COMMISSIONER OF INCOME TAX vs. ANSAL BUILDWELL LTD.

IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 19^^ May, 2008 Date oforder: 2"^ July, 2008 LPANo. 406/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal & Mr. Alok Singh, Advocates versus KEY POINT Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S. MURALIDHAR ORDER This appeal is dismissed in terms of the common judgment of 2nd July 2008 passed in LPA No. 319 of 2007 titled "Municipal Corporation ofDelhi v. N.K. Gupta" and connected matters. Registry is directed to place on record a copy ofthe judgment passed in LPA No. 319 of 2007. CHIEF JUSTICE July 02, 2008 S. MURALIDHAR, J. dn Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified

INTHEHIGH COURT OFDELHI: NEW DELHI LPA No. 319 of 2fln7 Reserved on: 19"^ May, 2008 Date ofjudgment: July 02, 2008 MUNICIPAL CORPORATION OF DELHI ..... Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus . N.K.GUPTA Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for RespondentGNCTD. With LPA No. 373/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. AlokSingh, Advocates versus -^4: i VARDI-MAN PROPERTIES .....Respondent Through Mr. Sanjay Goswamy andIS-Ir. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 374/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Ml-. Alok Singh, Advocates versus LPA No.319/2007 Page 1 of 25

• KEY POINT Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 376/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus K.K. ENTERPRISES Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 377/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate • Mr. Sanjeev Sabharwal aiid Mr. Alok Singh, Advocates V, versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates fortheRespondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 378/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPA No.319/2007 Page 2of25

K.K. ENTERPRISES Respondent Tlirough Mr. Sanjay Goswamy and Mi-. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No, 380/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Plioolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus GARIMA AGGRAWAL Respondent Through Mr. Sanjay Gosv^amy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 381/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwaland Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Tlirough Mr. Sanjay Goswamy tod Mr. Ajay Kumar, Advocates for the Respondents. Ms. Ifam Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 382/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES .....Respondent Tlirough Mr. Sanjay Goswamy and Mr. y^jay Kumar, LPA No.319/2007 Page 3of25

\h. Advocates forthe Respondents. Ms.IraniMajid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 383/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mi\ Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Ifam Majid and Ms. Zubeda Beguni, Advocates for Respondent GNCTD. A No. 384/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Tlirough Ml-. Sanjay Goswamy and Mr. Ajay Kumar, Advocates forthe Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 385/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus HARI SINGH BUILDER &PROMOTRS Respondent ThroughMi'. Sanjay Goswamy and Mr. AjayKumar, LPA No.319/2007 Page 4 of 25

xs- Advocates forthe Respondents. Ms. Irani Majid andMs. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 386/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Ml". Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus ICAMAL laSHORE AGGRAWAL Respondent Tlirough Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. ZubedaBegum, Advocates forRespondent GNCTD. LPA No. 387/2007 MUNICIPAL CORPORATION OF DELffl Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 388/2007 MUNICIPAL COI^ORATION OF DELffl Appellant Through: IVIr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus BASANT PROJECTS LTD Respondent Through Mr. SanjayGoswamy and Mi-. AjayKumar, LPANo.319/2007 Page 5 of 25

Advocates for the Respondents. Ms. Irani Majid andMs. ZubedaBegum, Advocates forRespondent GNCTD. LPANo, 389/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMANPROPERTIES Respondent ThroughIVIr. Sanjay Goswamy and Mr. AjayKumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates forRespondent GNCTD. LPANo. 391/2007 MUNICIPAL COI^ORATION OF DELm Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Ml'. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. ZubedaBegum, Advocates for Respondent GNCTD. LPANo. 394/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPANo.319/2007 Page 6 of 25

VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mi'. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 395/2007 MUNICIPAL COr^ORATlON OF DELHI Appellant Tlirough: Mr.H.S. Plioolka, Senior Advocate Mr. Sanjeev Sabliarwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mi*. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 396/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus MANISH AGGRAWy\L Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates forthe Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates forRespondent GNCTD. LPA No. 400/2007 MUNICIPAL CORPORATION OF DELHI ..... Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPA No.319/2007 Page 7 of25 i

VARDHMAN PROPERTIES Respondent Tlirough Mr. Saiijay Goswamy and Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 401/2007 MUNICIPALCORPORATION OF DELI-E Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mi\ Sanjeev Sabharwal and Ml-. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. IramMajidand Ms. Zubeda Begum, Advocates forRespondent GNCTD. LPA No. 402/2007 MUNICIPAL CORPORATION OFDELHI Appellant Tlirough; Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent ThroughMr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 403/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page 8 of 25

