Holding

The Supreme Court held that water‑tax may be imposed on all buildings in a common compound if any portion of the compound is within 600 feet of a water‑stand pipe; each building with its appurtenant land is a separate unit for house‑tax; and a flat 10 percent depreciation allowance is within the authority of the assessing body.

Summary

The Municipal Board of Saharanpur assessed house‑tax and water‑tax on a defunct railway company’s properties situated in a single complex with a "common compound". The Board treated all buildings as one unit for both taxes and allowed a 10% depreciation on the estimated cost of the buildings. The District Magistrate upheld the water‑tax exemption on the ground that the distance from the nearest water‑stand pipe exceeded 600 feet and confirmed the 10% depreciation. The Allahabad High Court held that water‑tax could be levied only on buildings within 600 feet, and that each building must be assessed separately for house‑tax. On appeal, the Supreme Court held that (i) water‑tax may be levied on all buildings in the common compound if any part of the compound lies within 600 feet of a water‑stand pipe; (ii) for house‑tax, each building with its appurtenant land is a separate unit and the complex cannot be treated as one unit; (iii) a flat 10% depreciation allowance is permissible and not ultra‑vires. Consequently, the appeal was partly allowed – the Board’s claim for water‑tax was upheld, but its claim for house‑tax and the objection to the depreciation were rejected.

Issues considered

Whether water‑tax can be levied on all buildings in a common compound when only part of the compound is within 600 feet of a water‑stand pipe.
Whether, for house‑tax under Section 128(1)(i) of the Uttar Pradesh Municipalities Act, all buildings in a common compound may be treated as a single unit.
Whether the 10 percent depreciation allowance on the estimated cost of buildings for house‑tax assessment is ultra vires the Act.

Legislation cited

Uttar Pradesh Municipalities Act, 1916s. 128(1)(i), s. 129, s. 14, s. 140(1)(a), s. 140(1)(b), s. 160, s. 2(2), s. 2(5)

Subjects

water taxhouse taxcommon compounddepreciationmunicipal taxationUttar Pradesh Municipalities Actassessment of propertyunit of taxbuilding tax

Judgment

A MUNICIPAL BOARD, SAHARANPUR
\(

SHA HD ARA (DELHI) SAHARANPUR LIGHT RAIL CO. LTD.

NOVEMBER 24, 1998

B [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]

U.P. Municipalities Act, I 9 I 6:

Ss.2(2), 2(5), 128(1) (i), 129, Explanation (a) and S.140(1) (a)-
-
C House tax and water tax-Several buildings situated in a complex having
"common compound"-Heldfor the purpose of water tax the term "common
compound" as found in S. I 29-Explanation (a) would cover all buildings
and the water stand pipe being within the prescribed distance from the
"common compound", the entire complex would be treated as one unit-As
regards house tax, all the buildings situated alongwith their appurtenant
D land in one "common compound" cannot be treated as one unit for imposing
house tax under S.128(1) (i); each building with land appurtenant to it
would be taxed as one unit-JO per cent depreciation allowed on total
estimated cost of buildings for bringing it within the assessable tax net of
house tax cannot be said to be ultra-vires the provisions of the Act or beyond
E the jurisdiction of assessing authority.

Words and Phrases;

Expressions "building", "compound" and "common compound" as
occurring in Ss. 2(2), 2(5), 128(1), and 129 Explanation (a) of U.P.
F Municipalities Act, 1916-Meaning of

The appellant-Municipal Board issued notice to the respondent-Railway
Company assessing its properties, situated in one complex, to house-tax and
water-tax. The annual value was determined with reference to clause(~) 'lf
sub-section (I) of S.140 of the Uttar Pradesh Municipalities Act, 1916
G treating all the buildings as one unit and all the land in the area as appurtenant
to the buildings. The appellate authority confirmed the order with regard trl
house-tax subject to the modification that the cost of the buildings for the
purpose of calculating annual value be reduced by 10 per cent by way of
depreciation allowance.

