Case: Godhra Borough Municipality Vs. Godhra Electricity Co. Ltd

2. 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 Godhara. 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. On appeal by the respondent, the Judicial Magistrate fixed the valuation of the properties at Rs. 90,000. On the appellant going in revision, the Sessions Judge fixed the valuation at Rs. 1,25,000. As a result of the High Courts decision the valuation stood reduced to Rs. 90,000. The present appeals are by the Municipality.

Court's reasoning:
Under Rule 4 (l) (b) above, the buildings of the respondent had to be valued on the capital basis. Under Rule 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 Rs.41,541-12-9. He sought to rely on the balance sheets and the 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 Tewan the life of the office buildings was 50 years white 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 1956-57 and taking into consideration the properties were over 40 years old, the Magistrate assessed the capital value at Rs. 90.0005. The said figures 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 included at least Rs. 1,00,000 as the cost up to 51st March, 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 municipalitys 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 and rounded the same off to Rs. 1,25,0007. We find ourselves unable to accept the views expressed or the reasoning given in the judgment of the High Court. Section 73 empowered the municipality to impose a rate on buildings or lands. Now the word rate had not been defined in the Act but it has a well known meaning10. Rule 5 of the Godhra Municipal Rules lays down that the capital value is to be determined in each case on reliable data furnished by the mills and the factories when called upon to do so and in the absence thereof is to be determined by the Chief Officer or expert value. The learned counsel for the respondent contended that here there were reliable data in that the balance sheet of the company showing the value of these properties for the purpose of the Companies Act and there was no reason why the same figures should not be adopted as the capital value of the lands and buildings within the jurisdiction of Godhra municipality. This clearly is fallacious as under Section 211 ofthe Companies Act, 1956 the balance sheet of a company has to be drawn up in the form prescribed by Schedule VI. Under the said Schedule, Part 1, the value of fixed assets has to be shown "distinguishing as far as possible between expenditure upon (a) good-will, (b) land, (c) buildings, (d) leaseholds, (e) railway sidings, (f) plant and machinery, (g) furniture and fittings, (h) development of property etc." The fourth column of the form which gives the instructions in accordance with which assets should be made out shows under each head "the original cost and the additions thereto and deductions therefrom during the year, and the total depreciation written off or provided up to the end of the Year is to be stated." It will therefore be noticed that the figures given in the balance sheet are merely statements in terms of the form given in Schedule VI. They have no relevance in determining the capital value of property for the purpose of assessment to a rate.