Delhi High Court
South Delhi Municipal ... vs M/S National Rifle Association Of ... on 24 September, 2019
$~A-17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 24.09.2019
+ W.P.(C) 9301/2018
SOUTH DELHI MUNICIPAL CORPORATION..... Petitioner
Through Ms.Biji Rajesh, Adv. for Mr.Gaurang
Kanth, Adv.
versus
M/S NATIONAL RIFLE ASSOCIATION OF INDIA..... Respondent
Through Ms.Maity, Adv.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
1. This Writ Petition is filed by the petitioner/South Delhi Municipal
Corporation seeking to impugn the order dated 24.11.2017 passed by the
Municipal Taxation Tribunal.
2. The case of the petitioner is that the respondent is a registered society
under the Registration of Society Act XXI of 1860 and is the owner of the
property 51-B Tughlakabad Industrial Area, New Delhi. In the said property
the respondent‟s headquarter building has been constructed. Respondent
took possession of the plot on 25.10.2002. Construction of the building was
completed on 11.2.2008. The property of the respondent is used as an office
building and no sports activity in the building has taken place. Hence, it is
pleaded that the respondent is liable to pay building tax w.e.f. 11.2.2008.
3. It is the case of the petitioner that on scrutiny of the property tax
returns filed it was noticed that respondent was using wrong use factor.
Notice on 17.6.2013 was issued under section 123-D of the DMC Act. The
Assessment order was passed in November 2013 whereby the building tax
W.P.(C)9301/2018 Page 1
was levied with use factor „4‟.
4. The respondents thereafter filed an appeal before the Municipal Tax
Tribunal for assessment years 2004-05 to 2012-13. By the impugned order
the Tribunal held that the respondent is covered under the category of
„public purpose organisation‟ and hence directed the assessing authority to
apply the use factor „2‟ and not use factor „4‟ while making the assessment.
5. I have heard learned counsel for the parties. Learned counsel for the
petitioner has vehemently argued that under the Delhi Municipal
Corporation (Property Taxes) Bye Laws 2004 under Rules 9(b)(ii) the
respondent is running an office building and hence the use factor of
„building‟ would apply.
6. Learned counsel appearing for the respondents have relied upon a
judgment of the Division Bench of this court in the case of Bar Council of
India vs. South Delhi Municipal Corporation & Ors., 2018(247) DLT 673
to contend that under similar circumstances this court had held that use
factor "1" will apply for the building itself.
7. The impugned order held as follows:-
"10. It is evident from the bare reading of this bye-law that any
society/institution set up for culture or sports, making no profit
and spending its income for the benefit of the public, etc. shall
be covered under this bye-law. The Assessing Authority
has/had no material before it to conclude that the Appellant is
not spending its income for the benefit of the public or sports.
Moreover, there is no material on record from which the
Assessing Authority could have concluded that the Appellant
is not a ‟public purpose institution'. The Assessing Authority
ought to have kept in mind that the land was 'allotted by the
DDA on concessional rate for public purpose institution and
that the building was allotted for raising the Headquarter
building by the appellant and that the appellant has been
W.P.(C)9301/2018 Page 2
granted exception by the Income Tax Department.
11. We are convinced that the Assessing Authority has
misinterpreted the objectives and the activities being carried
on by the Appellant society. We are, also, convinced that the
appellant is covered under the category of "public purpose
organization" as provided in Property-Tax bye-law 9(i)(ii).
The Assessing Authority ought to have applied Use Factor
(UF) "2" and not Use factor (UF) "4" while making the
assessment."
8. Reference may also be had to Rule 9(b) of the Delhi Municipal
Corporation (Property Taxes) Bye Laws 2004 which reads as follows:-
Rule 9(b)
"9. (b) "Business building" shall mean any Building or part thereof
used for transaction of business or for keeping of accounts and records
or for similar other purposes and such buildings shall include-
(i) Offices (other than offices of Central Government, State
Government and local bodies), banks, professional
establishments, court houses, and libraries for the
principal function of transaction of public business and
keeping of books and records;
(ii) Office buildings (premises) solely or principally used as
office or for office purpose; and
(iii) One and two star hotels, restaurants, lodges and guest houses.