The Board was, however, found not entitled to levy water tax on the
H
120
MUNICIPAL BD. SAHARANPUR. I'. SHAHDARA {DELHI) SAHARANPUR LIGHT RAIL CO. LTD 121

complex as in the opinion of the appellate authority, the distance between the A
water stand point and the complex was more than 600 feet. Both the Board
as also the Company filed writ petitions before the High Court. Single Judge
held that lands of the company were within the radius of 600 feet from the
nearest water stand point; but all buildings should not be treated as one unit
and only those buildings which were within the radius of600 feet were liable B
to water-tax. As regards hause tax, it was held that all the buildings situated
in the "common compound" could not be treated as one unit in a "common

- compound" and had to be taxed separately by computing the annual letting
yalue of such buildings and their appurtenant land. The company filed two
special appeals whereas the Municipal Board filed a special cross appeal
challenging the order with regard to levy of water tax building wise. The C
Division Bench disposed of the appeals. Aggrieved, the Munici~rd filed
the present appeal.

It was contended for the appellant-Municipal Board that all the buildings
belonging to the respondent-Company and situated within the "common
compound" should be treated as one Unit for the purpose of water tax as also D
house tax; and that 10 per cent depreciation granted by the appellate authority
and confirmed by the High Court on total assessable value of the buildings
for the purpose of house-tax was ultra vires and beyond the scope of the Act.

Allowing the appeal in part, this Court.
E
HELD: 1. The Division Bench of the High Court erred in holding that
only those buildings of the respondent which were situated within the radius
of 600 feet from the nearest water stand pipe of the appellant could be
subjected to water tax. The term "common compound" as found in S.129
Explanation (a) of the Uttar Pradesh Municipalities Act, 1916 would cover F
all buildings situated within the land wherein the occupants of the buildings
have a common right of usage by way of passage to and fro or even otherwise
a right to commonly use the said land wherein the cluster of these buildings
is situated, especially when a part of the said common land was within a
radius of 600 feet from the nearest water stand pipe fixed by the appellant
Board. (127-A; 125-G( G
Municipal Board Saharanpur v. lmpe:-ial Tobacco of India ltd. & Anr.,
(1999) 1 sec. 566, relied on.

2.1. All the buildings situated along with their appurtenant land in one
"common compound" belonging to the same owner cannot be treated as one H
122 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A unit for the purpose of imposing house tax under Section 128(1) (i) of the•.
Act. (129-C)

2.2. On a conjoint reading of ss.128(1) (i) and 2(5) of the Act, it
becomes clear that before the appellant Board can impose house tax under
Section 140(1) (a) on any property situated within its municipal limits if it
B is a "building" the unit of tax would be the building concerned including its
compound wall, and the compound wall would also cover within it the land
situated in the said compound provided it is appurtenant to the building or
a "compound" appurtenant to the several buildings. It is, therefore, obvious
that ifthe "common Compound" in which the housing complex belonging to
C the common owner is situated is not an appurtenance to several buildings
within that complex, then the said land would be outside the sweep of the term
"building" nor can it be said to be a part and parcel of the buildings for the
purpose of house tax. (128-F-G)

2.3. It is pertinent to note that "common compound" which is relevant
D for the water-tax as per Section 129 of the Ac~ is conspicuously absent in
connection with imposition of house tax on the annual value of buildings or
lands or both as found in Section 128(1) (i). [129-D)

3.1. When appurtenant land is to be valued its valuation has to be made
as per its market value obtaining at the time of assessm;ent. But as regards
E the value of the building, the computation has to be made on the estimated
present cost of erecting the building. (130-D)

3.2. While estimating the present cost of erecting the building
concerned, the assessing authority has to keep in view in what state the
building is at the time of its assessment and what will be the cost of erecting
F a new building so as to result into erection of such an old building keeping
in view its life and wear and tear from which it has suffered since it was put
up. If the building is an old one the present cost of erecting such a building
would necessarily require further consideration to what would be the
depreciated value of such a building, if a new building is erected at the time
G
-
of assessment. Such cost, has to be sliced down by giving due weight to the
depreciation so as to make estimation of present cost of the new building to
ultimately become equal to the erection cost of the building concerned in its
depreciated state. [130-F-G)

3.3. The buildings belonging to the respondent-company were old
H buildings. It cannot be said that a flat rate of 10 per cent depreciation
MUNICIPAL BD. SAHARANPUR. I'. SHAHDARA (DELHI) SAHARANPUR LIGHT RAIL CO.LTD. (S.B. MAJMUDAR. J.j 123

allowed by the District Magistrate (appellate authority) and as confirmed by A
the High Court on the total estimated cost of the buildings for bringing it
within the assessable tax net of house tax was an exercise which was ultra
virus the provisions of the Act or beyond the jurisdiction of the assessing
authority. [130-H)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1219 of B
1976.

