MITTER, - (1.) THE following Judgment of the court was delivered by :
(2.) THESE are two appeals by special leave against the judgment and order dated 8/01/1963 of the Gujarat High court dismissing Civil Revision Applications 116 and 117 of 1961 filed by the appellant and all-owing similar applications Nos. 173 and 174 of 1961 filed by the respondent against the common judgment dated 1/12/1960 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 Godhra. For the years 1956-57 and 1957-58 the appellant had fixed the valuation of the properties belonging to the respondent at Rs. 3,25,000.00 . On appeal by the respondent, the Judicial Magistrate fixed the valuation of the properties at Rs. 90,000.00 . On the appellant going in revision, the Sessions Judge fixed the valuation at Rs. 1,25,000.00 . As a result of the High court's decision the valuation stood reduced to Rs. 90,000.00 . The present appeals are by the Municipality. Under s. 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 S. 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 s. 75 and s. 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 brought 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 detennining tax the following properties shall be valued on the capital basis :- (a) All open lands, buildings and yards belonging to the Railway Administration. (b) All buildings and lands other than those which are actually used for residential purposes belonging to Mills and Factories to which the Indian Factories Act, is applied. (2) All properties other than those mentioned above shall be valued on the basis of the annual letting value as defined in section 3(1) of the Act. 5. Mode of determining capital value: The capital value of properties mentioned in rule 4(1) shall, in each case, be determined on such reliable data as the Railway Authorities and the Agents of the mills and the factories may furnish when called upon from time to time to do so and in the absence of any such trust- worthy reliable data, it shall be determined by the Chief Officer or by expert valuers employed by the municipality for that purpose. 6.............................. 7. Amount of tax : (1) in case of properties which as stated above, are valued on the capital basis the tax to be levied shall be assessed at Rs. 0-8-0 per cent of the capital value and it shall be a direct tax thereon provided however that any fraction of hundred in excess of fifty rupees shall be taken as the next higher hundred and any fraction of fifty rupees or less be taken as the lower hundred. (2) In case of properties which, as stated above, are valued on the annual letting value the tax to be levied shall be assessed as -shown in the appendix annexed hereto.' Under rule 4(1) (b) above, the buildings of the respondent had to be valued on the capital basis. Under r. 5 the capital, value of properties had to be determined on such reliable data as the respondent might furnish and in the absence thereof, it would be the duty of the Chief Officer to determine the same. Before the Judicial Magistrate, one R. R. Tewari, an Assistant secretary of the respondent who 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 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 195657 and taking, into Consideration the properties were over 40 years old, the Magistrate assessed the capital value at Rs. 90,000.00 .
(3.) 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 account ,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. JUDGEMENT_1504_AIR(SC)_1968Html1.htm The said figure 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 rental value. The Sessions Judge therefore inferred from the above figures that Rs. 1,85,265.00 included at least Rs. 1,00,000.00 as the cost up to 31/03/1955 of the factory buildings in question. The Sessions Judge found himself unable to accept the contention that the depreciated selling value of the property was the capital value for the purpose of assessment of house tax. He also did not accept the municipality's ,contention that the cost of construction of buildings had gone up five times since 1920. Considering the rival contentions he fixed the capital value at three times the figure shown by the company, viz., Rs. 41,541.00 and rounded the same off to Rs. 1,25,000.00 .;