(Delivered by Ramakrishnan, J.)
These two cases have come before the High Court for decision on a reference under R. 17 of Sch. IV of the Madras city Municipal Act. The question raised in these references is regarding the correct interpretation of S. 100(2) of the Madras city Municipal Act as well as the proviso (a) (ii) thereof.
Premises Nos. 37-A/19 and 37-A/20 on the Madhavaram High Road, Madras, are under the occupation of Messrs. Addison Paints and Chemicals Private Ltd., and they are utilised for their industry in paints and chemicals. There was first of all an assessment of these premises to property tax and, in appeal, the Taxation Appeal Committee of the Corporation of Madras confirmed the assessment under S. 100(2)(a)(ii) at six per cent of the capital cost of the building less ten per cent depreciation. Against this decision, the assessee appealed to the Chief Judge Court of Small Causes. The appellant urged that even though the buildings were not actually let out on rent, they were susceptible of being so let and that, therefore, the annual value of the building for the purpose of assessment to property tax should be fixed as the rental value. For the purpose of calculating the rental value, the assessee urged that three per cent of the capital cost would be a fain estimate. The Chief Judge of the Court of Small Causes held that since the buildings were not actually let out to any one, S. 100(2) of the Act did not apply, but the proviso above mentioned applied. The learned Judge held further that six per cent of the market value of the building should be adopted for fixing the annual value. The appeal was dismissed and thereafter on the assessee's application, the Chief Judge has made the present referrence to the High Court stating the following points for decision:
“1. Whether the petitioner's buildings in dispute fall under the proviso to S. 100(2) of the Madras city Municipal Act or only under S. 190(2) thereof.
2. Whether six per cent of the capital cost of the buildings and land cannot be adopted in respect of buildings falling under S. 100(2) of the Act for computing annual value.
3. Whether in respect of buildings coming under proviso to S, 100(2) of the Act, anything less than six per cent can be adopted on the Capital cost of the buildings and land for computing the annual value.”
Point No. 1: S. 100(2) of the city Municipal Act reads:
“The annual value of lands and buildings shall be deemed to be the gross annual rent at which they may (at the time of assessment) 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 allowance for repairs or any other account whatever:”
Proviso (a) (ii) of the section is in the following terms:
“(a) In the case of any building of a class not ordinarily let the gross annual rent of which cannot in the opinion of the Commissioner be estimated—the annual value of the premises shall be deemed to be six per cent of the total of the estimated market value of the land at the time of the assessment and the estimated cost of erecting the building at such time after deducting for depreciation a reasonable amount which shall in no case be less than ten per centum of such cost……….”
Section 100(2) applies to buildings which can be reasonably expected to be let. It is irrelevant to consider for the purpose whether the building is actually let or not. There may be many types of buildings, which though suitable for being let, are actually not let. This distinction was pointed out by a Bench of this Court consisting of Rajamannar, C.J, and Venkatarama Aiyar, J., in The General Committee, General Committee, Madras Club v. City Municipal Council (1), and it was observed in that decision—
“It is not sufficient that a building has actually not been let to bring it within this category. So many buildings In which the owners reside are not ordinarily let nor even ordinarily intended to be let. But they certainly do not belong to the category of buildings of a class not ordinarily let. The buildings, which are contemplated as belonging to that class, are buildings like temples, memorial buildings etc.”
The principle of the above decision will have to be applied to the instant case. The proviso to S. 100(2) also makes this distinction clear. That proviso has to be applied in lieu of S. 100(2), if the buildings are “of a class not ordinarily let.” Stress is thus laid on the class or type of the buildings, as ordinarily not suitable for letting out.
Learned Counsel, Mr. T. Chengalvarayan appearing for the Corporation, drew our attention to S. 101 of the Act, wherein certain categories of buildings are exempted from property tax. But this list includes buildings, which could be ordinarily let and which could not also be ordinarily let. Thus a temple cannot be ordinarily let. But a building used for a school for the deaf and dumb could be let, if the owner so desires. Therefore the buildings mentioned in S. 101 of the Act, are not all of them illustrative of the type or class of buildings, which could not be ordinarily let. On the other hand, one can conceive of buildings, which from the very nature of their construction or design, can be considered as buildings not capable of being let, like temples, memorial structures, etc., referred to in the decision.
In this case unfortunately the learned Chief Judge of the Court of Small Causes has based his conclusion on the short ground that the building is not actually let. He has not considered whether the building is capable of being let. No doubt, we could have remanded the case to the lower Court for a specific finding on this question. But we find that in his affidavit the appellant has averred that the premises in question were similar to other buildings in the locality, which have a letting value. The Corporation has not challenged this affidavit, or let in evidence to show that there is something special in the construction of the premises, which makes it incapable of being let either as a residential or as a non-residential building. We are therefore of the opinion that S. 100(2) of the city Municipal Act applies to the premises in question and not the proviso. We answer the first question accordingly.
Points 2 and 3:—These go together. We have to point out that six per cent of the total cost of the buildings is a ratio that Is mentioned only for the purpose of the proviso (a) (ii), to S. 102 and it has no place in the main portion of S. 100(2). The decision cited above, arose out of a particular case of assessment to property tax, where it was found difficult to estimate the rental value under S. 100(2), and thereupon the assessing authority adopted three per cent of the capital cost for fixing the rental value. The decision also sounded a note of caution that the three per cent ratio would not serve as a useful precedent for other cases, except perhaps for cases in which similar circumstance exist. The fixing of the rental value under S. 100(2) is a question of fact, that has to be decided with regard to the circumstance of each case. Any reasonable criterion can be adopted for the purpose, for example, the rental value of similar buildings with similar amenities in the same locality and so on. Our answer to questions 2 and 3 therefore is that where S. 100(2) applies, the question of fixing the rental value should be considered independent of the proviso and on its own facts. The ratio of six per cent mentioned in the proviso has no direct relevancy for the purpose of fixing the annual value under S. 100(2), and it is for the assessing authorities to make a proper estimate. We answer the questions referred to us accordingly. There will be no order as to costs.
V.C.S