From the Judgment and Order dated 22.7.74 of the Allahabad High Court
in Special Appeal No 5384 of 1970.

Dinesh Kr. Garg for the Appellant. c
R.F. Nariman, Ravinder Narain, Ms. Monica Singal, Mrs. Deepa Rathor,
Ratnesh and T. Sridharan for the Respondent.

The Judgment of the Court was delivered by
D
' S.B. MAJMUDAR, J. Municipal Board, Saharanpur having obtained
the certificate of fitness to appeal to this Court under Article 133 of the
Constitution of India on 12th August, 1976, has filed this appeal. While
granting the certificate, the High Court has observed that the concept and
meaning of the words "common compound" used in the Uttar Pradesh
Municipalities Act, 1916 (hereinafter referred to as 'the Act') is required to E
be decided in this appeal. This appeal raises the same contentions which are
raised in the Companion Appeal being Civil Appeal No. 1218 of 1976 moved
by the very same appellant - Municipal Board, Saharanpur against Imperial
Tobacco of India Ltd. wherein the High Court has granted a similar certificate
of fitness. Even though the certificates are granted by the High Court on the p
common question in both these appeals and even though our decision of
even date in Civil Appeal No. 1218 of 1976 will govern the present controversy,
we deem it fit to highlight the facts particular to the present respondent and
the other questions which were canvassed by the learned counsel for the
respective parties before us in this appeal.
G
BACKGROUND FACTS:

The respondent railway company which has now become defunct, had
various immovable properties situated in one complex within the Saharanpur
town. The appellant Municipal Board, duly constituted under the Act, sought
to levy house tax and water tax in connection with the buildings and lands H
124 SUPREME COURT REPORTS (1998) SUPP. 3 S.C.R.

A of respondent railway company during the relevant years. The said taxes were
sought to be levied under Section 128(1)(i). The respondent Railway Co., ·
functioning since 1905, had several properties in a vast contiguous area
within the limits of the Municipal Board. They included the railway station,
a childrens park, a canteen, a dispensary, administrative offices, rest-houses,
out-houses, officers bungalows etc. The appellant Board issued a notice to
B the railway company in 1960, assessing the properties to tax on buildings and
also to water-tax. The appellant Board determined the annual value with
reference to clause (a) of Section 140 of the Act and in doing so it treated
all the buildings as one unit and all the land in the area as appurtenant to
the buildings. A number of objections were raised by the respondent Railway
,.., Company but they were rejected by the Executive Officer of the Municipal
Board. The Railway Company appealed against the order of the Executive
Officer to the District Magistrate under Section 160 of the Act. The District
Magistrate remanded the case back for proper calculation of the house tax
and directed that the general rate should not be applied to all the buildings
but the buildings should be divided in such a way as to arrive at a fair rate.
D The respondent company, on remand, had again submitted to the Executive
Officer that certain buildings and approach roads should be excluded in
calculating the area. It appears that there was some agreement between the
parties regarding the total area to be considered for the purpose of taxation.
But leaving aside that agreement, which no longer remains operative, several .
E objections on merits were raised by the respondent Railway Company, but
they were all negatived. In further appeal, the District Magistrate, confirmed
the order of the Executive Officer, subject to the modification that the cost
of the buildings for the purpose of calculating annual value be reduced by
10 per cent by way of depreciation ailowance. The tax on buildings was
accordingly fixed at Rs. 3,957.75 paise. As regards the water-tax, the Magistrate
F considered that the Municipal Board was not entitled to levy water-tax on the
Railway Company. This was on the basis that there was one hydrant within
600 feet from the railway area. But it appeared that between the hydrant and
the railway area there lay some area of the Northern Raiiway surrounded by
a wall. According to this interference therefore, the distance between the
G hydrant and the premises of the respondent was more than 600 feet in a zigzag
manner and hence the water-tax could not be levied on this complex.

