Split verdict on BMC’s property tax calculation

Dalamal Towers Vs BMC Row Passes Onto Third Judge

Swati Deshpande TNN 

Mumbai: A decade after the dispute reached court, it is yet to be decided if the BMC can fix property tax based on steep market rents.    The Bombay high court on Friday pronounced a split verdict on an appeal by the Brihanmumbai Municipal Corporation (BMC). The civic body said from April 2000, under the Maharashtra Rent Control Act, which replaced the old Bombay Rent Control Act of 1947, it was empowered to reassess properties on the basis of steep market rents payable by individual occupants exempted under the rent law.    While giving out a verdict, Justice D K Deshmukh and Justice R G Ketkar differed in their views and arrived at separate conclusions in the case of the BMC versus Dalamal Towers at Backbay Reclamation in south Mumbai.    The battle began when the civic body reassessed the rateable value of a 15-storey commercial building, which has 199 self-occupied premises, 75 leased units and 116 open car park slots at Rs 1.74 crore for 2000-01. The property tax is almost 100-150% of the rateable value.    Senior judge Justice Deshmukh held that “the BMC was not justified in reassessing rateable value of a property on the basis of market rents”. He upheld the society counsel Milind Sathe’s contention that a Supreme Court ruling in Kamla Mills case that the BMC could fix rateable value only on the basis of standard rent payable under the rent law.    But Justice Ketkar thought otherwise. He upheld the BMC counsel K K Singhvi’s stand of determining rateable value based on the individual occupant and the rent paid.    Justice Deshmukh also said the BMC itself recognized the “Maharashtra government lessee Dalamal & Son Investment Co” as the property tax payer and not an individual occupant of the building.    The arguments will now be passed on to a third judge who will decide on the matter. The third judge will have to decide “going by the Maharashtra Rent Control Act, whether the BMC is justified in taking into consideration the actual amount of rent received or recoverable by a landlord in relation to flats or premises, which are let out but where the lease with effect from April 2000 is exempted from provision of standard rent”.    The BMC stand will lead to an “absurd, scary, inequitable and unmanageable” situation, Dalamal Tower residents say, as a housing or commercial society will be assessed differently for separate categories of occupants in the same building. In Dalamal Tower, three categories of occupants—self occupied, protected tenants (paid standard rent) and non-protected tenants (paid market rent)—stayed.    The split verdict means that the issue that had south Mumbai holding its breath for a verdict, will have to wait even longer. The dispute has a chequered history. In 2002, the HC asked the BMC to reassess the property and in 2004, after the BMC put up a tax tab of Rs 4.28 crore for 2000-04 to Dalamal, a single judge held against the BMC. The matter went to the apex court and was remanded in the HC again.