conceded that registration charges could not be added in light of the judgment of the Supreme Court in Godhara Borough Municipality (Godhara) v. Godhara Electricity Co. Ltd. .

4. She, however, contended that insulations, racks and containers did not fall within the definition of plant and machinery but were fixtures and a part of the building and were thus rightly assessed and included in the ratable value. She further urged that the respondents were not entitled to vacancy remission as no notice as envisaged under Section 166 of the DMC Act was served in writing to the Commissioner.

5. In support of the first contention that insulations, racks and containers were not a part of "plant and machinery", counsel placed reliance on various provisions of the Act and rules and in particular Sections 114, 2(3), 2(38) and 2(34) to contend that insulations, racks and containers were a part of the building/structure and not plant and machinery. She also urged that property tax was leviable on land and building and on a co-joint reading of the various provisions of the Act and in particular Sections 2(3), 2(24) and 2(38), building included fittings and fixtures affixed to the building and accordingly insulations, racks and containers were assessable as part of the cost of construction and no notification was required as envisaged by Section 116(3) of the DMC Act. Provisions of Section 123 of the DMC Act envisage that property tax due under the Act in respect of any land or building shall be a first charge. Land within the meaning of Section 2(24) does not mean a piece of land, pure and simple. It is wide enough to embrace within its fold all the benefits arising out of the land and things attached and fastened to the earth. In the circumstances, the insulations, racks and containers form a part of the premises and therefore attract levy of property tax. They cannot be equated to plant and machinery as is sought to be contended by the respondents. The impugned order is not sustainable.

6. She also urged that Section 116(3) of the DMC Act would have no application. Reliance was also place don Bharat Petroleum Corporation Ltd. v. Municipal Corporation of Delhi , United Tax Operators Cooperative (Urban) Thrift & Credit Society Ltd. and Anr. v. Municipal Corporation of Delhi reported in 1966 (2) DLT 281, Municipal Corporation of Delhi v. Pragati Builders and N.R.D.C. of India and Anr. , New Manak Chowk Spinning & Weaving Mills Company Limited and Ors. v. Municipal Corporation of the City of Ahmedabad and Ors. reported in (1967) 2 SCR 687, Poona Municipal Corporation v. Shankar Ramakrishna Jabade reported in (1957) 60 BLR 25, Haji Dawood v. Municipal Corporation reported in AIR 1922 Bom 386, Hindustan Lever v. Municipal Corporation of Greater Bombay , Ajay Enterprises Limited v. Municipal Corporation of Delhi reported in 1998 III AD (Delhi) 89.

7. Learned counsel for the respondent refuted both the contentions.

8. He urged that insofar as vacancy remission is concerned, in case of first assessment, no notice was required to be given. Land was never let out and there is thus a presumption under Section 116(2) that land was never let out and no notice of vacancy remission was necessary. Section 164 has no application. Assessing the respondent under Section 116(2) at 5% was justified on the presumption that land was vacant. At the most, the respondent could be asked to file an affidavit.

9. Insofar as insulations, rack and containers are concerned, they did not form a part of the building but were covered under the expression "plant" and in the absence of a notification under Section 116(3) with prior approval of the Standing Committee, the same could not be taken into account for purposes of calculating the ratable value. They were exempt under Section 116(3) of the DMC Act. The Addl. District Judge had rightly concluded that these items were distinguished from building and fell under the definition of "plant", even though they formed an integral part of the building fixed to earth and for the beneficial enjoyment of the property. Plant cannot be part of the fittings and fixtures.

10. Counsel for the respondent/assessed relied upon a decision of the Punjab & Haryana High Court in Commissioner of Income Tax, Patiala II v. Yamuna Cold Storage and Commissioner of Income Tax, Lucknow v. Kanodia Cold Storage and contends that even though insulation, racks and containers etc. are made of wood, metal or other material and may be attached to the earth or permanently fastened to anything attached to earth are not fittings and are provided for the better enjoyment of the building itself are not relevant while deciding the question of applicability of the exemption provision contained in Section 116(3) of the DMC Act as the same are plant and/or machinery. In the aforesaid decisions, it was held that thermocole insulation would be covered by the definition of plant.

11. He further contended that in terms of the provisions of the DMC Act and the opening sentence of Section 114 clearly states that whatever exemption, if any, granted by further provisions of the Act, the same would not be added for rating purposes. In the present case in the absence of any notification by the Commissioner all plant and machinery in the property even though fixed to the earth and forming a part and parcel of the property, embeded and/or mounted on concrete foundation for the better enjoyment of the building itself, increasing its utility to become its integral part could not be added for rating purposes. Whether the plant is embeded to a building or becomes an integral part it has no relevance in deciding the applicability of the exemption provisions.

