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TMI Blog1984 (12) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing the income from house property under section 22 of the Act in each of the years. The Commissioner (Appeals) set his seal of affirmance in the appeals by the assessee and refused to agree that the assessments made for earlier years afforded a guide inasmuch as in those assessments, following the order of the Tribunal, municipal valuation had been preferred in determining the annual value in view of the change in section 23, effected by the Taxation Laws (Amendment) Act, 1975, opera-ting from 1-4-1976. The unsuccessful assessee is on further appeal to the Tribunal. 4. The principal contention of Shri Palkhivala, the learned counsel for the assessee, is that the municipal valuation alone should be the basis for fixing the annual value, as done in the earlier years and that the Cominis-sioner (Appeals) fell into error in treating the licence fee as rent. The rejoinder on behalf of the revenue was that no such distinction could be adopted between rent and licence fee for the purpose of section 23(1)(b) in its interpretation if the object of introducing clause (b) by amendment was kept in mind. Before going to the merits of the rival submissions, we must refer to a few facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the decision in Salisbury House Estate Ltd. v. Fry ( Inspector of Taxes) 15 TC 266 (HL)]. 10. If the building is self-occupied, estimation of the amount would be on the basis specified in clause (a) of section 23(1). If the building is leased to a tenant, then section 23(1)(b) would come into play, if the agreed rent is higher than the estimation that could be made under clause (a). Here again, there is a point. As Rankin, CJ. observes: The house may have been let cheap or dear, the lease may be 80 years old or a thing of yesterday; personal relations or business relations may have led to exceptional terms as to rent (p. 887) -Krishna Lal Seal, In re. AIR 1932 Cal. 886. So, if the agreed rent is less than the estimated return under clause (a), then the higher has to be adopted, and to know this, it is necessary first to estimate under clause (a) to see how it compares with the agreed rent and then to decide which of the two should be the basis, for clause (b) can be applied only if the agreed rent is in excess of the sum referred to in clause (a) . So far no difficulty suggests itself. 11. The point in dispute is, whether the property given essentially on licence basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... let in generic sense means to rent, to lease, to demise, to permit, to enter, to remain, pass or leave . As Collins M.R States in Warr v. London County Council [1904] 1 KB 719, the word let may be used so as only to give a licence. But in legal domain, it has a narrower width. As stated in Stroud s Judicial Dictionary (Fourth edn., p. 1523), the word let is synonymous with demise as an operative word in a lease. Biswas s Encylopaedic Law Dictionary at p. 434 reads that in legal phraseology, the term let ordinarily implies a tenancy , see also Venkataramaiya s Law Lexicon and Legal Maxims (Second edn., p. 1235) and Corporation of Calcutta v. Anil Prokash Basu AIR 1958 Cal. 423. 15. It is plain that as a legal term, let should normally be taken as an equivalent of lease . In ascertaining in what sense this word could have been used in clauses (a) and (b), British India Corpn. Ltd. s case (supra) is a helpful precedent to illumine the field and, therefore, it is necessary to go into certain details of this case. Under the Punjab Urban Immovable Property Tax Act, 1940, buildings were liable to tax under the State Law, but exemptions were, however, provided to a few c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta v. Smt. Padma Debi AIR 1962 SC 151. The phrase reasonably be expected to let from year to year occurs in section 127(a) of the Calcutta Municipal Act 1923, which prescribes for ascertaining the annual value of land and building and this has been interpreted by the Supreme Court and this is what their Lordships have stated in regard to let found in the provision : We shall first look at the provisions of the section to ascertain the meaning. The crucial words are gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year . The dictionary meaning of the words to let is grant use of for rent or hire . It implies that the rent which the landlord might realise if the house was let is the basis for fixing the annual value of the building. The criterion, therefore, is the rent realisable by the landlord and not the value of the holding in the hands of the tenant. This aspect has been emphasised by the Judicial Committee in B.N. Ry. Co. Ltd. v. Corporation of Calcutta 74 Ind. App. 1 (AIR 1947 PC 50). [Emphasis supplied) (p. 152) 17. Even in interpreting section 23(1), as it stood prior to the 1975 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of clause (b) of section 23(1), then it would not have expressly excluded tenant-occupied premises from all other cases for deduction of tax if paid by the owner. This is an indication that for the purpose of section 23(1)(b), lease alone is singled out from all other cases of grant of property for use and occupation to another. 20. It could be argued with gravity that introduction of clause (b) to section 23(1) was for removal of a mischief and by the nicety of distingui-shing lease from licence for the purpose of clause (b), the very object of the amendment would be defeated, Lord Parker, G. questions in Smith v. Hughes [1960] 1 WLR 830, I approach the matter by considering what is the mischief aimed at by this Act . The Gravemen of the revenue was that part of the rental income received by the landlords (owners was escaping tax and to prevent this, the amendment to section 23 was pro-posed by clause (8) in the Taxation Laws (Amendment) Bill, 1973, and in the Statement of Objects and Reasons, the following was stated in regard to clause (8): (8) This clause seeks to make the following amendments to section 23 of the Act which provides for the determination of annual val ..... X X X X Extracts X X X X X X X X Extracts X X X X
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