The Bombay HC has ruled that BMC can take into consideration the rent paid by sub-tenants not protected by the MRCA Act, while computing property taxes.
MUMBAI: The Brihanmumbai Municipal Corporation’s earnings from property taxes in the city are likely to go up. The Bombay high court ruled on Monday that the BMC can take into consideration the rent paid by sub-tenants not protected by the Maharashtra Rent Control Act (MRCA), 1999, while computing property taxes for buildings.
The order will affect all those buildings where premises have been sub-let by the original tenants to others not covered by the MRCA. Such sub-tenants pay a much higher rent.
Now, instead of basing its tax assessment on the lower rent paid by the original protected tenant, the BMC can fix property taxes on the basis of the higher rent paid by the sub-tenants.
The rent attracted by a property determines its rateable value, which is one of the determinants of property tax. The high court’s order means rateable value will be reassessed, hiking the property tax payable a by building society as a whole. The burden of this is likely to fall on the owners of the premises.
In 2002, the BMC had hiked the rateable value of Dalamal Tower in Nariman Point from Rs1.7 crores to Rs5.07 crores. The building society had challenged this in the HC, which ruled in 2004 that the BMC cannot reassess the rateable value of a building. BMC had appealed against the single judge order.
Upholding BMC’s contention, a bench comprising Justice RM Lodha and Justice AV Mohta overruled the 2004 order on Monday.
Unhappy with the decision, the petitioner and honorary secretary of Dalamal Towers, Ramesh Ramchandani said, “We are definitely moving the Supreme Court on the issue as the order is bad in law”. He maintained that the apex court has already ruled against making a distinction between a property which is sold or let out. “How can taxes be collected from retrospective effect?” he asked.
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