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Issues Involved:
1. Whether the assessing authority under Section 154(1) of the Bombay Municipal Corporation Act, 1888, can consider income derived from an advertisement hoarding on a building's roof when determining the rateable value of the building. Issue-wise Detailed Analysis: 1. Consideration of Advertisement Income in Rateable Value: The primary issue in this appeal is whether the assessing authority can include income derived from an advertisement hoarding on the roof of a building when determining the rateable value under Section 154(1) of the Bombay Municipal Corporation Act, 1888. Relevant Facts: The appellants own a building where the terrace is used for advertising via a neon-sign under an agreement with Tata Locomotive and Engineering Co. Ltd., which pays Rs. 800 per month for the advertisement and Rs. 700 for exclusive rights. The Municipal Corporation increased the rateable value of the building from Rs. 44,320 to Rs. 64,685, considering this additional income. The appellants filed a complaint, and the assessing authority reduced the rateable value to Rs. 59,600. The Chief Judge, Small Cause Court, disallowed the increase, but the High Court restored it, leading to this appeal. Legal Analysis: Section 154(1) of the Act mandates that the rateable value of a building is the annual rent it might reasonably be expected to let from year to year, minus a 10% statutory allowance. The principle in rating is that both gross and net annual value are estimated by the hypothetical rent a property might fetch. This includes considering all intrinsic qualities and circumstances affecting rental value. Hypothetical Rent Consideration: The hypothetical tenant would consider all advantages, including the unique location of the property and the potential income from advertising. The measure for rating is the rent a hypothetical tenant would pay, considering all beneficial uses of the property. Therefore, the income from the advertisement hoarding is relevant as it adds to the beneficial value of the building. Irrelevance of Lease vs. Licence: The distinction between lease and licence is irrelevant for assessing rateable value. The hypothetical tenant would consider the total potential income, not just the rent. The income from the advertisement, whether termed as rent or licence fee, affects the rent a hypothetical tenant would offer. Precedents and Comparisons: The judgment refers to English law and cases where the income from advertisements was rated irrespective of whether it was termed rent or licence fee. The case of Corporation of Calcutta v. Anil Prakash Basu, which held that licence fees could not be treated as rent, was distinguished on the basis that it did not consider the broader principle of hypothetical rent. Conclusion: The Court concluded that the income from the advertisement hoarding legitimately affects the rateable value of the building. The High Court was correct in confirming the enhancement of the annual rent from Rs. 44,320 to Rs. 59,600, as a hypothetical tenant would consider the additional income from the advertisement when determining the rent they could offer. Judgment: The appeal was dismissed with costs, affirming the High Court's decision to include the advertisement income in the rateable value of the building.
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