Against the said order of the District Magistrate, the respondent railway·
company filed a Writ Petition being 3508 of 1965 in so far as it referred to
house tax while Writ Petition No. 3415 of 1965 was filed by the appellant
H Municipal Board urging that the Railway Company was liable to water-tax.
MUNICIPAL BD. SAHARANPUR. 1• SHAHDARA (DELHI) SAllARANPUR LIGHT RA1L CO.LTD. IS B MAJMUDAR. J.] 125

Both these writ petitions were heard together by a learned Single Judge of A
the Allahabad High Court, who took the view that the lands of the Railway
Company were within the radius of 600 feet from the nearest water-stand point
and hence they had to be considered for imposing water-tax on the buildings
of the respondent Railway Company situated in these lands. To thjlt extent,
the learned Single Judge set aside the reasoning and finding of the" District
Magistrate. However, the learned Single Judge took the view that so far as B
the levy of water-tax was concerned, only those buildings in the complex of
the respondent which were withi:l the radius of 600 feet were liable to pay
water-tax. It was also held that the assessment of water-tax had to be done
building-wise and all the buildings should not be treated as one unit for that
purpose. The assessment also had to be made as per Section 140 (a) of the C
Act. So far as levy of house tax was concerned, it was felt that all the
buildings situated in the "common compound" could not be treated as one
unit in a "common compound" and had to be taxed separately by computing
the annual letting value of such buildings and their appurtenants. Resultantly
both the writ petitions were partly allowed by the common order dated
27.2.1970. That gave rise to two special appeals moved by the respondent D
Railway Company being aggrieved by the common order of the learned Single
Judge, in so far as the same was party against the respondent on both the
writ petitions. While the appellant Board also filed a cross special appeal
being aggrieved by the decision of the learned Single Judge regarding water-
tax. All the three appeals were heard together and were disposed of by a E
common judgment by a Division Bench of the High Court of Judicature at
Allahabad dated 22nd July, 1974. Against the said decision, as noted earlier,
on the grant of certificate of fitness under Article 133 of the Constitution of
India, the present appeal is filed by the Board.

RIVAL CONTENTIONS: F

Shri D.K. Garg, learned counsel for the appellant Board submitted that
so far as levy of water-tax was concerned, the Division Bench of the High
Court had committed a patent error in taking the view that even if the water
stand pipe of the Board was at a distance of600 feet from one of the buildings G
of the respondent company situated in the same "common compound", all
other buildings situated in the very same "common compound" and belonging
to the same respondent could not be subjected to water-tax if such buildings
were more than 600 feet of radius from the nearest water stand pipe. He,
however, fairly stated that if it is held that all tliese buildings in the "common
compound" were liable to water-tax by assessing water-tax, Sections I 40(a) H
126 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A and l 40(b) of the Act as applicable at .relevant time had to be applied and
assessment had to be made on that basis. So far as the house tax was
concerned, it was submitted by Shri Garg in support of this appeal that all
the buildings situated within the "common compound" which belong to the
same owner respondent should be treated as one unit for the purpose of
assessing water-tax and house tax. It was next contended that in any case the
B 10 per cent depreciation granted by the District Magistrate and as confirmed
by the learned Single Judge and the Division Bench, on the total assessable
value of such buildings, for the purpose of house tax, was ultra vires and
beyond the scope of the Act and could not have been sustained by the
Division Bench. On the other hand, learned counsel for the Liquidator, who
C is now in-charge of the property of the respondent defunct private Railway
Company, which is in voluntary winding up, submitted that water-tax could
not be levied on all those buildings belonging to the respondent company
which were situated in the "common compound", if such buildings were
beyond the distance of 600 feet radius from the nearest water stand pipe and,
accordingly, the Division Bench of the High Court was right in taking this
D view. It was submitted that even assuming that for the levy of water-tax,
radius of 600 feet from th~ water stand pipe for one of the buildings may
attract the levy of water-tax for the entire complex. So far as the house tax
is concerned each individual house with appurtenant land was a unit by itself
and all such buildings cannot be treated as one unit as tried to be submitted
E by learned counsel for the appellant. He also submitted that the grant of I0
per cent depreciation of the assessment of annual letting value for the purpose
of levy of water tax and house tax on all these buildings was legal and valid.
We may mention that learned counsel for the appellant also submitted that
the special appeals were not maintainable against the decision of the learned
Single Judge. However, this contention cannot be countenanced for the
F simple reason that even the appellant, aggrieved by the order of the learned
Single Judge, has also filed a special appeal and had sought the decision of
the Division Bench of the High Court on merits. The Board's appeal was also
heard with the companion appeals of the respondent. Hence, this contention
which is self-destructive cannot be entrained. Even otherwise if such contention
G is entertained, it will not advance the case of the appellant, as the respondent
would be well entitled to bring in challenge the main order of the learned
Single Judge directly before us and the entire period till date will get excluded
under Section 14 of the Limitation Act, Thus, this technical contention cannot
.; ·.
be countenanced.

