Factory use exemption covers worker housing and welfare facilities; licence fees are not rent for exclusion purposes.

Buildings provided for worker welfare and operational efficiency, including residential quarters and club rooms for staff, may fall within the expression "used for the purpose of a factory" under Rule 18 of the Punjab Urban Immovable Property Tax Rules, 1941. The provision is to be applied on the facts, and facilities necessary to maintain the functioning and efficiency of the factory and its workers can qualify for the exemption. The term "rent" in Rule 18(4)(ii) is construed in its narrower sense as payment by a tenant to a landlord for demised premises, so amounts received from employees occupying premises under leave and licence are not treated as rent for excluding the exemption.

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Issues: (i) Whether residential quarters, club rooms and similar buildings provided for workers and staff were "used for the purpose of a factory" within Rule 18 of the Punjab Urban Immovable Property Tax Rules, 1941; (ii) whether payments received from employees in occupation under leave and licence amounted to "rent" so as to deny the exemption under Rule 18(4)(ii).

Issue (i): Whether residential quarters, club rooms and similar buildings provided for workers and staff were "used for the purpose of a factory" within Rule 18 of the Punjab Urban Immovable Property Tax Rules, 1941.

Analysis: The expression "used for the purpose of a factory" was treated as one to be determined from the facts, rather than by an exhaustive definition. Buildings required to make the factory function in accordance with law, and buildings that help maintain the efficiency of the machines or workmen, were regarded as falling within the exemption. Facilities and amenities necessary for the welfare and efficiency of workers, including quarters and rooms for their use, were held to be part of the factory use.

Conclusion: Yes. The buildings in question were used for the purpose of a factory and satisfied that part of the exemption.

Issue (ii): Whether payments received from employees in occupation under leave and licence amounted to "rent" so as to deny the exemption under Rule 18(4)(ii).

Analysis: The word "rent" was read in its narrower sense as payment by a tenant to a landlord for demised property. The contextual use of the word in the Act supported that meaning. Amounts received from licensees for occupation under leave and licence were therefore not treated as rent for the purpose of the rule.

Conclusion: No. Payments received from licensees were not rent within Rule 18(4)(ii), and the exemption was not excluded on that ground.

Final Conclusion: The disputed buildings qualified for exemption from property tax under the statutory scheme, and the assessment orders were correctly set aside.

Ratio Decidendi: Buildings provided for worker welfare and operational efficiency may be treated as used for the purpose of a factory, and "rent" in a taxing exemption provision refers to payment by a tenant to a landlord, not to licence fees.

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