- (1.) The order under challenge was passed by a learned Single Judge of the High Court at Madras on a civil revision petition filed by the present respondent, Coimbatore Municipal Corporation.
(2.) The appellant K.G. Arts Centre Pvt. Ltd., owns and operates a cinema theatre complex called "Ragam, Thanam and Pallavi" in Coimbatore city. This theatre complex came into existence on 1-5-1981. The question in the appeal is about the mode of its assessment to property tax. The relevant provision is to be found in Section 122 of the Coimbatore City Municipal Corporation Act, 1981. Sub-section (2) thereof and the second proviso thereto are relevant. They read thus: "122. Method of assessment of property tax. (1) * * * (2) The annual value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or from year to year less a deduction, in the case of buildings, of ten per cent, of that portion of such annual rent which is attributable to the buildings alone, apart from their sites and the adjacent lands occupied as an appurtenance thereto; and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever; Provided that (a) in the case of (i) * * * (ii) any building of a class not ordinarily let the gross annual value of which cannot, in the opinion of the Commissioner, be estimated,the annual value of the premises shall be deemed to be six per centum of the total of the estimated market value of the land and the estimated present cost of erecting the building after deducting for depreciation a reasonable amount which shall in no case be less than ten per centum of such cost;"
(3.) It appears that the Commissioner of the respondent assessed the theatre complex to property tax on the basis of the capital value thereof but, it is an admitted position, he did not set out in his order any reasons for proceeding upon the basis that the theatre complex belonged to a class of buildings which were not ordinarily let. The assessment made accordingly by the Commissioner was challenged by the appellant before the Taxation Appeals Committee, Coimbatore. The Committee upheld the conclusion of the Commissioner. It acknowledged that the Commissioner had not adverted to the question of the basis for assessment of property tax of the theatre complex in his assessment order; he had not given reasons for adopting the capital value instead of the annual rental value. The Committee, however, made up for the lacunae by giving three reasons in this behalf. According to the Committee, being a newly constructed one, the theatre complex was not governed by the provisions of the Rent Control Act and, therefore, its annual rental value could not be adopted for assessing the property tax. In the second place, according to the Committee, the theatre complex "with its building, accessories and fittings cannot possibly be leased out to a single individual because it would involve huge expenditure and investment of money attendant with all risks for exhibiting films in the three theatres in the complex. In other words, there is remote possibility of leasing out this entire cinema complex to a single individual or an association of persons. So the annual rental value cannot afford us the basis for assessing this property for tax purposes". In the third place, according to the Committee, if at all there was a lease of the theatre complex, it would not be of the building alone but also of the furniture, fittings, generators and projectors therein. The basis of the annual rental value could not, in the Committee's view, "be a safe basis because it is very difficult to find out the annual rental value for building alone, especially in respect of a cinema theatre. In other words, this cinema theatre complex, with all its accessories cannot be ordinarily let out".;