12. Reliance was placed upon a judgment of the Madras High Court in Commissioner of Income Tax, Madras v. Jagadeeschandran & Company reported in (1970) 75 ITR 1097 which followed the decision of Lindley L.J. in Yarmouth v. France.

13. Reliance was placed on a judgment of the Allahabad High Court in Commissioner of Income Tax Lucknow v. Kanodia Cold Storage reported in (100) 1975 ITR 185, Hindustan Lever v. Municipal Corporation of Greater Bombay (supra) and Gas Authority of India Ltd. v. Municipal Corporation of Delhi 1999 (78) DLT 584 where a Division Bench of this Court while considering the provisions of Section 116(3) of the DMC Act and after referring to Yarmouth v. France reported in 1987 (19) QBD 647, Jarrold v. John Good & Sons 1963 (1) All E.R. 141 and Indland Revenue v. Barclay Curcle (1969) 1 All E.R. 732 applied the functional test and held a Dry dock to be a plant.

14. The crucial questions that arise are whether insulations, racks and containers are plant and machinery and are to be excluded in calculating the rateable value and whether respondents are entitled to vacancy remission.

15. Section 2(3) of the DMC Act defines "building" as under:-

"building means a house, out-house, stable, latrine, urinal, shed, hut, wall (other than a boundary wall) or any other structure, whether of masonry, bricks, wood, mud, metal or other material but does not include any portable shelter."

Sections 2(24), 2(38), 114, 116(3) and 123 of the DMC Act are extracted hereunder :-

2(24) - "land" includes benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by law over any street."

2(38) "premises" means any land or building or part of a building and includes-

(a) the garden, ground and out-houses, if any, appertaining to a building or part of a building; and

(b) any fittings affixed to a building or part of a building for the more beneficial enjoyment thereof;

1114. COMPONENTS and rates of property taxes.- (1) Save as otherwise provided in this Act, the property taxes shall be levied on lands and buildings in Delhi and shall consist of the following, namely-

xxxxx

(d) a general tax-

(i) Of not less than ten and not more than thirty per cent, of the rateable value of lands and buildings within the urban areas, and

(ii) on lands and buildings within the rural area at such lower rates and with effect from such date as may be determined by the Corporation:

Provided that the Corporation may, when fixing the rate at which the general tax shall be levied during any year, determine that the rate leviable in respect of lands and buildings or portions of lands and buildings in which any particular class or trade or business is carried on shall be higher than the rate determined in respect of other lands and buildings or portions of other lands and buildings by an amount not exceeding one-half of the rate so fixed:

Provided further that the general tax may be levied on a graduated scale, if the Corporation so determines.

Explanation.- Where any portion of a land or building is liable to a higher rate of the general tax such portion shall be deemed to be a separate property for the purpose of municipal taxation.

(2) The Corporation may exempt from the general tax lands and buildings of which the rateable value does not exceed one hundred rupees.

116. Determination of rateable value of lands and buildings assessable to property taxes.-

(1) xxxxx

(2) xxxxx

(3) All plant and machinery contained or situate in or upon any land or building and belonging to any of the classes specified from time to time by public notice by the Commissioner with the approval of the Standing Committee, shall be deemed to form part of such land or building for the purpose of determining the rateable value thereof under Sub-section (1) but save as aforesaid no account shall be taken of the value of any plant or machinery contained or situated in or upon any such land or building.

123. Property taxes a first charge on premises on which they are assessed.- Property taxes due under this Act in respect of any land or building shall, subject to the prior payment of the land revenue, if any, due to the Government thereon, be a first charge-

(a) in the case of any land or building held immediately from the Government, upon the interest in such land or building of the person liable for such taxes and upon the goods and other movable properties, if any, found within or upon such land or building and belonging to such person; and

(b) in the case of any other land or building, upon such land or building and upon the goods and other movable properties, if any, found within or upon such land or building and belonging to the person liable for such taxes.

xxxxx

16. Section 114 of the Act empowers the petitioner to impose property tax on lands and buildings in Delhi. Section 114(1) is a saving provision and creates on exception and encompasses within its ambit application of Section 116(3) independent of provisions of Section 114. Section 114(1) opens as under:

"Save as otherwise provided in this Act, the property tax shall be levied on buildings in Delhi...."

