• Property tax for property built on leasehold land

I have a flat in an Apartment complex in Rajarhat, WB, which has been built on LEASEHOLD land allotted by the Govt. of West Bengal. Annual lease rent is being paid for the land to the Govt.

 My question is:
 a. Is MUTATION a legal requirement for LEASEHOLD property (since title to the land on which the complex is built rests with the Govt.).
 b. Since lease rent is being regularly paid, is PROPERTY TAX also applicable on such flats? 
Grateful for your response.
Asked 3 years ago in Property Law
Religion: Hindu

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14 Answers

Mutation is not required in name of lessee

2) property taxes is payable by lessor

Ajay Sethi
Advocate, Mumbai
84384 Answers
5530 Consultations

5.0 on 5.0

a. yes the mutation of a long term lease hold property is required.

b. further property tax is to be paid by the lessee on the lease. (subject to terms of lease but in most cases for long lease the lessee has to pay such tax either on renewable of lease or time to time basis.)

Shubham Jhajharia
Advocate, Ahmedabad
25518 Answers
148 Consultations

5.0 on 5.0

Dear Client,

Actual is vested in the govt, Mutation is illegal.

Property in under rent agreement, and no ownership, if any tax payable will borne by the govt.

Rest depends on terms of Lease deed

Yogendra Singh Rajawat
Advocate, Jaipur
21442 Answers
31 Consultations

4.4 on 5.0

Yes it is required.

Yes

Subhendu Ghosh
Advocate, Barrackpore
234 Answers

4.0 on 5.0

Property taxes would be payable by lessor unless agreement provides that lessee would be liable to pay property taxes

2) you are not owner of the premises but merely paying lease re t to the lessor . Hence property taxes should be the responsibility of lessor

Ajay Sethi
Advocate, Mumbai
84384 Answers
5530 Consultations

5.0 on 5.0

Dear Sir , if you need I can provide you with judgement where the lessee has hone to high court for mutuation of long leased property because it is required the title resides with th government in case of lease, mortgage mutuation is required.

And in mutuation entry it specifically mentioned on lease of such period with so and so.

Regarding property tax on in some states on renewable it is paid further there it also depends on the lease agreement.

Shubham Jhajharia
Advocate, Ahmedabad
25518 Answers
148 Consultations

5.0 on 5.0

Sometimes details are mentioned in the agreement, where it is also mentioned that who need to give the property tax.

Mutation is not required because, it is a govt. Property and they have given it on lease. But if you are staying there then either you have to pay the property tax by yourself or you have to give it while given the lease rent.

Moumita Mitra
Advocate, Kolkata
366 Answers
1 Consultation

4.0 on 5.0

Unknown vs Sri Ajay Poddar And Another on 11 March, 2015

Author: Subhro Kamal Mukherjee

Form No. J(2)

IN THE HIGH COURT AT CALCUTTA

Civil Appellate Jurisdiction

Present:

The Hon'ble Justice Subhro Kamal Mukherjee

And

The Hon'ble Justice Indrajit Chatterjee

M.A.T. 2248 of 2014

With

C.A.N No. 226 of 2015

State of West Bengal and others

...Appellants.

- Versus -

Sri Ajay Poddar and another

...Respondents.

For the appellants: Mr. Tapan Kumar Mukherjee(III), Mr. Nilotpal Chatterjee.

For the respondents: Mr. Ratnanko Banerjee, Mr. N.C. Bihani, Ms. Papiya Banerjee Bihani.

Heard on: March 3, 2015.

Judgment on: March 11, 2015.

Subhro Kamal Mukherjee, J.:

This is an appeal by the State of West Bengal and its officials against judgment and order dated September 18, 2014 passed by the Hon'ble Single Judge of this Court in W.P No. 687(W) of 2014.

By the order impugned in this appeal, the Hon'ble Single Judge directed the authorities to mutate the names of the petitioners in relation to plot no. 272 in Block - EC in Sector - I of the Salt Lake City Extension area, within 4 (four) weeks from the date of communication of the aforementioned order dated September 18, 2014.

By an indenture of lease dated February 12, 1972, the State of West Bengal granted lease in favour of Somendra Mohon Mukerji for the period of 999 (nine hundred ninety nine) years on annual rent of Re.1 (Rupee one) only or any fraction of any year at the same rate. The only restrictive clause in the said deed of lease was prohibiting the lessee from sub-dividing or sub-letting the demised land or the building to be constructed without the consent in writing of the Government.

On or about December 25, 1995 the original lessee, namely, Somendra Mohon Mukerji, died intestate. Consequent upon his death, the name of the daughter of the original lessee, namely, Shibani Mukherjee, was mutated on or about October 9, 1996.

