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TMI Blog1968 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment dated December 1, 1960, passed by the District and Sessions Judge of Panchmahals. The matter arises out of assessments made by the appellant constituted under the Bombay Municipal Boroughs Act, 1925, on the respondent under section 73 of the Act. The respondents are an electricity company owning, inter alia, properties bearing several numbers in the municipal borough of Godhara. For the years 1956-57 and 1957-58 the appellant had fixed the valuation of the properties belonging to the respondent at Rs. 3,25,000. On appeal by the respondent, the Judicial Magistrate fixed the valuation of the properties at Rs. 90,000. On the appellant going in revision, the Sessions Judge fixed the valuation at Rs. 1,25,000. As a result of the High Court's decision the valuation stood reduced to Rs. 90,000. The present appeals are by the municipality. Under section 73(1) of the Bombay Municipal Boroughs Act, 1925 (hereinafter referred to as the 'Act' ) : " Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76, a municipality may impose for the purposes of this Act any of the following taxes, namely--- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent, had affirmed an affidavit showing that the approximate value of the seven items of property on which tax was sought to be imposed as per the books of the company was Rs. 41,541-12-9. He sought to rely on the balance sheets and the accounts of the company audited under the Companies Act for the purpose. The Judicial Magistrate observed that the properties were 40 years old and according to Tewari the life of the office buildings was 50 years while that of others was only 30 years. Acting on the admission of Tewari that the price of building materials had increased three times the original figures in 1956-57 and taking into consideration the properties were over 40 years old, the Magistrate assessed the capital value at Rs. 90,000. The Sessions Judge dealt with the matter in greater detail and noted that neither party had given him real assistance in determining what should be the proper assessment. According to him the assessment papers preceding the bills had not been produced and neither party had led any evidence as to how the capital value was to be arrived at. He, however, felt that the capital value could not mean merely the book value shown in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal cost of construction without depreciation." Accepting the figure of Rs. 41,541-12-9 as the cost of construction of the building in 1920 as found by the courts below, be observed that the capital value, should be " either Rs. 41,541-12-9 or something less after deducting depreciation. " According to him " the assessee has not come in revision against the order of the Magistrate fixing the value at Rs. 90,000. Both the courts have erred in considering the probable cost of construction of a new building. " He therefore held that the courts below had committed a material mistake in the exercise of jurisdiction in relying upon the probable cost of constructing a new building of a similar type in order to estimate the capital value as contemplated by the Godhara Municipality and accordingly reduced the capital value fixed by the Sessions Judge to Rs. 90,000. We find ourselves unable to accept the views expressed or the reasoning given in the judgment of the High Court. Section 73 empowered the municipality to impose a rate on buildings or lands. Now, the word " rate " had not been defined in the Act but it has a well-known meaning. As observed in Patel Gordhandas Hargovindas v. Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpret was the same Act which is before us in this case. Consequently, that decision affords us a good guide in forming our own conclusions in this case. Section 75 of the Act has an Explanation introduced in 1966 which reads as follows : " Explanation.---For the purposes of a rate on buildings or lands, the basis of valuation may be--- (i) the annual letting value ; (ii) the annual value ; (iii) the floor area, in the case of mills, factories and buildings and lands connected therewith ; and (iv) the capital value, in the case of vacant lands. " The Explanation is deemed always to have been substituted for the original by the Maharashtra Act No. 3 of 1966, section 3(b). Rule 4 of the Godhara Municipal Rules shows what properties are to be valued on the capital basis. What the capital basis is is not defined. The capital value, however, can be determined in the way laid down in Patel Gorthandas's case by adopting the contractor's method. What that method is has been explained in Ryde On Rating (eleventh edition), chapter 20. In R. v. School Board for London Cave J. applied the contractor's test to schools. Ryde points out that it was tacitly recognised as applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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