DIXIT C.J - (1.) THIS revision petition, which has come up before us on a reference by one of us, is directed against a decision of the Additional District Judge, Indore, rejecting an appeal preferred by the petitioners against a determination of the Commissioner, Indore Municipal Corporation, fixing the valuation of a hotel building owned by the petitioners, for the purpose of assessment to property-tax levied by the Indore Municipal Corporation, at Rs. 43, 405. 20.
(2.) BRIEFLY stated, the material facts are that the petitioners own a hotel building known as Tirana Lodge' located on the Ravindranath Tagore Marg, c. r. No. 711 of 1966 decided on 26-9-1968 against the order of S. R. Ghanekar, ii Addl. Dist. Judge, Indore, dated 29-10-1966, in c. M. Appeal No. 72 /66. N.. Indore. In 1956 the annual gross rental value of this building was determined at Rs. 6,600 and on that basis, property tax of Rs. 464 was levied. On 3rd June 1965 the Assessment Officer of the Corporation revised the annual value of the building and fixed it at Rs 43,405.20. The petitioners then preferred objections under section 147 of the Madhya Pradesh Municipal Corporation Act, 1956 (hereinafter called the Act) to this valuation, which were heard by the Commissioner who, overruling them, reached the conclusion that the annual value of the building was Rs. 43,405.20. Thereafter an appeal was preferred by the petitioners before the Additional District. Judge under section 149 of the Act, which was dismissed. The applicants have now filed this revision petition under section 392 of the Act. The relevant provision of the Act to consider is section 138 (b) and (c) which is as follows- "138. For the purposes of assessing land or building to the property tax:- ' (a) *** *** *** (b) the annual value of any building shall notwithstanding anything contaikod in any other law for the time being in force be deemed to be the gross annual rent at which such building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith might reasonably at the time of assessment be expected to be let from year to year, less an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. Explanation I.-For the purpose of this clause it is immaterial whether the building and the land let for use or enjoyment therewith are let by the same contract or by different contracts, and if by different contracts, whether such contracts are made simultaneously or at different times. Explanation II.-The term 'gross annual rent' shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by tenant. (c) the annual value of any building, the gross annual rent of which cannot be determined under clause (b), shall be deemed to be five per cent on the sum obtained by adding the estimated present cost of erecting the building, less any amount which the Commissioner may deem it reasonable to deduct for depreciation, to the estimated market value of the land valued with building as part of the same premises: Provided that- (i) in calculating the annual value of any land or building under this section the value of any machinery on such land or in such building shall be excluded; and (ii) When a building is occupied by an owner under such exceptional circumstances as to render excessive a valuation of five per cent on the cost of erecting the building, less depreciation a lower percentage may be taken." The contention of the petitioners, was advanced before the Commissioner and, in appeal, before the Additional District Judge and which was repeated before us, was that the annual value of the building determined in accordance with section 138 (b) of the Act could not exceed the annual value determined according to the standard rent in respect of the building under the Madhya Pradesh Accommodation Control Act, 1961; and that the Commissioner did not at all take into account the "standard rent" of the building and the learned Additional District Judge erred in holding that having regard to the language of section 138 (b) the "standard rent" in respect of the building under the 1961-Act was not relevant and could not be taken into consideration. It was further submitted that the annual value of the buliding was determined by the Commissioner in utter violation of section 138 (b) and (c); that he erred in.proceeding on the basis that each room in the building could fetch rent from Rs,.25 to Rs. 62.90 and including in the area of the building which could be let put the area of bath-rooms, passages, verandahs, open spaces etc.; and that he also did not give due weight to annual rental value of properties in the neighbourhood.
(3.) AT the outset, it must be stated that at the time of the hearing of this petition, none appeared on behalf of the Corporation. Consequently, we were deprived of the benefit of arguments on behalf of the Corporation in justification of the valuation fixed by the Commissioner. However, after hearing Shri Dhanda, learned counsel for the petitioners, and considering the provisions of section 138 (b) and (c), it is plain to us that the annual value of the building determined by the Commissioner and upheld by the Additional District Judge in appeal is based on no principle. Clauses (b) and (c) of section 138 are plain enough. According to clause (b), the annual value of any building is deemed to be that gross annual rent of the building, which it might reasonably be expected to fetch if let out at the time of assessment, less an allowance of ten per cent for the cost of repairs and other expenses necessary for the maintenance of the building. If the annual value of any building cannot be determined under clause (b), then it has to be determined in accordance with the provisions of clause (c) of section 138. Under that clause, the annual value of any building is deemed to be five per cent on the sum obtained by adding the estimated present cost of erecting the building after making a reasonable allowance on account of depreciation. It will be seen that under clause (b) of section 138 it is not the actual rent received by the owner or the landlord that is made the basis of determining the annual value of the building. It is the hypothetical rent which, the owner or landlord can reasonably be expected to receive at the time of assessment if the building is let out for the purpose for which it is being used at the time of assessment. The expression "which might reasonably at the time of assessment be expected to be let from year to year" used in clause (b) of seotion 138 is very significa.it. It indicates "hypothetical rent" cannot be "fantastio" or "black-market" rent in defiance of any statutory provision. It is the rent which a willing landlord may reasonably expect to get and a willing tenant may reasonably be expected to pay having regard to any statutory provision putting a limit on rent of building. Now, sections 6 and 7 of the M. P. Accommodation Control Act, 1961, plainly lay down that in respect of any accommodation to which that A.ct applies, no person shall claim or receive any rent in excess of the "standard rent", as defined in section 7, notwithstanding any agreement to the contrary. That being so, sections 6 and 7 of the 1961-Act, necessarily put a limit on the annual value of any building that may be determined u/s 138 (b) of the Act. The words "notwithstanding anything contained in any other law for the time being in force" used in olause (b) in no way override the effect of the expression, "whioh might reasonably at the time of assessment be expected to be let from year to year" from which flows a limitation on the annual value of any building. The annual value of any building u /clause (b) may be less than that arrived on the basis of the "standard rent", but it eannot exoeed it.;