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Issues Involved:
1. Interpretation of Section 154 of the Bombay Municipal Corporation Act, 1888. 2. Correct rateable value assessment under Section 154. 3. Allowability of various expenses claimed by the respondent-Club in the rateable value assessment. Issue-wise Detailed Analysis: 1. Interpretation of Section 154 of the Bombay Municipal Corporation Act, 1888: The primary issue in this appeal concerns the interpretation of Section 154 of the Bombay Municipal Corporation Act, 1888, which deals with the valuation of property assessable to property taxes. The section mandates that to fix the rateable value of any building or land, a deduction of 10% from the annual rent is to be made in lieu of all allowances for repairs or any other account. This annual rent is not the actual rent paid but rather a hypothetical rent that a tenant might reasonably be expected to pay from year to year. 2. Correct Rateable Value Assessment under Section 154: The assessing authority adopted the profits basis method to determine the rateable value, which involves calculating the net annual value from the profits made or capable of being made from the premises. This method starts with the gross receipts and deducts expenses necessary to maintain the premises, resulting in the net annual value. The Small Cause Court and the High Court both upheld the use of this method given the unique nature of the Club's premises. The High Court, however, disagreed with some of the deductions allowed by the assessing authority, resulting in a significantly lower rateable value than the actual rent paid by the Club. 3. Allowability of Various Expenses Claimed by the Respondent-Club: The Club claimed several expenses as deductions, which were partially or wholly disallowed by the Deputy Municipal Commissioner and the Small Cause Court. The High Court, however, allowed most of these deductions, leading to the following detailed analysis: - Item 3 (Bombay Course upkeep and repairs): The High Court allowed this expense, reasoning that the upkeep of the racecourse track is essential for earning receipts and is not covered by the 10% statutory deduction for repairs under Section 154(1). - Item 6 (Track sand and Murum): The High Court disagreed with the Small Cause Court's partial allowance and allowed the full expense, emphasizing that these costs are necessary for maintaining the track and thus are deductible. - Item 7 (Legal charges): The Small Cause Court allowed this deduction, which was upheld by the High Court. - Item 9 (Totalisator upkeep and repairs): The High Court allowed this expense, noting that the totalisator is an essential adjunct for the efficient operation of the racecourse and its upkeep is necessary for generating receipts. - Items 10, 11, 12, 13, 14 (Salaries and wages, motor lorry expenses, grass and maintenance charges, insurance and garden expenses, spares for tractors and machinery parts): The High Court allowed the full deduction of these expenses, rejecting the Small Cause Court's view that they should be partially borne by the lessor since the race meetings were held only for part of the year in Bombay. - Item 19 (Painting): This item was not pressed by the Club before the Supreme Court and thus was not considered. - Licence Fee: The High Court allowed the full deduction of the licence fee, rejecting the argument that it should be divided between the tenant and the landlord. The Court found that the licence was solely for the Club's benefit in conducting race meetings and thus was the tenant's burden. - Wheel Tax and Water Tax: The High Court allowed the full deduction of these taxes, rejecting the partial allowance by the Small Cause Court. The Supreme Court upheld the High Court's judgment, affirming that the deductions allowed were proper and necessary for determining the correct rateable value. The appeal was dismissed with costs, concluding that the net rateable value need not always equal the actual rent paid.
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