17. Thus an exemption provided under the Act would be excluded from rating purposes.

18. Section 116 deals with procedural part to quantify the ratable value. Plant and machinery are not to be included in cost of construction for determining the ratable value unless there is a notification with the approval of the Standing Committee. Admittedly, there is no such notification.

19. What is exigible to tax under the DMC Act is land or building. General tax shall be levied on all buildings and lands under the DMC Act and machinery is provided under relevant provisions of the Act and rules to fix the rateable value. Therefore, except those exempted under Section 116(3) of the DMC Act, which provides that plant and machinery contained in or situated upon land and building shall not be included in the rateable value of the such land and building. Question is whether insulations, racks and containers are building and land. Building is defined in the Act. Building is defined in the Oxford English Dictionary to mean: "that what is built, structure, edifice, structure of a nature of a house built where it is to stand". Websters Dictionary defines building as "an edifice for any use ; that which is built, as a dwelling house, barn, etc. (2) the occupation, business or art of constructing. (3) The Act or process of erecting or establishing." Stroud's legal dictionary has defined building - "What is a building must always be a question of degree and circumstance, its ordinary and usual meaning is, a block of brick and stone work covered in by a roof". Ordinary and natural meaning of word "building" includes fabric and the ground on which it stands. The Supreme Court in D.C. Gouse & Co. v. State of Kerala held the word "building" to mean : "that what is built, a structure, edifice"

20. It is thus clear that insulation, racks and containers must be a structure designed for habitation, storage, within four corners of the walls built with masonary or otherwise. The definition is inclusive and brings within its ambit house, outhouse, stable, shed, hut and every other structure, whether of masonary, bricks, wood, mud, metal or any other material whatsoever. Racks, insulations and conditions do not answer any of the aforesaid particulars. Are they structures in their legal perspective? The Court has to consider the meaning of the word "structure" in light of legislative intent to fix the rateable value under the Act. The test of construction in conformity with statutory requirement is not a conclusive test though a relevant one. Definition of building being inclusive, meaning of the word "structure" must be understood in that context. Structure must be an entity by itself, although not necessarily a building in itself adopted to the particular purpose it serves. The insulation, racks and containers are functional parts of a cold storage plant. It is not a building nor is it analogous to a building.

21. Are the containers and insulations "land"? Definition of land is inclusive definition - land what is capable of being built upon or is built upon or covered with water, benefits to arise out of land; things attached to the earth permanently or permanently fastened to anything attached to the earth, etc. It is not the intention of the Legislature to impose tax on plant and machinery in the garb of land. The DMC Act excludes plant and machinery and there is no reason why this Court should accept decisions as to what was comprehended by the term land. Deeming provision may extend the meaning of a word, but when the language is clear no such extension by way of interpretation is possible. The provisions of DMC Act on the face of it goes to show that land was not meant to include plant/machinery. Language of DMC Act is different to that of the Bombay Act. Machinery is altogether excluded from consideration of rateable value in the Bombay Act. It is not go in the DMC Act for any class of plant and machinery specified from time to time by public notice to be part of the such land and building for purposes of determining the rateable value. So long as no public notice as issued, plant and machinery are not exigible.

22. Plant is not defined in the Act. Though difficult of precise definition, plant is an ordinary English word which has received judicial consideration on a number of occasions.

23. The word 'plant' has to be understood in a sense as it is understood in common parlance. It was so held by the Supreme Court in CIT Andhra Pradesh v. Taj Mahal Hotel, Secundrabad while considering the scope of the word "plant":-

"Where a word is not defined in a statute, it must be construed in its popular sense, i.e., that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it. The word 'includes' is generally used to enlarge the meaning of words or phrases used in the statute so that, words and phrases may be construed as comprehending not only such things as they signify according to their nature and import, but also these things which the interpretation clause declares that they shall include. The fact that even books have been included in 'plant' shows that the meaning given to 'plant' shows that the meaning given to 'plant' is wide. It should cover sanitary and pipe-line fittings".

In S.P. Jain v. Krishna Mohan Gupta , the Supreme Court held that law should take a pragmatic view of the matter and respond to the purpose for which it is made and also take cognizance of the current capabilities of technology and life style of the community.

24. The definition of plant was given by Lord Justice Lindley in Yarmouth v. France 1987 (19) QBD 647 wherein it was held:-

"There is no definition of plant in the Act; but, in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business, not his stock-in-trade which he buys or makes for sale, but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business."