The Principal Secretary of Urban Development Department, Government of West Bengal, issued a circular dated August 25, 2004, inter alia, allowing mutation on the basis of registered deeds of conveyance in relation to the lease deeds where there has been absolutely no restriction on transfer. Corollary of that the Government of West Bengal recognised in the said circular that in respect of 17 clauses lease deeds the restrictive clauses were deleted. The relevant portion of the said circular runs as under:

"...that a good number of lessees could get Salt Lake plots on execution of the 17 clause lease deeds or even 20 clause lease deed from where the restrictive clauses were deleted...."

By an indenture of assignment dated March 19, 2012, the said Shibani Mukherjee assigned her rights in the said plot of land in favour of the writ petitioners.

The writ petitioners requested the Urban Development Department for mutation of their names instead and in place of the said Shibani Mukherjee.

As the Urban Development Department did not grant the request for mutation, the writ petitioners approached this Court with an application under Article 226 of the Constitution of India, which was registered as W.P No. 11478 (W) of 2012. The Hon'ble Single Judge entertained the said writ petition and, inter alia, directed the exchange of affidavits.

An Appeal was filed, which was tendered under M.A.T. 1236 of 2012. The division bench, inter alia, disposed of the appeal by directing the Principal Secretary of the Urban Development Department to consider the representation of the writ petitioners.

The Principal Secretary, by order dated December 6, 2012, held that as there was no application by the said Shibani Mukherjee seeking permission to transfer the said plot of land, the mutation could not be granted in favour of the writ petitioners. As and when the mutated lessee would apply for permission in the prescribed format as per the existing rules and notification, the prayer would be considered.

Being aggrieved by and dissatisfied with the said order dated December 6, 2012, the writ petitioners approached this Court with yet another application under Article 226 of the Constitution of India, which was registered as W.P. No. 687 (W) of 2014.

The Hon'ble Single Judge, by the order impugned, allowed the aforementioned writ petition and directed the authorities to mutate the names of these petitioners in respect of the said plot of land.

Mr. Tapan Kumar Mukherjee(III), learned Additional Government Pleader, strenuously, argues that mutation could not be granted in favour of the writ petitioners as they have not complied with the requirements of the circular dated June 22, 2012 issued by the Principal Secretary, Urban Development Department, Government of West Bengal.

Clauses 2, 3 and 4 of the said notification are relevant for the purpose of deciding the appeal and they are quoted hereunder: - "2. It has come to the notice of the Govt. in the U.D. Deptt. that in many cases possession of plots is transferred to third parties on the strength of various documents such as General Power of Attorney (GPA), Agreement of Lease/Tenancy and Will (to a stranger) and that though such documents do not amount to a transfer of lease in law, in effect, possession of the plots is being parted with by the original lessee. Most of the lease deeds executed by the Government contain restriction on assignment/transfer of the nature as is being carried out at present and this transfer without the Government's permission is not binding on the Govt.

3. The Government in the U.D. Deptt. has earlier allowed transfer of lease-hold right in respect of plots of land at Kalyani Township as well as for non-residential plots of land at Salt Lake Township by imposing permission fees and on fulfilment of certain other terms and conditions since 2005.

4. In the like manner and also in order to put an end to such unauthorized transfer as well as to increase revenue in Government Exchequer, the Governor has been pleased to order that the Govt. of West Bengal may allow the lessee of residential plots/building thereon of Bidhannagar to transfer his lease-hold right to others for un-expired period of lease term inter alia by imposing transfer fees @ Rs. 5 lakh (Rupees five lakh) per cottah for the time being and such other terms and conditions as may be fixed from time to time. To seek the permission of the Government to transfer his lease-hold right to others, the lessee/mutated lessee shall have to apply to the Principal Secretary to the Govt. of West Bengal, U.D. Deptt., "Nagarayan", DF-8, Sector-I, Bidhannagar, Kolkata - 700 064 stating his intention for such transfer. The transfer fees, however, will not be applicable to the cases that are within close blood relation viz., father-mother, husband-wife, borther-sister, son-daughter, son's daughter, son's son, daughter's son and daughter's daughter and in those cases only a nominal amount of processing fees as may be fixed by the Govt. from time to time will be realized."

Interestingly, even in the said notification dated June 22, 2012, there has been an admission that most of the lease deeds executed by the Government contained restriction on assignment/transfer without the permission of the Government. Corollary of that is there are lease deeds with no restrictive clause.

We have perused the impugned deed of lease dated February 12, 1972. We find that there was no restriction on the original lessee from assigning or transferring the demised plot of land. Only restriction was not to sub-divide or sub-let the demised land or the building to be constructed without the consent in writing of the Government.

In Shrimati Nathi Devi Kulthin versus State of West Bengal and others reported in (2003) 2 Calcutta Law Times 376 (HC), it was held that where the lease deed executed by the Government in favour of the lessee did not contain any restrictive clause in respect of the right of the lessee to transfer his leasehold estate, there would be no bar on the lessee to transfer or assign the lease-hold estate to a third party.

