TMI Blog1967 (9) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... r the last few years the Municipal Corporation has been assessing the rate able value of the building as equivalent to the actual rents recovered by the owners. After the rate able value for the year 1956-57 was assessed it was found that the terrace of the building was used for advertising Tata Mercedes-Benz Automobile Trucks and Buses by means of a neon-sign. This was done under an agreement dated February 5, 1957 entered into by the appellants under which the Tata Locomotive and Engineering Co. Ltd., had a reed to pay to the appellants ₹ 800 per month in consideration of their being allowed to display the said advertisement and a further sum of ₹ 700 in consideration of the owners agreeing not to allow any one else to use-any portion of the said building for displaying any advertisement save those of the tenants on the ground floor not above the level of the height of the ground floor. The agreement provided also that it would be the owners who, during the continuance of the agreement, would pay all existing and future rates, taxes etc., which would be assessed, imposed, charged or become payable in respect of the said building or the said advertisement except the Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts then applied for and obtained a certificate under Art. 133(1)(a) of the Constitution and filed this appeal. Counsel for the owners challenged the correctness of the High Court's judgment and order and contended that in deter- mining the annual rent of the building the assessing authority can, take into account the rent at which the. building is expected to be let, that therefore the income derived from an agreement which amounts to a mere licence and not a demise cannot be added to such rent, such income being totally irrelevant to the concept t of annual rent envisaged in rating. -To appreciate the contention it is necessary first to examine s. 154(1) of the Act. The section provides that in order to fix the rate able value of any building or land assessable to a property tax, there shall be deducted from the, amount 'of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten percent of the said annual rent and, the said deduction shall be in lieu of all allowances for repairs or on any other account whatever. The assessing authority for the purpose of fixing to rate able value has therefore to determine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and every intrinsic circumstance which tends to push the rental value up or down must be taken into consideration. In other words, in estimating the hypothetical rent all that could reasonably affect the mind of the intending tenant ought to be considered. (Cartwright v. Sculcoates Union([1900] A.C. 150.). Scott, L. J. Robinson Bros. v. Houghton and Chester-le-Street Assessment Committee([1937] 2 K.B. 445 at 469.) observed: - It is the duty of the valuer to take into consideration every intrinsic quality and every other circumstances which tends to push the rental value up or down, just bec ause it is relevant to the valuation and ought there- fore to be cast into the scales of the balance... The 'objective being the real value of the actual hereditament, the inquiry is primarily economic and not legal-, it is only legal in so far as logical relevance is the measure of legal admissibility. (See also Ryde on Rating, 11th ed., 385, 387). The measure for purposes of rating is therefore the rent which a hypothetical tenant, looking at the building as it is, would be prepared to pay. Though the tenant is hypothetical and the rent too is, hypothetical, the property in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as he can the beneficial use to which the property is capable of being put. Therefore, the mere fact that the income from the agreement is not rent but licence fee and therefore cannot be added to the actual rent fetched by the property does not justify on any principle 'of rating or any construction of section 154 of the Act, disregard of it while estimating the rent which' the property would be expected to fetch. It is true that the rating was so far made including the year in question on the basis of the actual rent derived from the property. That appears to have been done because 'of the restrictions under the Bombay Rent Act by reason of which the property cannot be leased at rent higher than the standard rent allowed under the provisions of that Act. Since no hypothetical tenant would pay rent higher than such standard rent the actual rent would ordinarily be the rent expected' from a hypothetical tenant. The question would be whether the Corporation would be justified in enhancing the rate able value by adding the said sum of ₹ 1500 per month arising from the said amount? It is true, as 'observed earlier, that -the hypothetical rent cannot be in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or a mere licensee, the income arising from advertisement hoardings has always been rated irrespective of the question as to who was liable to pay the tax. Reliance was placed both before the High Court and also before us on the decision in Corporation of Calcutta v. Anil Prakash Basu(1). The building there was let out to the tenant at ₹ 64 / 14 / -. per month. On the roof of it, however, the Calcutta. Street Advertising Company had displayed a neon sign board of Capstain cigarette for which the owner was paid ₹ 125 per month. The question was whether the Calcutta Corporation was right in treating this income as rent within the meaning of s. 127(a) of the Calcutta Municipal Act, 1923 and take it into account while determining the annual letting value of the building. Section 127(a) is as follows.: For the purpose of assessing land and building to the consolidated rate the annual value of land and the annual value of any building erected for letting purposes or ordinarily let shall be deemed to be the gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year less in the case of a building an allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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