25. The Court in the said decision held that a horse was a plant. The definition was adopted in a number of latter decisions including a decision of the House of Lords and followed by Courts in India where it has been held that functional test is to be applied to determine whether the aparatus, machinery/ structure are used as an integral part of the trade and business of the assessed and as a part of the and business of the assessed and as a part of the apparatus for carrying out the business. In Jarrold v. John Good & Sons (1963) 1 All.E.R. 141, the Court of Appeal held the partitions as 'plant' on the basis that the same served as a part of the building in which tax payers' business was carried on. The decision of Lord Lindley in Yarmouth v. France (supra) was followed by the House of Lords in Inland Revenue v. Barclay Curcle (1969) 1 All E.R. 732 holding dry dock to be a plant by applying the functional test being an integral part of the business of the appellant. The functional test was applied by the English Courts in Cooke v. Beach Stations Caravans Ltd. (1974) 3 All.E.R. 159 and it was held that part of the apparatus used by the tax payer company for carrying on its business was a plant. A Division Bench of this Court in Commissioner of Income Tax, Delhi-I v. National Air Products Ltd. held that the relevant test to be applied to hold whether an article would be a plant or not is that does it fulfill the function of a plant in the assessed's trading activity or in other words is it a tool of tax payer's trade. If that be so, then it would fall in the definition of 'plant'. The decision was followed by the same Division Bench in R.C. Chemical Industries v. Commissioner of Income Tax, New Delhi . It was held in The Commissioner of Income Tax Andhra Pradesh v. Taj Mahal Hotel, Secunderabad, , while following Yarmouth v. France that the definition of the word 'plant' must be construed in its popular sense and popular sense means "the sense which people conversant with the subject matter with which the statute is dealing would attribute to it". Sanitary fittings and pipelines installed in a hotel were held to be a plant. It was the functional test which was applied by the Supreme Court. The apex Court held that it was not necessary for the pipeline to be a 'plant' that the same must be within the factory or plant, it need not be confined to the factory itself. The Supreme Court in Scientific Engineering House (P) Ltd. v. Commissioner of Income Tax, Andhra Pradesh, , while applying the functional test, held that the drawings, designs, chars, etc. taken collectively would have to be treated as a book and would fall within the definition of plant.

26. In Commissioner of Income Tax, Patiala-II v. Yamuna Cold Storage (supra), the Court considered the definition of 'plant' in Section 43(3) of the Income Tax Act, 1961 as being inclusive and did not exclude things normally included in it. Section 43(3) of the Income Tax Act, 1961 gives an inclusive definition of plant in the following words:-

"'Plant' includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of business and profession."

27. The Court held that the world 'plant' includes within its ambit buildings and equipment used for manufacturing purpose. Where a building with insulated walls is used as a freezing chamber, though it is not machinery or part thereof, it was a part of the air-conditioning plant of the cold storage and thus entitled to depreciation.

28. The DMC Act has to be read as a whole and not in isolation. The opening sentence of Section 114 of the DMC Act clearly states that whatever exemption, if any, is granted by other provisions of the Act, those things would not be added for rating purposes and in the present case in the absence of any notification by the Commissioner, all plant and machinery in the property even though affixed to earth and forming part and parcel of the property, embedded and/or mounted on concrete foundation for the better enjoyment of the building itself, increasing its utility to become its integral part, cannot be added for rating purposes and that the plant and machinery gets embedded to a building or becomes integral part of it has no relevance while deciding the applicability of the exemption provisions, which,in the present case, is Section 116(3) of the DMC Act. The Supreme court in the matter of Hindustan Lever Ltd. Municipal Corporation of Greater Bombay while considering Section 154(2) of Bombay Municipal Corporation Act held that the cost of airconditioning and false ceiling could be taken into account while assessing the rateable value on cost basis even though the same was embedded and mounted on concrete foundation to become its integral part for purposes of better enjoyment of the building. Sub-section (2) of Section 154 of the Bombay Municipal Corporation, 1888 reads as under:-

"(1) x x x x x

(2) The value of any machinery contained or situate in or upon any building or land shall not be included in the rateable value of such building or land."

29. The provisions of Section 154(2) of the Bombay Act are in para materia with Section 116(3) of the DMC Act and the provisions of the DMC Act are wider and include the 'plant and machinery'.

