Municipal property tax valuation follows rent-control limits: standard rent caps assessment when fixed, otherwise agreed rent may govern.

For municipal property tax, annual value or rateable value is governed by the rent the premises may reasonably be expected to fetch, but that standard is controlled by rent law. Where standard rent has been fixed or is statutorily determined, assessment cannot exceed that ceiling because higher rent is not legally recoverable. Where no standard rent has been fixed, the legally recoverable agreed rent for let premises may be used, unless its genuineness is affected by factors such as fraud or collusion. For premises never let or first assessed, annual value must still be determined on the applicable statutory rent-control basis.

---

---

Issues: (i) Whether, for property tax purposes, the municipal authority is bound to cap annual value or rateable value by standard rent where standard rent has been fixed or is statutorily determined under the rent law. (ii) Whether, where standard rent has not been fixed or statutorily determined, the municipal authority may assess annual value on the basis of the actual agreed rent in the case of let premises. (iii) What basis governs fixation of annual value for premises never let or first assessed for the first time.

Issue (i): Whether, for property tax purposes, the municipal authority is bound to cap annual value or rateable value by standard rent where standard rent has been fixed or is statutorily determined under the rent law.

Analysis: The relevant municipal provisions fix annual value or rateable value by reference to the rent at which the premises might reasonably be expected to let. That expression must be read in the light of the rent control legislation in force. Where standard rent has been fixed by the Controller or is otherwise statutorily determined, rent above that limit is not legally recoverable and cannot be treated as reasonable letting value. The ceiling operates because a landlord cannot reasonably be expected to let at a rent prohibited by law.

Conclusion: Yes. The municipal assessment cannot exceed the standard rent where such rent has been fixed or statutorily determined.

Issue (ii): Whether, where standard rent has not been fixed or statutorily determined, the municipal authority may assess annual value on the basis of the actual agreed rent in the case of let premises.

Analysis: The Delhi Rent Control Act permits recovery of contractual rent until standard rent is fixed. In such a situation, the agreed rent is legally recoverable and represents the rent the premises may reasonably be expected to fetch from a tenant. The statutory ceiling based on standard rent does not arise until standard rent is fixed or is otherwise deemed fixed by the statute. Accordingly, for let premises where no such fixation or statutory determination exists, actual agreed rent is a proper basis, save where the rent is tainted by fraud, collusion, emergency, relationship or similar factors affecting genuineness.

Conclusion: Yes. In the absence of fixation or statutory determination of standard rent, the municipal authority may proceed on the basis of the agreed rent if it is legally recoverable.

Issue (iii): What basis governs fixation of annual value for premises never let or first assessed for the first time.

Analysis: For premises not let, never let, or first brought to assessment, the annual value must still be determined by reference to the rent-control standards. Where the premises fall within categories for which the statute itself prescribes standard rent, that statutory basis applies; failing that, the Controller would proceed on the reasonable cost of construction and market value of land, or on the principles for reasonable rent in the rent-control statute.

Conclusion: The annual value for such premises must be determined on the statutory rent-control basis applicable to the premises.

Final Conclusion: The municipal authorities were entitled to assess the premises on the basis of agreed rent in cases where standard rent had neither been fixed nor statutorily determined, and the contrary view of the single judge was rejected on the principal issue.

Ratio Decidendi: For municipal taxation, the phrase denoting rent at which premises may reasonably be expected to let is controlled by the rent law: standard rent forms an absolute ceiling only when it has been fixed or statutorily determined, while legally recoverable agreed rent may be used where no such fixation exists.

---