Gujarat High Court
The Surat Textile Market Co-Operative ... vs The Municipal Corporation Of The City Of ... on 8 November, 1990
Equivalent citations: AIR1992GUJ70, AIR 1992 GUJARAT 70
ORDER
1. The petitioner seeks to challenge the judgment and order dated 18th October 1979 passed by the learned Extra Assistant Judge, Surat in Regular Civil Appeal No. 283 of 1977 dismissing the appeal confirming the order passed by the Civil Judge (S.D.), Surat in Municipal Assessment Appeal No. 13 of 1975 dated 26th August 1977 upholding the action of the respondent Municipal Corporation by which the respondent had added an amount of Rs. 5508/- in the annual letting value of the premises in respect of charges recovered by the petitioner for use of a direct lift for access to the revolving restaurant on the 14th floor of the premises
2. The petitioner constructed a textile market building on the land taken on lease from the respondent-Corporation. The shops constructed by the petitioner were allotted to various persons as member tenants of the petitioner-Society. In this huge complex 13 lifts were installed and one of such lifts was exclusively reserved for use of persons who wanted to go to the 14th floor for visiting the revolving restaurant. That lift would go nonstop to the 14th floor. The premises of the said revolving restaurant were leased out by the petitioner to Kapoor Deviarwala Hotels by lease deed dated 5th April 1974 for a period of 10 years. It appears that two other lifts were provided for the hotel portion and as stipulated in the lease deed the expenses towards the salary of the liftman, power consumption and all other incidental expenses were I to be borne by the lessee in respect of those two lifts while the lessor was to bear the expenses of pay of the liftman, power consumption and other incidental expenses for the lift used for the revolving restaurant. It was stipulated between the parties that the liftman employed by the lessor for that lift will be exercising control over the entry in the revolving restaurant. It was further stipulated in respect of that lift that fee would be charged and collected fully by the lessor for maintenance and service charges or for admission to revolving restaurant and observation gallery. The charges were to be fixed by the managing committee of the lessor from time to time. Accordingly the petitioner was charging fees from the visitors for their access to the restaurant through the said lift. The petitioner was served with special notices Nos. 91 to 97 dated 23rd January 1975 pertaining to assessment years 1-5-1973 to 31-3-1975 for assessment in respect of the said building. The petitioner filed objection on 13th January 1975 which was heard on 27th February 1975. By the order dated 1st May 1975, the objection filed by the petitioner to the effect that the income derived from the various persons using the lift for going to the 14th floor should not be considered as part of the income derived from the property which was liable to municipal taxes, was overruled. The petitioner appealed against the said decision by filing Municipal Assessment Appeal No. 13 of 1975 which was dismissed by the learned Civil Judge (S.D.) who held that the respondent had not erred in computing income of the lift for assessing the annual letting value of the premises. The learned Judge found that while no charge was made from persons who used other lifts for their access to the building, the petitioner charged Re. I from each visitor for using the lift for going to the revolving restaurant and admittedly that charge was over and above the rent which was collected from the tenant of the revolving restaurant. He held that the assessment of Rs. 5508/- as calculated after deducting 50% of service and maintenance charges from the total amount collected by the petitioner from the persons going to the revolving restaurant through the lift was properly made and there was no reason to interfere with that order.
3. The Appellate Judge recorded that it was considered before him that the petitioner did not challenge the assessment of Rs. 5508/ per month on the basis of calculation. It was, however, contended before him that the income which the petitioner derived by collecting fees from the visitors to the restaurant using the lift did not form part of the rent recovered from the tenant of the restaurant and, therefore, it did not form part of the annual letting value of the premises. It was urged before him on behalf of the respondent that the lift was a special amenity provided to the tenant running the revolving restaurant and even though the amount was recovered from the customers it amounted to additional income to the petitioner from the premises which was given on lease to the tenant. The Appellate Judge found that when the rent of the revolving restaurant was fixed, the expenses of the lift were not taken into consideration and that the said lift was provided only for the restaurant. He came to the conclusion from the evidence on record that the premises were given on lease to the tenant running the revolving restaurant with a special facility of the lift and while fixing the rent of the restaurant the expenses of the lift were not taken into consideration. He found that the charge of Re.1 from each customer for the use of the said lift cannot be separated from the premises for the visit of which the amount was recovered. Holding that the said income from the use of the lift was an additional income to the petitioner for a special facility provided to his tenant, the learned Appellate Judge dismissed the appeal.
