Actual annual rent may determine rateable value for decontrolled property without turning municipal tax into income tax.

For properties freed from rent control, actual annual rent received may be used as the basis for rateable value under municipal law, because it is ordinarily the best evidence of the rent the property might reasonably fetch from year to year. The owner may displace that basis by showing special circumstances such as extraneous factors affecting the rent. A property tax measured by annual rent remains a tax on lands and buildings, not on income, because rent is only the method of valuation and does not alter the true character of the levy. The municipal property tax was therefore treated as within legislative competence.

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Issues: (i) Whether, for properties freed from rent control, the annual rent actually received can be adopted as the basis for determining rateable value under the municipal law; (ii) whether a property tax computed on annual rent by reference to rateable value becomes a tax on income and is therefore beyond legislative competence.

Issue (i): Whether, for properties freed from rent control, the annual rent actually received can be adopted as the basis for determining rateable value under the municipal law.

Analysis: The statutory formula for rateable value is the annual rent at which the property might reasonably be expected to let from year to year. Where no rent control legislation caps the rent, the actual rent received in an arm's-length letting ordinarily provides the best evidence of the rent a willing lessor may reasonably expect from a willing lessee. The municipal authority may therefore revise rateable value on the basis of actual annual rent unless the owner shows that extraneous considerations have depressed or inflated the rent.

Conclusion: The annual rent actually received can be taken as the rateable value for decontrolled premises, subject to proof of special circumstances by the owner.

Issue (ii): Whether a property tax computed on annual rent by reference to rateable value becomes a tax on income and is therefore beyond legislative competence.

Analysis: The validity of a taxing statute depends on the true nature and character of the levy, not merely on the method used to quantify it. A tax on lands and buildings does not become a tax on income merely because annual rent is used as the yardstick. The charging provisions remain directed to property, while annual rent is only the measure for computation. The levy therefore remains within the field of property taxation and does not trench upon the entry relating to income tax.

Conclusion: The municipal property tax is not a tax on income and is within legislative competence.

Final Conclusion: The challenge to the revised assessment basis failed, and the municipal corporation was held entitled to assess decontrolled properties on actual annual rent.

Ratio Decidendi: Where rent control no longer applies, actual annual rent is a reliable measure of the rent reasonably expected from a hypothetical tenant, and use of that measure for property tax does not convert the levy into an income tax.

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