Jp^ -rps versus VARDHMAN PROPERTIES Respondent Through Mi-. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for theRespondents. Ms. Irafli Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTt). LPA No. 405/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharvval and Ml". AlokSingh, Advocates versus UNITY PROJECTS LIMITED Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates forRespondent GNCTD. v.,^^^PANo. 406/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. SanjeevSabharwal and Mr. Alok Singh, Advocates versus KEY POINT Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates forthe Respondents. Ms. IramMajidand Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 407/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page 9 of 25

-4^ versus VARDl-iMANPROPERTIES Respondent Through Mr. Sanjay Goswamy and Mi-. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 408/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus M.M. DEVELOPERS Respondent Tlirough Ml". Sanjay Goswamy andMr. Ajay Kumar, Advocates forthe Respondents. Ms. Iram Majid andVis. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1051/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Ml*. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid andMs. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1057/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page 10 of 25

versus VARDHMAN PROPERTIES Respondent Through VIi-. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for theRespondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1058/2007 MUNICIPAL CORPORATION OF DELffi Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondem Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates fortheRespondents. Ms. Irain Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1059/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through; Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus SUNDER CONSTRUCTION CO. Respondent Tlirough Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates fortheRespondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1060/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and LPA No.319/2007 Page 11 of 25

Mr. Alok Singh, Advocates versus VARIDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1061/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate IVfr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocatesfor the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. AND LPA No. 1285/2007 MUNICIPAL CORPORATION OF DELHI Appellant through: Mr.H.S. Phoolka, Senior Advocate Ml-. Sanjeev Sabharwal and Mr. AlokSingh, Advocates versus SURYA BUILDWELL LIMITED Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid aiidMs. Zubeda Begum, Advocates for Respondent GNCTD. Coram: HON'BLE THE CHIEF JUSTICE LPA No.319/2007 Page 12 of 25

HON'BLE DR. JUSTICE S. MURALIDHAI^ 1. 2. 3. Whether Reporters of local papers may be /, allowed to see the judgment? To be referred to the Reporter or not? - Whether the judgment should be reported /< in Digest? JUDGMENT Dn S. Muralidhar. J. 1. These appeals are directed against the common judgment dated March, 2007 passed by the learned Single Judge of this Couit in Writ Petition (Civil) No. 8161 of2005 and Batch. The writ petitions challenged the validity of the notices issued by the Collector of Stamps under Section 40 of the Indian Stamp Act, 1899 ('Stamp Act') demanding transfer duty as well as deficient stamp duty and penalty equal to tentimes oftlie deficient duty. 1. The demand for transfer duty was made in respect of the conveyance ofplots ofland in favour ofthe appellants who successfully bid for them in auctions held by the Delhi Development Authority ('DDA')/ Municipal Corporation of Delhi ('MCD'). Consequently, perpetual lease deeds were executed and registered in their favour. The writ petitioners had also paid the appropriate stamp duty ,and transfer duty interms ofthe certificate issued by the Collector ofStamps in each of the cases. 3. On 29''^ August 2004 ageneral order was issued by the Divisional LPANo.319/2007 Page 13 of25

,<v Commissioner, Delhi stating that the Collectors of Stamp of different districts had adopted varying methods ofcalculation ofduty in respect of perpetual leases which had resulted in the duty being short levied and collected. This conclusion was reached on an interpretation ofArticle 35 of Schedule 1(A) to the Stamp Act as applicable to Delhi and Section 147 to the Delhi Municipal Coiporation Act, 1957 ('DMC Act'). Consequently, the impugned notices were issued in February 2005 to each ofthe appellants calling upon them to pay the deficient duty as well as the penalty equaling ten times of the deficient duty. In respect of Vardliman Properties, for instance, the auction purchaser had paid Rs.12,42,215 as stamp duty. This was now recomputed as Rs.13,30,604 being tlie aggregate of Rs.10,79,772 as stamp duty and Rs.2,00,832 as transfer duty. In re-worldng the duty, the total consideration for the perpetual lease was taken as the aggregate of the premium amount of Rs.1,91,11,000 and the annual rent calculated as .a percentage of the premium amount. In addition a penalty of Rs.8,88,389 (being ten times ofthe deficient duty) was also demanded. 4. Before the learned Single Judge the respondents contended that they were not challenging the re-worldng of the stamp duty since the question of interpretation of Article 35 of Schedule 1(A) of the Stamp Act was debatable. Their challenge was, therefore, confined to the penalty imposed under the Stamp Act as well as the DMC Act with regard to the stamp duty and transfer duty respectively as well as the LPANo.319/2007 Page 14of 25