H In view of the aforesaid rival contentions on merits of the appeal, the
MUNICIPAL BD. SAHARANPUR. '· SHAHD. (DELHI) SAHAD. LIGHT RAIL CO. LTD. [S.B MAJUMDAR.J) \27

following points arise for our cons.ideration: A
(I) Whether the Division Bench of the High Court was right when it
held that only those buildings of the respondent, which were
situated within the radius of 600 feet from the nearest water
stand pipe of the appellant, could be subjected to water-tax.

(2) Whether for imposition of house tax, all the buildings of
B
respondent situated in the "common compound" and forming
part of one complex could be treated as one unit for imposing
house tax;

(3) Whether I 0 per cent depreciation allowed by the learned District C
Magistrate and as confirmed in the High Court both by learned
Single Judge and the Division Bench on the assessable annual
letting value of such buildings was justified in law; and

(4) What final order?

We will deal with these contentions seriatim. D
Point No. I:

So far as the contention concerning this point is concerned, by a
detailed Judgement in the companion Civil Appeal No.1218of1976 decided
today we have negatived this contention. For the reasons recorded therein, E
therefore, this contention fails. Point No. I is, therefore, answered in the
negative in favour of the appellant and against the respondent.

Point No. 2 :

So far as this contention of the appellant that all the buildings situated F
within the "common compound" belonging to the respondent Railway Company
should be treated as one· unit for the purpose of house tax is concerned, it
becomes necessary for us to have a look at the relevant statutory scheme.
Section 128 (I )(i) of the Act provides as under:

"128. Taxes which may be imposed- (1) Subject to any general rules G
or special orders of the State Government in this behalf, the taxes
which a municipality may impose in the whole or any part of a
municipality are-.

(i) a tax on the annual value of buildings or lands or of both."

In view of the aforesaid provision, therefore, it has to be held that the H
128 SUPREME COURT REPORTS (1998] SUPP. 3 S.C.R.

A appellant Board, subject to special orders of the State Government, is entitled
to impose tax on the annual value of buildings or lands or of both. It,
therefore, becomes clear that in the complex belonging to the respondent as
number of buildings are situated in the "common compound", house tax can
be levied by the appellant both on the buildings and also on the other open
land in which such buildings are situated. These open lands surrounding the
B buildings if not appurtenant to such buildings would be a separate subject
of house tax while buildings with their appurtenant land would form another
subject of house tax. Charge of house tax will settle on all these buildings and
lands not comprised in these building. This becomes clear if we view Section
2 sub-section (2) of the Act which defines "buildings". It reads as under:
c "(2) "Building" means a house, outhouse, stable, shed, hut or other
enclosure or structure whether of masonry bricks, wood, mud, metal or any
other material whatsoever, whether used as a human dwelling or otherwise,
and includes any verandah, platform, plinth, staircase, doorstep, wall including
compound wall other than a boundary wall of the garden or agricultural land
D not appurtenant to a house but does not include a tent or other such portable
temporary shelter."