30. The legislature thus intended to give an extended meaning which go beyond of what is conveyed by it in common parlance. It did not intend to exclude from its ambit things which would normally be included in it. If the Legislature has power to levy tax on land and building, I don't see how the same can be levied on plant and machinery contained in or situate on the building even though the plant and machinery is there for use of the building for a particular purpose. Insulation, racks and containers are a part of the entire set up for functioning of the cold storage. They are used to maintain appropriate temperature and it would be impossible to run the cold storage without them. They are an integral part of the cold storage for the purposes of the respondent's business.

31. Applying the functional test, as applied in the above-mentioned cases the insulation, racks and containers will have to be treated as a plant contained in or situated upon the land. Holding the insulation, racks and containers as a plant, until such a plant is specified by a public notice by the Commissioner, with the approval of the Standing Committee, as envisaged in Sub-section (3) of Section 116 of the DMC Act, the same shall not be deemed to be forming a part of such land for the purpose of determining the ratable value thereof. In other words, insulation, racks and containers to be wholly excluded while determining the ratable value of the land and as such there is no question of having issued any notice to the petitioner for the proposes of determining the ratable value of the insulation, racks and containers, namely, the plant.

32. In Commissioner of Income Tax Lucknow v. Kanodia Cold Storage reported in (100) 1975 ITR 185, while dealing with whether freezing chamber containing insulation material constitute "plant" within the meaning of Section 43(3) of the Income Tax Act, 1961, it was held that the Legislature intended to give "plant" an extended meaning which went even beyond that conveyed by it in common parlance.

33. Viewed in this light, building in question would be a part of the "plant" used for airconditioning the assessed's cold storage and thus assessed is entitled to succeed.

34. The decisions relied upon in Municipal Corporation of Delhi v. Pragati Builders and N.R.D.C. of India and Anr. (supra), Bharat Petroleum Corporation Ltd. v. Municipal Corporation of Delhi (supra), Municipal Corporation of Greater Bombay v. Indian Oil Corporation , Poona Municipal Corporation v. Shankar Ramkrishna Jabade (1968) 60 BLR 25 and Haji Dawood v. Municipal Commissioner (supra) do not lend any support to the petitioner's case. The impact of provisions of Section 116 of the DMC Act or the provisions of Section 154(2) of the DMC Act were not considered by the Courts in these decisions. Thus the decisions are distinguishable.

35. Though learned counsel for the petitioner placed reliance on C.I.T. Patiala v. Yamuna Cold Storage which followed the decision in Commissioner of Income Tax, Lucknow v. Kanodia Cold Storage , these decisions in fact support the case of the respondent.

Moreover, the question whether plant and machinery is or is not to be added for purposes of determining ratable value within the meaning of the word 'land' came up for consideration before a Constitution Bench of the Supreme Court in New Manek Chowk Spg. & Wvg. Mills Co. Ltd. etc. v. Municipal Corporation of the City of Ahmedabad where after considering the definition of land in the Bombay Provincial Municipal Corporation Act in Section 2(30), which is more or less the same as in Section 2(24) of the DMC Act and is reported hereunder:-

"2(30) "land" includes which is being built upon or is built upon or covered with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over any street."

the Supreme Court held that:-

"It will, therefore, be noticed that the rateability of plant and machinery depended on judicial decisions as to meaning of the word "land". There is no reason why we should accept those decisions as to what was comprehended by the term "land" when we find in our statutes plant and machinery being excluded there from".

36. On a parity of reasoning, the meaning of the words 'building' and 'premises' would not include plant and machinery as in Section 116(3) plant and machinery have been specifically excluded there from in the absence of a notification issued by the MCD with the approval of the Standing Committee.

37. Having come to the conclusion that the insulations, racks and containers fall in the definition of 'plant', Section 116(3) comes into operation and insulation, racks and containers could not be added/include in the cost of construction for determining the ratable value as there is no notification issued by the respondent with the approval of the Standing Committee under Section

116(3) of the DMC Act. The Addl. District Judge rightly set aside the impugned assessment order and remanded the matter back to the Assessing Authority with directions to reassess the ratable value of the property in question.

38. Vacancy remission is allowed under the DMC Act as per Sections 164 to 167. Sections 164 to 167 of the DMC Act are set out hereunder:-

"164. Remission, or refund of tax.- (1) If any building together with land appurtenant thereto has remained vacant and unproductive of rent for sixty or more consecutive days, the Commissioner shall remit or refund, as the case may be, two-thirds of such portion of the general tax assessed on the rateable value thereof, as may be proportionate to the number of days during which the said building together with the land appurtenant thereto has remained vacant and unproductive of rent.