dues in the transfer duty as demanded in the impugned notices. 5. On the question of penalty, the learned Single Judge came to the conclusion that in tentis of Section 40 of the Stamp Act, the power to impose a penalty was consequential upon the Collector of Stamps impounding an instrument. Since no instrument had yet been impounded by the Collector, the question of imposition ofany penalty did not arise. To the extent, therefore, that the impugned notices sought to levy penalty, they were held to be unsustainable in law. 6. The next question before the learned Single Judge concerned the interpretation ofthe relevant entry in Section 147 (2) (b) (v) DMC Act. After referring to tlie decision ofthe learned Single Judge ofthis Court inNiagara Hotels &Builders (P) Ltd. v. Union ofIndia 65 (1997) DLT 826, the learned Single Judge concluded that the words 'amount' and 'value' in Section 147 (2) (b) (v) DMC Act did not refer to the premium collected for the grant ofthe lease. The learned Single Judge rejected the contention ofthe MCD that the word 'amount' referred to premium and the word 'value' referred to the rent. Itwas held that they referred to the quantum of the rent for the first fifty years of the lease. Consequently, transfer duty would be leviable on one-sixth ofthe rent for the first fifty years of the lease. Although the lease referred to only the first thirty years, the learned Single Judge held tliat "the transfer duty has to be computed on the basis of1/6^ of the rent payable at present for the first LPANo.319/2007 Page 15 of25

30 year period but computed for the first fifty years". 7. The petitions were accordingly partly allowed holding that no penalty could be iinposed in respect ofthe transfer duty under the DMC Act since that was a debatable issue. A direction was issued to re-work the transfer duty in terms ofthe judgment ofthe learned Single Judge. It was fiirther held that no further stamp duty in addition to the amounts already paid was payable nor was any penalty chargeable. 8. Aggrieved by the judgment ofthe learned Single Judge, the MCD has filed thepresent appeals. 9. It is contended by Mr. H.S. Phoolka, the learned senior counsel appearing for the MCD that in the sense and in the context in which the word 'rent' is used in Section 147 (2) (b) (v) DMC Act, ithad to connote the total consideration payable under the lease deed. His submission was that unless the total consideration as shown on the lease deed was paid by the lessee, the execution of the peipetual lease deed could not have taken place. Therefore, the word 'rent' would include the premium paid bytheauction purchaser for obtaining the lease. In other words, the expression 'rent' meant 'rent + premium' and not the rent alone. Reference was made to the definition of the word 'premium' in Black's Law Dictionary, Edition (page 1181). Mr. Phoolka then submitted that every word occurring in Section 147 (2) (b) (v) DMC Act had to be LPA No.319/2007 Pagel6of25

given full effect to keeping in view the context in which the word occurs. Therefore the disjunctive 'or' had to be read as a conjunctive 'and'. Since the lease could not have been executed without the premium being paid, tlie legislative intent was to levy transfer duty onthe amount equal to one-sixth of the entire consideration payable in respect of the lease which, in any event, has been set forth in the instrument. Mr.Phoolka contended that since the annual rent payable is calculated as a percentage of the premium paid, it is a measure of the premium itself. Consequently, there itwas logical to include the premium amount as part \ oftherent forthepurposes of computing thetransfer duty. 10. In support of his contention that all words in the statute haveto be given ftill effect Mr.Phoolka referred to the judgments ofthe Supreme Court inShin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (2005) 7 see 234, Manohar Lai v/ Vinesh Anand (2001) 5 SCC 407, Noorie Manure Mill v. Commissioner Trade Tax (2007) 10 SCC 478, Associated Cement Co. Ltd. v. State of MP (2004) 9 SCC 727 and Indcon Structurals (P) Ltd. v. Commissioner of Central Excise (2006) 6 see 786.. 11. Mr.Sanjay Goswamy, learned counsel appearing on behalf of the respondents submitted that a taxing statute admits of only strict interpretation. If the intention ofthe legislature was to tax the premium \ paid for the obtaining of a perpetual lease, then certainly the wording of LPANo.319/2007 Page 17 of25

