Rateable value assessment cannot include notional income from a refundable security deposit, and land valuation may be redone.

Rateable value for land and building may be reassessed afresh where the original valuation is not sustainable on the evidence; the market value of land and the cost of construction can both be reconsidered, with the owner allowed to prove actual construction cost and valuation material such as CPWD rates used only as a guideline. A refundable security deposit is distinct from rent, and absent evidence that rent was depressed or the deposit was a rent substitute, no notional addition for presumed interest or income from the deposit can be made for rateable value purposes.

---

---

Issues: (i) whether the assessment of rateable value in respect of the land and building required fresh valuation, including reconsideration of the market value of land and the cost of construction; (ii) whether any amount could be added to the rent on the basis of interest or presumed income from the security deposit.

Issue (i): whether the assessment of rateable value in respect of the land and building required fresh valuation, including reconsideration of the market value of land and the cost of construction.

Analysis: The valuation of land had to be made afresh in the light of the applicable guidelines and the earlier assessment could not be sustained on the material then on record. Since the matter was being remanded for reconsideration of the land value, the cost of construction was also directed to be determined afresh. The owner was permitted to adduce evidence of actual construction cost, while the assessing authority could rely on appropriate material, including CPWD rates only as a guideline.

Conclusion: The determination of the land value and building cost was set aside and remitted for fresh assessment.

Issue (ii): whether any amount could be added to the rent on the basis of interest or presumed income from the security deposit.

Analysis: A refundable security deposit is distinct from rent. In the absence of evidence that the rent was depressed or that the deposit was taken as a substitute for rent, no presumption could be made that the landlord earned an amount equivalent to interest which formed part of the rent. The assessing authority had no basis to treat such presumed income as part of the rent receipt for rateable value purposes.

Conclusion: The addition made on account of the security deposit was held impermissible.

Final Conclusion: The assessment was reopened for fresh valuation of the property, but the notional addition based on the security deposit was disapproved.

Ratio Decidendi: For fixation of rateable value, a refundable security deposit cannot ordinarily be treated as part of rent, and land and construction values may be reassessed afresh where the original valuation is not sustainable on the evidence.

---