Rule 9(i)(ii)
9(i) (ii) The purposes of public health, medical treatment, culture,
or sports, ensured or organized by Government institutions or
institutions wholly aided by the Government or the Corporation,
or any other public institution such as a society making no profit,
or a public charitable trust spending its income for the benefit of
public, or patients, or sports persons, or similar other persons,
charging them with a small or nominal fee and the fee being
charged not to exceed such amount as may be specified by the
Corporation from time to time as per laid down procedure,
provided that the income or profit, if any, of such an institution is
W.P.(C)9301/2018 Page 3
in total redeployed and ploughed back for its expansion or
improvement and no part thereof is in any way diverted for any
other purpose whatsoever,"
9. Hence, under Rule 9(i)(ii) public purpose includes institutions or any
public institution not making profit and spending its income for the benefit
of sports persons. Respondent National Rifle Association of India would fall
within the aforesaid parameters to apply the rule. Factually no dispute in this
regard has been raised. There is no ground to apply rule 9(b) and treat the
building as "Business Building".
10. In this context reference may be had to the judgment of the Division
Bench of this court in the case of Bar Council of India vs. South Delhi
Municipal Corporation (supra) where the court held as follows:-
"14. In the present case BCI is a statutory professional body
constituted under the Advocates Act, 1961. Its functions are set
out under Section 6 of the Act, a perusal of which makes it
evident that there is no scope for it to be considered a
commercial organisation or related to a commercial activity.
SDMC has erred in classifying the office building of BCI as a
"business building", subsequently attributing a Use Factor of 4,
the same rate as a commercial entity. However, the discharge of
BCI‟s statutory duty is not comparable to a commercial
activity; it is rather a social statutory activity performed for the
furtherance of the legal profession. It would be unfair to subject
the performance of such a duty to the same Use Factor as
compared to a commercial enterprise using their building for the
furtherance of their commercial and financial goals. An
assessment of property tax on the highest degree of Use Factor
substantially hinders and handicaps BCI's ability to perform its
statutory duties. As the function performed is for societal good,
all necessary steps must be taken to facilitate its ability to
discharge its duties. Therefore, for the purposes of conducting a
fair assessment of property tax, the petitioner must be assessed
on a Use Factor of 1 as is attributable to a public utility."
W.P.(C)9301/2018 Page 4
11. Hence, as per the aforesaid judgment the discharge of duties like that
being done by the respondent would not be a commercial activity. It would
rather be a social activity for building up of sports and for the welfare of
sportsman. Accordingly, it would fall within the aforenoted definition of
Rule 9(i)(ii). There is hence no infirmity in the impugned order which would
warrant this court interfering in the same.
12. Learned counsel for the respondent, at this stage, states that there is a
typographical error in the impugned order dated 24.11.2017 and that the use
factor directed as applicable is use factor 2 instead of use factor 4. It is
submitted that use factor of public purpose organisation is 1 and not 2. She
also submits that the same would follow on a perusal of the judgment of the
Division Bench in the case of Bar Council of India vs. South Delhi
Municipal Corporation (supra).
13. Learned counsel for the petitioner submits that for institutions covered
by public purpose organisation use factor would be 1.
14. Let the petitioners recalculate the property tax dues of the respondent
in terms of the impugned judgment read with the judgment of the Division
Bench Bar Council of India vs South Delhi Municipal Corporation
(supra). Petitioner will recalculate the property tax based on use factor 1.
15. Needful may be done within six weeks from today. After calculation,
steps will be taken as per law.
16. There is no merit in the present petition. Same is dismissed.
JAYANT NATH, J.
SEPTEMBER 24, 2019/n
W.P.(C)9301/2018 Page 5
