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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 ..... trate 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--- (i) a rate on buildings or lands or both situate within the municipal borough... " The procedure preliminary to imposing tax is laid down in section 75 and section 78 deals with the preparation of an assessment list. Section 58 empowers the municipality to make rules prescribing the taxes to be levied in a municipal borough for municipal purposes, etc. Rules 4, 5 and 7, relevant for our purpose, read as follows : " 4. Modes of valuation.---(1) For the purpose of determining tax the following properties shall be valued on the capital basis--- (a) All open lands, bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 of accounts of the assessee. He noted that according to the balance sheet for 1955-56 the property and assets under the head " Buildings " was shown as below : Buildings Cost up to 31st March, 1955 Rs. 1,72,866 - 5 - 11 Additions during the year Rs. 12,398 - 10 - 3 ------------------------------ Total Rs. 1,85,265 - 0 --- 2 ------------------------------ The said figures included the value of all the buildings of the company but those which were to be assessed were only seven out of which two residential bungalows and servants' quarters were to be assessed on the rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise 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. Municipal Commissioner, Ahmedabad, the word " has come to our country for the purpose of the local taxation from England. " In that case this court examined various statutes bearing on the English Rating Law and held that the word " 'rate' was used with respect to a tax which was levied on the net annual value or rateable value of lands and buildings and not on their capital value. It would therefore not be wrong to say that in the legislative history and practice in England up to 1925, 'rate', for the purpose of local taxation, meant a tax on the annual value of lands and buildings liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 applicable in various other cases. The principle on which the contractor's basis rests is given by the author at page 439 and the method of its application is given at page 442. The learned author notes that in " applying the contractor's basis it is possible to discern five stages. The first stage is the estimation of the cost of construction of the building. " There is a difference of view as to whether it is better to take the cost of replacing the actual building as it is, or the cost of a substitute building on the same plan as the actual building but otherwise in an up-to-date form. The second stage i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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