Receipts for these payments were issued in the name of Bhiku Bhai who was our tenant on record. An aggregate payment of Rs 54,000 was made and it was verbally agreed that Jitinder Bhai would pay us the agreed rent each year in advance. But after the aforestated payment of Rs 54,000, no further payments followed and all our notices sent to him have been returned by the postalauthorities with the remarks `Addressee Not Traceable'. We also understand that the original tenant has since gone into liquidation. Please advise what action should be taken by my friends to recover possession of their property and also the rent in arrears.

-R M Patel, Mumbai

If the principal tenant company is in liquidation, the official liquidator will disclaim tenancy right and the premises will revert to your friends. If the subletting is prior to February 1, 1973, under Section 14 of the Bombay Rent Act, the lawful sub-tenant will become your direct tenant. If the tenant continues in arrears of rent, as per the amended provisions of Section 12 of the aforestated act, you are required to issue demand notices each month even if the arrears are not more than one month and upon expiry of the notice period, file a suit for ejection.

From the narration of facts provided by you, it would seem that your friends have at no stage recognised Jitinder Bhai as their tenant and, therefore, the chances arethat their suit of ejection against the principal tenant would succeed. In any case, I would strongly urge that your friends seek competent legal advice in the matter and then proceed in the manner that their legal counsel may commend.

I purchased a one-and-a-half storeyed built house on a 311 sq. yard plot of land of 1956 vintage in 1984 for a purchase consideration of Rs 6.75 lakh and entered into a builder's agreement to add a basement to the plot, renovate the ground floor by adding a mezzanine thereto and building another one and a half storeys as per the bye-laws of the Municipal Corporation of Delhi subsisting at that time.

Under the agreement, the builder paid me a security deposit of Rs 8 lakh with the stipulation that upon his handing over possession of the basement and the renovated ground floor premises (including the mezzanine floor that forms a part and parcel of the ground floor apartment) which the builder has undertaken to build at his own cost and expense (as per the agreedspecification) and his being empowered to transfer the first and the second floor premises to his nominees as my power of attorney holder along with 50 per cent undivided but non-partitionable interest in the land, the security deposit paid under this agreement would be retained by me as a consideration for sale of the ground floor terrace rights along with 50 per cent certain but indivisible interest in the plot of land beneath and surrounding the building admeasuring 311 sq. yards.

Therefore, in pursuance of this agreement, I vacated the premises previously occupied by me in November 1989 and handed over possession of the same to the builder for undertaking renovation/additions to the premises as my licensee. Whilst the construction started in January 1990, the builder handed over possession of the basement and the ground floor premises to me in January 1991 and I reoccupied the same from February 1991. The builder, acting under the General Power of Attorney, given to him in January 1991, alsotransferred the first and the second floor premises to the respective purchasers through registered sale deeds in April and May 1991.

While I have been in touch with the MCD for the mutation and assessment of my part of the property since 1984, the matter to date has remained unresolved. Meanwhile, the MCD continues to raise bills in the name of the original owners and I have been depositing the taxes so demanded on behalf of the original owner. With amendments to the MCD Act and the introduction of self assessment system, I undertook self-assessment and started paying taxes on the basis of original cost of acquisition -- Rs 6.75 lakh for the original plot of land and the house built thereon, on the premise that I had received renovated structure with additional construction in lieu of surrender of my 50 per cent interest in the land and that the cash compensation of Rs 8 lakh related to transfer of ground floor terrace rights.

Please comment upon the reasonableness of my assumptions andalso advise the correct method of tax computation for the period that the property has been under our occupation.

-- N Rao, New Delhi

It is incumbent upon both the seller and the buyer of the property to inform the MCD within 30 days of effecting a transfer of ownership (which in the present instance is through the execution of a registered sale deed) regarding the change in the status of the property. It is not clear whether such a notice was sent by the previous owners in 1984.

In the event you have informed the MCD of this change and have continued to deposit the property taxes on behalf of the previous owner, it does not absolve you from the payment of property taxes as and when assessed in your name on the basis of your declared cost of acquisition. However, you would be entitled to vacancy remission for the period that the property remained unoccupied due to renovation/ additional construction.

From 1991 onwards, your ownership of the property stands diluted because your power of attorneyhas transferred on your behalf by conveyance deed(s) 50 per cent interest in the plot of land to other parties along with the superstructure built thereon and the terrace rights subsisting presently.

Also during the period 1989-1991, expenditure has been incurred on your behalf to renovate the existing buildings and add additional constructed areas whether these be basements or mezzanine floor etc. As per MCD rules, the cost of renovation and additions should be added to the net cost of acquisition to arrive at the aggregate cost of acquisition.

Therefore, it would be necessary for you to take into account the 50 per cent cost of acquisition i.e. Rs 3,375 lakh and add to it the reasonable cost of renovations and additions. As of April 1, 1991, you are liable to be taxed for property taxes on this aggregate cost. Since you have not given any indication of costs incurred on your behalf in renovating and undertaking additional construction, MCD may insist that you have this work valued by an independentvaluer to determine whether the costs so incurred closely correspond to the difference in the original cost of acquisition and the reduction in the cost of land transferred to the builder/ his nominees (ie Rs 3.375 lakh) in case the assessed cost of renovation / additional construction undertaken on your behalf is assessed to be higher than Rs 3.375 lakh. In that case, you could be called upon to pay differential taxes. However, no penalty would be payable as you have been depositing taxes on self assessment basis despite a pending request for fixation of RV for the portion of the property owned and occupied by you.