theprovision should expressly indicate it. Reliance is placed on Section 105 of the Transfer of Property Act, 1882 ('TP Act') where the words 'premium' and 'rent' have been separately defined. Relying on the judgment of the Supreme Court in Commissioner of Income Tax v. Ptinbari Tea Company Alk 1965 SC 1871, it is submitted that the expression 'premium' and 'rent' have to be separately understood and one cannot include the other in the context in which it is used in the deed of perpetual lease in the instant case. The word 'rent' can only refer to the actual rent indicated in the lease deed and not the premium. Reference is also made to the decisions in Govind Ram v. Rajphul Singh AIR 1973, Punjab & Haiyana 94 and S. Venkataraman Swami V. S. Abdul Wahab AIR 1969 Madras 473. \ 12. In order to appreciate the respective contentions, a reference may be made first to Section 147 (2) (b) (v) of the DMC Act which reads: "147. Duty on transfer of property and method of assessment thereto,- (1) Save as otherwise provided in this Act, the Coi-poration shall levy a duty on transfers of immovable property situated within the limits of Delhi in accordance with the provisions hereafter in this section contained. (2) The said duty shall be levied- (a) in the fomi of a surcharge on the duty imposed by the Indian Stamp Act, 1899 (2 of 1899) as in force for the time being in the Union Territory of Delhi, on every instrument of the description specified below, and (b) at such rate as may be determined by the Corporation not exceeding five per cent, on the amount specified below against such instruments - LPANo.319/2007 Page 18 of 25

Description of instrument Amount on which duty should levied (i) Sale ofimmovable property The amount or value of consideration for the sale, as set forth in instrument. (ii) Exchange of immovable property The value ofthe property ofthe greate value, as set forth in the instrument. (iii) Gift ofimmovable propert; The value ofthe property, as set forth the instrument. (iv) Mortgage with possession immovable property The amount secured by the mortgage ; set forth in the instrument. (v) Lease in perpetuity immovable property The amount equal to one-sixth ofthe whole amount or value of the rent which would be paid or delivered in respect ofthe first fifty years of the le; as set forth in the instrument, (emphasis supplied) (v) Contract for transfer of immovable property Ninety per cent of the value of the consideration for the transfer as set out in the contract." 13. In Niagara Hotels & Builders (P) Limited a learned Single Judge of this Courtheld that the word 'or' in Section 147 (2) (b) (v) DMC Act could not be read in a manner so as to enable MCD to levy the transfer duty on an aggregate both the premium amount as well as the rent. In the impugned order in the instant cases, the learned Single Judge has heldthatthe expression "amount' or 'value' botli qualified "rent and rent alone" and, therefore, the rent, (and not the premium) could alone form the basis for calculating the transfer duty. 14. Depending on the context, the word 'premium' can have both a broad as well as a narrow meaning. The definition of premium in the Law Lexicon by P. Ramanatha Aiyar, Second Edition reads as under: LPANo.319/2007 Page 19 of 25

a sum of money paid as coiisi#Mipii for grant oflease. It represents -capiteliz^ rent which in fact is the different be^een the actual rent and the rent'wM<?h' miglit otherwise be obtained by thel^sor. Other Like Sums", "are sums of the agreed rent in of grant, continuance or tenancy" In Black's Law Bicttona^, Sixth Edition, premium is defined as capitalized rent"paidinlutnpsum at thetime oflease is granted." 15. The question whether the 'rent' payable under the deeds of perpetual lease in the instant cases includes the 'premium' paid will depend on the context in which the word is used. This distinction is aclcnowledged in the definitions of the terms 'premium' and 'rent' in Section 105 ofthe TP Act as well. 16. The decision of the Supreme Court in Panbari Tea Company supports the contention of the respondent that, given the context, the word 'rent'm Section 147 (2) (b) (v) DMC Act has to have a narrow meaning. The question that arose in the said case was "whether the premium collected as a lump sum (although payable in instalments) could also be considered to be arevenue receipt in the same mamier as the rent collected"? In the said case a registered lease deed had been executed by the Assessee Company by which two tea estates were leased but to a firm. The consideration for the lease was a combination of LPAN6.319/2007 Page 20

SI premium in the sum ofRs.2,25,000 ofthe Annual rent ofRs.54,000. The premium was to be paid in the following manner: Rs.45,000 as lump sum at the time of execution of the lease deed and the balance of Rs.1,18,000 in sixteen half yearly instalments ofRs.l 1,250 before the 31'' January and 31'^ July of each year. The annual rent of Rs.54,000 was payable in the following manner:Rs.1,000 per month to be paid on or before last date ofeach month, thus, making in all Rs.12,000 per year and the balance of Rs.42,000 to be paid on or before 31'^ December of each year. In the assessment year for 1952-53, the income tax officer treated the instalment of Rs. 11,250 paidtowards premium as a revenue receipt. This assessment was upheld by the Appellant Assistant Commissioner as well as the Tribunal. The High Court reversed the Tribunal andheldthat the sumof Rs.l 1,250 was a capital receipt and not a revenue receipt. The Department then appealed the Supreme Court. The Supreme Court refeited to the decisions in Kamakshya Narain Singh V. Commissioner ofIncome Tax (1943) 11ITR 513, Memberfor the Board of Agriculture v. Commissioner of Income Tax (1957) 32 ITR 169 and Chintamani Saran Nath Sah v. Commissioner ofIncome Tax AIR 1961 SC 732 to underscore the distinction between the premium and rent. It pointed out that a one-time payment ofpremium for the grant ofa lease was known as 'salami' which is in the nature ofa capital receipt in tlie hands of the lessor. The Supreme Court then referred to Section 105 TP Act and observed as under: "The section, therefore, brings out the distinction LPANo.319/2007 Page 21 of25