The said definition has to be read with the definition of the term
"compound" under Section 2, sub-section (5). The said term reads as under:

E "5. "Compound" means land, whether enclosed or not, which is the
appurtenance of a building or the common appurtenance of several buildings".

On a conjoint reading of these provisions therefore, it becomes clear
that before the appellant Board can impose house tax under Section 140(a)
on any property situated within its municipal limits, if it is a ."building", the
F unit of tax would be the building concerned including its compound wall and
the compound wall would also cover within it the land situated in the said
compound, provided it is appurtenant to the building or a "compound"
appurtenant to the several buildings. It is, therefore, obvious that if the
"common compound" in which the housing complex belonging to the common
G owner is situated is not an appurtenance to several buildings within that
complex, then the said land cannot be said to be a part and parcel of the
building for the purpose of house tax. For imposing house tax on buildings
under Section 140(1 )(a) it has to be shown that the buildings with their
common appurtenant land or the land in common appurtenance to several
buildings situated nearby are available for imposing such a tax thereon. lt is
H only such appurtenant land which can form part of the buildings for attracting
MUNICIPAL BO. SAHARANPUR. '· SHAHD. (DELHI) SAHAD. LIGHT RAIL CO. LTD. [S.B. MAJUMDAR,J.] 129

, house tax assessment proceedings. But if the "common compound" in which A
· such buildings with appurtenant lands are situated also includes land which
cannot be said to be a common appurtenance to several buildings situated
therein or separately appurtenant to any given building, such land would be
outside the sweep of the term "building". Such land, however, on its own
could be legitimately made the subject matter of separate levy of house tax
as an independent unit being open land. As seen from Section J40(1)(b) itself B
as the Board can impose the tax on annual value of lands which may not be
covered by the sweep of the definition of the term "building". Once that
conclusion is reached, it becomes obvious that all the buildings situated
along with their appurtenant lands in one "common compound" belonging to
the same owner cannot be treated as one unit for the purpose of imposing C
house tax under Section 128 (I )(i). The reasoning of the High Court in this
connection cannot be found fault with on the scheme of the Act. It is
pertinent to note that "common compound" which is relevant for the water-
tax as per Section 129 of the Act to which we have made a detailed reference
while deciding the companion appeal No. 1218 of I 976 is conspicuously
absent in connection with imposition of house tax on the annual value of D
buildings or lands or both as found in Section 128 (l)(i). We, therefore,
endorse the reasoning of the Division Bench of the High Court which rejected
this contention of the appellant Board. Point No.2 is, therefore answered in
the negative against the appellant and in favour of the respondent.

Point No.3:
E

That take.• us to the last main point for consideration. It has to be kept
in view that house tax is to be imposed under Section 128 (1) (i) on the annual
value of buildings or lands or of both. Assessment of annual value has to
be done according to the requirement of Section 140 sub-section (I) which F
defines "annual value" as under:

"(!) "Annual value" means
(a) in the case of railway stations, hotels, colleges, schools, hospitals,
factories and other such buildings, a proportion not exceeding
five per centum to be fixed by rule made in this behalf of the sum G
obtained by adding the estimated present cost of erecting the
building to the estimated value of the land appurtenant thereto,
and
(b) in the case of a building or land not falling within the provisions
of clause (a), the gross annual rent for which such building, H
130 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A exclusive of furniture or illachinery therein, or such iand is actually
let, or where the building or land is not let, or in the opinion of
the municipality is let for a sum less than its fair letting value,
might reasonably be expected to let from year to year."