4. It was contended by Mr. A. H. Mehta learned counsel appearing for the petitioner that the customers who used the lift for going to the revolving restaurant on the 14th floor of the said building were not occupiers of the building or any part thereof since they were fluctuating body of persons and had no right to occupy the premises. He submitted that the lift was machinery and therefore the use of the said lift cannot be taken into account for determining the annual letting value of the premises in view of the definition contained in Section 2(1)A of Bombay Provincial Municipal Corporations Act, 1949 of the "annual letting value" which excluded furniture or machinery contained or situate in the premises. Mr. G. N. Desai, learned counsel appearing for the respondent on the other hand contended that the lift provided for the said revolving restaurant was an integral part of the building and income derived from the customers who used the lift for going to revolving restaurant could validly be computed for determining the annual letting value of the premises. He also submitted that there was no error commmitted by the Courts below in passing the impugned orders and in any view of the matter this Court cannot interfere with the order passed by the Courts below under Article 227 of the Constitution of India, which was within the bounds of their jurisdiction.
5. There can be no dispute about the fact that the lift taken by itself may be described as machinery. However, it is not the value of the lift which is sought to be added for determining the annual letting value of the premises. Therefore, no question of adding the value of the lift by itself as machinery arises in the present case. Section 2(3) of the Act defines 'land' which inter alia includes things attached to the earth or permanently fastened to anything attached to the earth. A lift which is installed in a building can be said to be an object which is permanently fastened to the building which is attached to the earth. When the lift was to be used for going to the 14th floor with a stipulation that it will not stop anywhere and that it was meant for the use the revolving restaurant on the 14th floor, it is clear that it was nothing but a passage for an access to the revolving restaurant. Modern scientific development has made it possible to provide such passages in place of tiring staircases. An access to the revolving restaurant on the 14th floor by use of such lift was absolutely necessary for going to the restaurant since no-one would be expected to climb 14 storeys by going through the stair-cases. It is clear that this particular lift was intended to be an exclusive passage for going to the revolving restaurant on the 14th floor and it should be viewed as such in the context of imposing municipal tax as under the Act. The provision for such exclusive passage to the revolving restaurant cannot be compared with rendering services or giving the amenities of providing hot water to the tenants in a building. Therefore, the decision in Bell Property Trust Ltd. v. Hampstead Borough Assessment Committee of the Court of Appeal, reported in 1940 (3) All ER 640, in which it was held that the cost of providing the services of amenities and a sum representing the profits thereon would properly be deductible from the gross rents for the purpose of determining the gross rateable value, relied upon by the learned counsel for the petitioner cannot help the petitioner. It may be mentioned here that the part of the decision in Bell Property case (supra) which allowed a deduction from the gross rents for landlord's profits for repairs to common parts and for depreciation of plant and buildings not part of the hereditament was reversed by legislation. The law on landlord's services is now governed in England by the decision of the Court of Appeal in the Bell Property Case (supra), as modified by Section 23 of the General Rate Act, 1967. Reliance placed on behalf of the petitioner on Maneklal v. Municipal Commissioner for Greater Bombay, reported in (1961) 65 Bombay Law Reporter 480 cannot also help the petitioner since in that case it was held that the electric lamps provided in a connecting road for the access to the building were not an integral part of the premises let to the tenants and that therefore the assessee was entitled to deduction for the electric charges paid by him in assessing the rateable value of the buildings. In the present case there is no question of any service or an amenity being provided of the nature with which the Courts were concerned in Bell Property case (supra) and Maneklal's case (supra). The lift provided for the restaurant was an integral part of the building and would be a passage to the restaurant rather than a mere service or amenity to be provided for by the landlord unconnected with the premises let.
