ANNEXURE (54) [Vide Item 2 of Schedule A] Clarification regarding cost of building for deciding reasonableness of rent under item 2 (iii) (a) of the schedule ‘A’ of the secondary code- SS CODE
ANNEXURE (54)
[Vide Item 2 of Schedule A]
Clarification regarding cost of building
for deciding reasonableness of rent under item 2 (iii) (a) of the schedule ‘A’
of the secondary code
The
secondary schools code laid down the basis on which reasonable nominal rent
should be paid to the managements of non-government secondary schools having
their own buildings, or schools which are located in buildings belonging to the
trust or managements sponsoring such institutions, rent is to be limited to 7 ½
per cent of actual cost of construction as shown in the certified accounts of
the institution, plus municipal taxes, plus six per cent value actually paid
for land as per documents or reasonable calculations. The code provides that
the rent should not exceed 7 ½ per cent of the cost incurred as certified by
the executive engineer.
(2)
It has, however, been noticed that in a number of cases, there is no uniformity
in calculating the capital value of the building. This has naturally resulted in
certificate being submitted to government having different and varying
financial implications which appear to be some times exaggerated. The executive
Engineer’s appear to be under the impression that the cost of the building has
to be calculated on the basis of the prevailing market rate. It is obvious that
if the existing market rate is applied to buildings constructed years ago, the
rent even if calculated at 7 ½ etc., Would get inflicted.
(3)
The following instructions are, therefore, issued for the information and
guidance of the executive Engineer who are primarily concerned with the issue
of certificate regarding reasonableness of rent:-
(i)
The executive Engineer should call for audited statement of accounts from the
management of the educational institutions or sponsoring bodies owhing the
building and calculate the reasonableness of the nominal rent of the building
taking into consideration the actual certified cost of the building incurred by
the management when the building was constructed and also the cost of land when
it was actually purchased as certified by the Chartered Accountants in the
audited statement of accounts submitted to the charity commissioner.
(ii)
The executive Engineer should communicate the rent so calculated to the divisional
deputy director of education concerned along with calculation sheet and the
statement of accounts received from the management.
(iii)
On receipt, the divisional deputy director of education should verify from the
records whether the rent is calculated on the basis as laid down above and
communicate the management of the school accordingly.
(iv)
In case of additions and alternations, the executive Engineer should call for
from the management, the statement of actual cost incurred by them as certified
by the Chartered Accountants and issue revised rent certificates having regard
to the actual cost of additions and alterations.
(4)
The instructions mentioned above will on the one hand achieve uniformity of the
certificates as reasonableness by the executive Engineer’s and on the other
reduce the cost of grant payable on rent.
The
executive Engineer’s are requested to adhere to the instructions indicated in
para 3 above in respect of cases pending with them for issue for issue of
certificate for reasonableness of rent. The certificates pending with them for
issue of certificate of reasonableness of rent. The certificates pending to be
issued for the current financial year and those to be issued for the next
financial year onwards should be based on the instructions above.
(Government
Circular, Education Department, No. GAC. 1072/E, dated 5th November
1972).
(Please
also see Annexure 24).
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