Municipal annual value is capped by standard rent; sub-letting receipts and owner apportionment do not affect valuation.

Annual value for municipal rate purposes is the gross rent the premises might reasonably fetch, but where rent control applies, statutory standard rent fixes the ceiling even if no controller's order has yet been made. The assessment therefore had to remain within the standard rent under the rent control law. Rent received by a tenant from sub-tenants was irrelevant because the valuation test looks to what the owner could reasonably obtain in an open-market letting, not downstream sub-letting receipts. Likewise, gradations of ownership affected only apportionment of liability, not valuation; rent receivable by a subordinate owner did not enter the computation of annual value.

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Issues: (i) whether the annual value of the premises for consolidated rate purposes could exceed the standard rent where no controller's order had fixed rent under the rent control law; (ii) whether rent received by a tenant from sub-tenants could be taken into account in fixing annual value; (iii) whether the existence of gradations of owners required consideration of the rent receivable by a subordinate owner in determining annual value.

Issue (i): whether the annual value of the premises for consolidated rate purposes could exceed the standard rent where no controller's order had fixed rent under the rent control law.

Analysis: The governing principle was that annual value is the gross annual rent at which the building might reasonably be expected to let, and that statutory control of rent places an upper limit on the hypothetical rent. The proviso to section 168(1) of the Calcutta Municipal Corporation Act, 1951 did not change that principle. Even where no controller's order had been made under section 9 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, the standard rent could still be ascertained under section 2(10)(b) of that Act. The assessed annual value therefore had to be confined to the statutorily determined standard rent.

Conclusion: The annual value could not exceed the standard rent, and the assessment on the basis of standard rent was upheld.

Issue (ii): whether rent received by a tenant from sub-tenants could be taken into account in fixing annual value.

Analysis: The annual value depends on the rent the owner may realize from letting the premises in the open market, judged on the basis of a bargain between a willing lessor and a willing lessee and not on the rent obtainable by the tenant from sub-tenants. The sub-letting receipts were therefore irrelevant to the statutory test of annual value.

Conclusion: Rent received from sub-tenants could not be included in determining annual value.

Issue (iii): whether the existence of gradations of owners required consideration of the rent receivable by a subordinate owner in determining annual value.

Analysis: The definition of owner and the provision for apportionment of the owner's share of consolidated rate dealt with distribution of liability among owners. They did not alter the basis for computing annual value, which remained the gross rent reasonably expected from the premises as a whole. Section 193 was confined to apportionment and had no bearing on valuation.

Conclusion: The rent receivable by a subordinate owner was not relevant to the computation of annual value.

Final Conclusion: The statutory basis for municipal valuation was confined to the rent reasonably realizable from the premises as a whole, subject to the ceiling of standard rent, and ancillary receipts from sub-letting or apportionment between graded owners did not affect that valuation.

Ratio Decidendi: For municipal assessment of annual value, statutory rent control fixes the ceiling of the hypothetical rent reasonably expected from the premises, and the tenant's sub-letting receipts or internal apportionment among owners do not enter the computation.

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