between aprice paid for atransfer ofaright to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for aprice, the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The foraier is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage tlie real nature of the transaction by using clever pliraseology. In some cases, the so-called premium is in fact advance rent and in others rent is defeiTed price. It is notthe form butthe substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the Court, having regard to the other circumstances, to ascertain the intention of the parties." On an analysis ofthe relevant clauses in the lease deed, itwas held that the amount paid as premium could not be construed as rent and, such premium was a capital receipt inthehands ofthe lessor. 17. InHotel Kings v. Sara Farhan Liikmani (2007) 1 SCC 202, the Supreme Court emphasized the importance ofacontextual interpretation and held that while the pemiitted increase inrent can serve as ayardstick for the landlord to increase the rents it did not make such permitted increase "a partofthe rent though it may be a consideration for the grant of lease." 18. The lease deed in the instant cases a makes reference to the annual rent that wouldbe payable in future. This is not a pre-determined figure but is to be worked out as a percentage of the premium amount. This is set out in the lease deed. For instance in the lease deed dated 1^' LPA No.319/2007 Page 22 of 25

December, 2003 in favour of M/s N.K. Gupta, the fourth paragraph of the preamble reads: "NOW THIS INDENTURE WItNESSETH that, in consideration of the amount of Rs. 1,31,04,000/- (Rupees One Crore Thirty One lacs and Four thousand only) paid towards premium before the execution of these presents (the receipt where of the Lessor hereby aclcnOwledges) and of the rent hereinafter reserved and of the covenants on the part of the lessee hereinafter contained, the Lessor doth hereby demise unto the Lessee, all that plot of land being the Commercial Plot No. 09 Block No. X in the lay out plan of New Friends Colony District Centre" 19. In the later portion of the same paragraph of the lease deed, the annual rent is stated as being two and a halfper cent of Rs.1,31,04,000 and the first annual rent instalment is to be paid on 15'^ January, 2008. The relevant portion reads asunder: "TO HOLD the premises unto the lessee in perpetuity from 24''' day of January two thousand and three ^TELDING AND PAYING therefore yearly rent payable in advance of.Rs. 5/- (Rupees Five only) up to the 23'^'' day ofJanuary two thousand and Eight and thereafter at the rate of two and a half per cent of the premium (the sums already paid and such other sum or sums hereafter to be paid towards premium under the covenantsand conditions hereinafter contained) or such other enhanced rent as may hereafter be assessed under the covenants and conditions hereinafter contained clear of all deductions by equal half yearly payments on the day ofJanuary and IS''' day ofJuly in each year at the Reserve Banlc of India, New Delhi." LPANo.319/2007 Page 23 of 25

(v) DMC Act cannot be said to include the premium paid for the lease. I 21, It is also not possible to construe the premium paid as advance rent since the annual rent in is not indicated as a pre-determined sum in the lease deed. It is a percentage of the premium paid. The premium amount serves as a yardstick for determining the rent payable. It is therefore not possible to interpret the word 'rent' in the lease deeds in the instant cases as including the premium paid. 22. This Court is inclined to accept the contention of the respondent that since what is sought to be collected is a transfer duty, which is an involuntary exaction of revenue, the statute admits of a strict LPA No.319/2007 Page 24 of 25

n /\ V, interpretation. The-principle enunciated in the decisions relied upon by the appellants that eveiy word in astatute must be given its full meaning is unexceptionable. However, the meaning so given must be in the context of the statute in general and the provision in particular. In the context ofthe lease deeds in question in the instant cases, the word 'rent' cannot possibly be interpreted to include the premium paid for the grant of the lease. As rightly contended by the respondents, ifthe legislature intended to make the premium paid for the lease as includible for the purposes of determining transfer duty then the statute should have been expressly worded to reflect that intention. 23. Accordingly, this Court concurs with the conclusion arrived at by the by the learned Single Judge. The appeals are dismissed with no orders as to costs. July 02, 2008 sb LPANo.319/2007 a S. MURALIDHAR, J. CHIEF JUSTICE Page 25 of 25