It was noted that lease deeds were executed for valuable consideration upon acceptance of a lump sum selami and the Government, also, agreed to accept nominal amount of rent. Therefore, it was a contractual transaction for a monetary consideration. The position of the Government was that of the landlord. The Government Grants Act, 1895, therefore, could not be made applicable in respect of those leases because in all the leases, the lessees had been permitted to construct building on their leasehold lands.

Jyotirmay Bhattacharya, J. in Shiv Surat Pandey versus State of West Bengal reported in 2012 (4) Calcutta High Court Notes (Cal) 539, also, held that the notification dated June 22, 2012, would apply only in case of lease deed which contains 21 clauses wherein restriction on assignment/transfer was imposed.

In some lease deeds, there were restriction clauses of transfer/assingment of the leasehold estate. The Principal Secretary, Urban Development Department, issued a circular dated June 22, 2012 to soften the aforementioned rigour. It provides, inter alia, that transfer or assignment would be permitted on payment of transfer fees of Rs. 5,00,000/- (Rupees five lakh) only per cottah.

Therefore, the circular would apply in relation to the deeds with restriction clauses. The circular cannot be applied in relation to a deed where there has been no restriction clause.

We have, carefully, considered the deed of lease dated February 12, 1972. It contains 17 clauses. There was no restriction imposed on transfer or assignment or the leasehold interest of the lessee.

We, therefore, do not find any reason to interfere with the impugned judgment and order passed by the Hon'ble Single Judge.

The appeal and the connected application for stay, filed under C.A.N. 226 of 2015, are dismissed and the appellants are directed to mutate the names of the writ petitioners in respect of the plot no. 272 in Block - EC in Sector - I Salt Lake City, within a month from the date of communication of this order.

We make no order as to costs.

(Subhro Kamal Mukherjee, J.) Indrajit Chatterjee, J.

I agree.

(Indrajit Chatterjee, J.)

Shubham Jhajharia
Advocate, Ahmedabad
25518 Answers
148 Consultations

5.0 on 5.0

Mutation is the process of change of title of the said property. It can also happen in leasehold property by conversion of same in freehold property. In case of govt land the same has to be offered by govt and ownership is given to the leaseholders by payment of conversion premium. Once it becomes freehold then property tax is applicable.

Prashant Nayak
Advocate, Mumbai
24476 Answers
52 Consultations

4.4 on 5.0

1. The mutation of the property on the name of lessee is not applicable and would not be legally proper since the property is a leasehold property.

2. Rent is paid for the land and not for the flat, hence applicable property for flats is to be paid.

T Kalaiselvan
Advocate, Vellore
74484 Answers
1226 Consultations

5.0 on 5.0

Hello,

You should go for mutation of the said property for your own safeguard.

Regards.

Swarupananda Neogi
Advocate, Kolkata
2935 Answers
6 Consultations

4.7 on 5.0

I have received 3 different answers.

2 opinions say that mutation is not required and 1 opinion says mutation is required.

2 opinions say that property tax has to be paid by the lessee and one says Mutation is illegal.

Property in under rent agreement, and not ownership, if any tax payable will borne by the govt.

I am confused

Dont get confused about the different opinions by different advocates.

The opinions are based on individual advocate's interpretation of law on the subject matter.

In my opinion, the mutation of the property on the name of lessee would be inappropriate and illegal becasue the lessee is not the title owner of the property, the property has just been taken on lease and the monthly rentals are being regularly paid to the lessor (government), therefore the lessee cannot claim ownership of the property or mutation of the same to his name.

Further, as per my opinion, since the flat property is on your name, the applicable property tax is necessarily to be paid by the person on whose the name the flat is registered.

If it is not so, then clarify the status and ownership or title of the flat property constructed on the vacant and leased land for rendering proper opinion to your query.

T Kalaiselvan
Advocate, Vellore
74484 Answers
1226 Consultations

5.0 on 5.0

1. The land was allotted by the W.B. Govt. on lease to whom? The lease was for how many years? I have a flat at Karunamayee which is on 99 years lease for which I was not required for mutating my name but have been paying property tax.However, it was a flat allotted by the W.B. Housing Development Board and not a private party.

2. If it is not a flat allotted by the Govt. on lease bases and has been leased to a private party, it does not become your property for which you are not required to pay the property tax.

3. However, more details in connection with the property and its lease is required to advise properly.

Krishna Kishore Ganguly
Advocate, Kolkata
26070 Answers
726 Consultations

5.0 on 5.0

1.If the property is under lease given by the Govt, then it is the property of the Govt. for which no mutation is required.

2. However, the lease deed executed by the Govt will specify all the clauses to clear doubts.

Krishna Kishore Ganguly
Advocate, Kolkata
26070 Answers
726 Consultations

5.0 on 5.0

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