Case: State Of Punjab &amp; Another Vs. British India Corporation Ltd

is provided or a cloakroom or a number of other parts of the hereditament. Tucker J. agreed- with this conclusion and observed :- ((The element which, to MY mind., is decisive is that the facts stated show that the canteen was necessary and essential for the welfare and efficiency of the workers engaged in the admittedly industrial part of the under. taking."For applying the two principles mentioned above to the facts of these two appeals we have to ascertain to what use the property in question has been put. In the first appeal ( In which the British India Corporation Ltd. is the respondent) we are concerned -with four units : (1) A set of rooms used for indoor games by the mill employees; (2) One big hall used as the Gurkha Guards Club; (3) A set of rooms used as officers Club, and (4) A set of rooms used as residential quarters by workers of the mills.9. In our opinion, the allotment of these buildings for the use of the workmen was made for a purpose which was necessary to the efficiency of the workmen.10. The property assessed in the other appeal (in which Shri Gopal Paper Mills Ltd., is the respondent) consists of 200 quarters which have been allotted to workers of the factory for their occupation. The provision of such quarters is clearly necessary to the welfare and efficiency of the workmen and it must be held that in this case also the buildings were being used for the purpose of a factory. The next question is : what is the meaning of "rent" in cl. (ii) of Rule 18 (4). In its wider sense rent means any payment made for the use of land or buildings and thus includes the payment by a licensee in respect of the use and occupation of any land or building. In its narrower sense it means payment made by tenant to landlord for property demised to him. Did the rule-making authority when providing that the exemption provided by sub.rules 1 and 2 of Rule 18 shall not extend to quarters and other buildings for which "rent" is charged, used the word in its wider sense or in its narrower sense? In seeking an answer to this question it is legitimate to examine the use of the word "rent" in the Act for which these rules were made. At the time the rules were first made in 1941 the Act used the word "rent" only in two sections. First, in s. 5, where in providing how the annual value of land or building shall be ascertained the legislature said that it shall be ascertained "by estimating the gross annual rent at which such land or building ..................... might reasonably be expected to let from year to year. It is absolutely clear that here the word "rent" is used in its strict and narrower sense of payment by tenant to landlord for demised property. The other section where the word "rent" occurs is s. 14, where in providing for recovery of tax in arrears the legislature said : .......... it shall be lawful for the prescribed authority to serve upon any person paying rent ............... to the person from whom the arrears are due, a notice stating the amount of such arrears of tax and requiring all future payments of rent by the person paying the rent to be made direct to the prescribed authority and also providing that such notice shall operate to transfer to the Prescribed authority the right to recover, receive and give a discharge for such rent". While the section itself leaves it doubtful whether the word "rent" has been used in the narrower or the wider sense, the marginal note describes the subject-matter , of the section thus : "Recovery of tax from tenants." If this note is taken into consideration it becomes clear that in this section also the word "rent" was used in its narrower sense to mean payment made by tenant to landlord for demised property.When in 1941 the rule-making authority set about framing the Rules, it had before it this clear use of the word "rent" in its narrower sense in s. 5 and the marginal note in s. 14 which was some indication that there also the word "rent" was used in the narrower sense. In the absence of anything to indicate the contrary, it would be reasonable to think that the rule-making authority would not depart from the meaning in which it had reason to believe that the legislature had used the word, and that it used the word in cl. (ii) of Rule 18 (4) in the same narrower sense of payment by tenant to landlord for demised property.11. Our conclusion therefore is that the word "rent" in cl. (ii) of Rule 18 (4) means payment to a landlord by a tenant for the demised property and does not include payments made by licensees.12. In coming to this conclusion we have not overlooked the fact that there is scope for an argument that in cls. (d) and (e) of s. 4 of the Act as they stand after the amendments in 1954 and 1957, respectively, the word "rent" has been used in the wider sense. Assuming that this is so, such use of the word in 1954 and 1957 cannot be -taken into account for the purpose of interpretation, as the Rule under consideration was framed long before these dates.13. Coming now to the facts of the two cases before us, we find that admittedly, in both the cases. the property that has been assessed was allowed to be used by the employees on leave and license. Whatever payment was received from them was not therefore "rent" within the meaning of cl. (ii).14. Our conclusion therefore is that no tax is leviable under the Punjab Urban Immovable property Tax Act, 1940, in respect of the buildings in these two appeals. The High Court therefore rightly quashed the orders of assessment.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It appears to us to be reasonable to think, however, that two principles will be easy of application in the solution of tile problem in the majority of cases. One is that where the building is used for a purpose which the factory law requires must be fulfilled in order that the factory may function, that will be user for the purpose of a factory. The other is that where the user of the building is such as is necessary for the efficiency of the machines or of the workmen engaged in the factory the building should be held to be used for the purpose of aour opinion, the allotment of these buildings for the use of the workmen was made for a purpose which was necessary to the efficiency of thecoming to this conclusion we have not overlooked the fact that there is scope for an argument that in cls. (d) and (e) of s. 4 of the Act as they stand after the amendments in 1954 and 1957, respectively, the word "rent" has been used in the wider sense. Assuming that this is so, such use of the word in 1954 and 1957 cannot be -taken into account for the purpose of interpretation, as the Rule under consideration was framed long before thesenow to the facts of the two cases before us, we find that admittedly, in both the cases. the property that has been assessed was allowed to be used by the employees on leave and license. Whatever payment was received from them was not therefore "rent" within the meaning of cl.conclusion therefore is that no tax is leviable under the Punjab Urban Immovable property Tax Act, 1940, in respect of the buildings in these two appeals. The High Court therefore rightly quashed the orders of assessment.