It becomes obvious in the light of the aforesaid provision that up to the
B limit of 5 per cent •Jf the annual value, the Board can impose house tax on
immovable properties, like railway stations, hotels, colleges, schools, hospitals
etc. mentioned in the said provision, but for doing so the estimated present
cost of erected buildings concerned has to be kept in view and also the .
estimated value of the land appurtenant thereto is also to be taken into
C consideration. Now, the phrase "estimated present cost of erecting the building"
is entirely differently worded as compared to the phrase "estimated value of
the land appurtenant thereto". The value of the building as well as the land
appurtenant once arrived at will have to be added for computing 5 per cent
ceiling up to which by rules the Municipal Board can impose house tax on
the buildings concerned. It becomes at once clear that when appurtenant land
D is to be valued it's valuation has to be made as per its market value obtaining
at the time of assessment. But so far as the value of the building to which
such land is appurtenant goes, the computation has to be made on the
estimated present cost of erecting the building to be subject to the tax.
Meaning thereby, at the time of assessment the cost of construction of such
E building in its existing state is to be kept in view. Hence such cost must be
arrived at by keeping in view the then existing state of the building and the
cost which would be incurred for erecting such a building. Consequently, it
becomes obvious that while estimating the present cost of erecting the building
concerned., the assessing authority has to keep in view the life of the building
and also the fact as to when it was earlier constructed and in what present
F state the building is and what will be the cost of erecting a new building so
as to result into erection of such an old building keeping in view its life and
wear and tear from which it has suffered since it was put up. It is obvious
that if the building is an old one, the present cost of erecting such a building
would necessarily require further consideration to what would be the
G depreciated value of such a buildings; if a new building is erected at the time
of assessment. Such cost, obviously, has to be sliced down by giving due
weight to the depreciation so as to make estimation of present cost of the new
building to ultimately become equal to the erection cost of the building
concerned in its depreciated state. Consequently, it cannot be said that 10 per
cent depreciation allowed by the District Magistrate and as confirmed by the
H High Court on the total estimated cost of the building for bringing it within
MUNICIPAL BD. SAHARANPUR. '" SHAHD. (DELHI) SAHAD. LIGHT RAIL CO. LTD. [S.B. MAJUMDAR,J.] J3 J
the assessable tax net of house tax was an exercise which was ultra vires A
provisions of the Act or beyond the jurisdiction of the assessing authority.
On the facts governing the case, it is seen that the railway station belonging
to the respondent, was as old as 1905, there may be other buildings within
the complex which might have seen the light of the day years befofe the time
of assessment. Naturally, they would not be new buildings which could have B
said to have been put up only at the time of assessment proceedings. They
were obviously old buildings. It is not the case of the appellant or any of them
that these buildings were new.buildings recently constructed when assessment
proceedings were initiated. Consequently, a flat rate of 10 per cent depreciation
as granted by the District Magistrate while computing the annual value for
house tax purposes, in the present case, cannot said to be an unauthorised C
exercise. The third point for determination, therefore, has to be answered in
the affirmative against the appellant and in favour of the respondent.

Point No. 4:

As a result of the aforesaid discussion, this appeal succeeds so far as D
the first point is concerned. However, it stands rejected so far as the last two
contentions are concerned. The appeal is partly allowed, accordingly, and the
Judgment and Order of the Division Bench will stand modified in terms of this
judgment in favour of the appellant Board. Before parting with this appeal,
we may mention that during the pendency of this appeal, by an interim order E
dated 20th January, 1977, a three Judge Bench of this Court, directed as under:

"There will be stay of restitution pending the disposal of the appeal.

The appellant undertakes not to press the demand for the recovery
of the amount of Rs. 98,950 and any future dues from the respondent
during t\)e pendency of the appeal in this Court. F
The hearing of the appeal is expedited and the same shall be listed
for hearing along with C.A.1218176."

It is obvious that the aforesaid order in so far as the interim stay deals
with the right of the appellant Board to impose water-tax on all the buildings G
situated within the "common compound" of the respondent is concerned,
now there will remain no occasion for the appellant Board to grant any
restitution to the respondent so far as recovery of water-tax for the relevant
time in dispute is concerned. It will also be open to the appellant Board to
press for payment of recovery of water-tax which has remained unpaid by the
respondent for the relevant year subject to assessment of all buildings as H
132 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A separate units of taxation. However, as the appellant fails on the question of
levy of house tax as decided against it while answering point no. 2, so far
as house tax levy is concerned, it will abide by the result of this appeal which
is partly decided against the appellant and will be assessed accordingly for
the relevant years. The appeal is partly allowed as aforesaid. No costs.

B RP. Appeal partly allowed.