6. In Municipal Corporation, Greater Bombay v. Royal Western India Turf Club Ltd. reported in AIR 1968 SC 425 in context of provisions of Section 154 of the Bombay Municipal Corporation Act, 1888 it was held that the annual rent has to be worked out on the basis of what a hypothetical tenant would be willing to pay as rent of the premises to a hypothetical landlord who is prepared to let the premises from year to year as they stand having regard to all the advantages and disadvantages relating to such premises, such as, the situation, the nature of the property the obligations and liabilities attached thereto and other features, if any, which enhance or decree their value to such a tenant. It was held that the said provision simply enjoined upon the Municipal Corporation to determine the annual rent and the rateable value of the property there from but did not provide for any particular method of rating out of the several well known methods usually followed in such assessments, such as the comparative method, the contractor's method, the unit method and the profit basis method, that is, profit making capacity or valuating by reference to receipts and expenditure. In Dr. Balbir Singh v. M.C. D. reported in AIR 1985.SC 339 in the context of rent laws and the provisions of Delhi Municipal Corporation Act it was held that if the building is not in a proper state of repair or is so situate that it has certain disadvantages from the point of view of easy accessability or means of transport any other similar cause, the actual rent which the owner may reasonably expect to receive from a hypothetical tenant may be less than the standard rent determinable on the principles laid down in the Rent Act. It was held that the test is not what is the standard rent of the building but what is the rent which the owner reasonably expects to receive from a hypothetical tenant and such reasonable expectation can in no event exceed the standard rent of the building determinable in accordance with the principles laid down in the Rent Act, though it may be a given case lower than such standard rent. In the present case no such question regarding the value being assessed in excess of the standard rent arises and hence this decision cannot assist the petitioner.
7. It is clear from the terms stipulated between the petitioner and the tenant which are reproduced in the petition that the access through the said lift to the revolving restaurant on the 14th floor was to be regulated by the petitioner who reserved exclusive control on the said passage by providing its own liftman and charging fees from the customers who desired to go to the restaurant. The terms clearly show that while two other lifts for the hotel portion were to be maintained by the tenant, this particular lift was to be regulated by the petitioner who was free to charge and collect fee in respect of the said lift. It is obvious that the rent which was fixed in respect of the premises let out to the tenant did not take care for the amount which would have become payable had the petitioner not retained his full control over the said passage to the revolving restaurant. If the amount of rent fixed was also for the said passage by use of the lift to the restaurant, then surely the tenant would not have agreed to the term under which the petitioner could charge and collect fees in respect of the use of the said lift for going to the revolving restaurant. In other words, if the said exclusive passage through the lift was also taken into account while fixing the rent, the rent would have been higher. It was open to the respondent Corporation to impose tax on the said portion used as passage through the said lift constituting an integral part of the building for access to the 14th floor. One way for determining the amount of annual letting value in respect of the said portion of the premises was to assess how much more rent the tenant running the restaurant on the 14th floor would have given had the petitioner not retained his control on the access through his lift to the restaurant. However, such passage alone from the ground floor to the 14th floor by the said lift could not have been let out to a hypothetical tenant and therefore having regard to the peculiar user to which this passage was to put to, it was open to the respondent Corporation to consider the profit earning capacity of the said passage for ascertaining what additional amount the willing hypothetical tenant would give for the exclusive control of the passage through the said lift from the ground floor to the revolving restaurant on the 14th floor. Therefore, it appears that the Courts below were justified in upholding the action of the respondent in adding an amount of Rs. 5508/- per month being 50 per cent of the income derived by the petitioner from the customers visiting the revolving restaurant by using the said passage through the lift. There is absolutely no error in the reasoning adopted by the Appellate Judge and the conclusions arrived at by him in forming the decision of the Trial Court. There is, therefore, no substance in this petition, which deserves to be rejected. Rule is, therefore, discharged with no order as to costs.
8. Petition dismissed.