(2) If any land, not being land appurtenant to a building, has remained vacant and unproductivity of rent for sixty or more consecutive days, the Commissioner shall remit or refund, as the case may be, one-half of such portion of rateable value thereof, as may be proportionate to the number of days during which the said land has remained vacant and unproductive of rent.

165. Power to require entry in assessment list of details of buildings.- (1) For the purpose of obtaining a partial remission or refund of tax, the owner of a building composed of separate tenements may request the Commissioner, at the time of the assessment of the building, to enter in the assessment list, in addition to the rateable value of the whole building, a note regarding any detail of the rateable value of each separate tenement.

(2) When any tenement, the rateable value of which has been thus separately recorded has remained vacant and unproductive of rent for six or more consecutive days, such portion of any tax assessed on the rateable value of the whole building shall be remitted or refunded as would have been remitted or refunded if the tenement had been separately assessed.

166. Notice to be given of the circumstances in which remission or refund is claimed. - No remission or refund under Section 164 or Section 165 shall be made unless notice in writing of the fact that land, building or tenement has become vacant and unproductive of rent has been given to the Commissioner, and no remission or refund shall take effect in respect of any period commencing more than fifteen days before delivery of such notice.

167. What buildings are to be deemed vacant.- (1) For the purposes of Sections 164 and 165, no land, building or tenement shall be deemed vacant if maintained as a pleasure resort or town or country house or be deemed unproductive of rent if let to a tenant who has a continuing right of occupation thereof, whether he is in actual occupation or not.

(2) The burden of proving the facts entitling any person to claim relief under Section 163, or Section 164, or Section 165, shall be upon him.

39. Section 116(2) of the DMC Act provides that rateable value of land which is not built up but is capable of being built upon and on any land on which a building is in the process of erection shall be fixed as 5% of the estimated capital value. Therefore, the rateable value of land which is not built upon and/or is in the process of erection is nothing but a vacant land inasmuch as if it is not a vacant land or is let out then the same will be assessed under Section 116(1) of the DMC Act. In terms of Section 116(1) of the DMC Act, rateable value has to be determined on the expectation of letting whereas under Section 116(2) it has to be assessed at 5% of the estimated capital value. In the present case, the assessment has been made by the MCD with regard to land @ 5% of the estimated capital value and it is thus deemed to be vacant and therefore no notice of vacancy is necessary.

40. The MCD had considered this question whether in a property which is or the first time being assessed, whether a notice under Section 166 of the DMC Act was necessary or not. Departmental instruction Policy No. 9 dated 9.7.1980 was published by the MCD which is reproduced hereunder:-

"Claim of vacancy remission in case of first assessment - Whether notice necessary or not

In terms of Section 166 of the DMC Act, 1957 no remission or refund of property taxes can be made unless notice in writing of the fact that the building has become vacant and unproductive of rent has been given to the Commissioner and no remission or refund shall take effect in respect of any period commencing more than 15 days before delivery of such notice.

A question has arisen whether vacancy remission is admissible in the case of a building which was fit for occupation at an earlier date, but was actually let out much later or say after 60 days. In other words whether vacancy remission should be allowed for the period the building remained vacant and unproductive of rent prior to its first letting.

The matter has been carefully examined. Under the provisions of Section 129 of the DMC Act, the assessment is to be framed from the date of completion or date of occupation whichever first occurs. However, in the case of a building which is assessed as vacant in the first instance, necessary vacancy remission should be allowed as provided under Section 164 of the DMC Act.

A further question has arisen whether Vacancy Notice is necessary in such cases as required under Section 166 of the DMC Act. The legal position is required only in those cases where properties were previously on rent and subsequently became vacant and unproductive of rent. In other cases notice under Section 166 of the DMC Act is not required. It is, therefore, implied that for the building which were initially assessed as vacant, no vacancy notice is necessary.

Since it may not be possible in such cases for the present field staff to verify the exact position from site, it would be proper if the assessed claiming such vacancy remission is asked to file an affidavit on a non-judicial stamp paper of Rs. 2/- to the effect that the property remained vacant and unproductive of rent during the period for which such a claim is being made."

41. In the present cases, the assessment order of the assessing authority was the first assessment of the property and therefore, the learned Addl. District Judge rightly allowed the vacancy remission on the rateable value of the plot till such time the property was complete and occupied.

Accordingly, the petitions are dismissed.