Rateable value must reflect hypothetical tenant rent, standard rent limits, and comparable premises; administrative difficulty is no excuse.

In assessing the rateable value of self-occupied recently constructed premises, the authority must apply the hypothetical tenant test, keep the valuation within the ceiling of standard rent, and consider comparable premises in the same or adjoining locality to avoid irrational disparity between old and new properties. A municipal body cannot decline to follow these legal principles on the ground of administrative inconvenience or lack of machinery to collect comparative material, because the valuation function remains quasi-judicial and must be exercised in accordance with law. The Supreme Court therefore set aside the High Court judgments and remitted the matters for fresh determination of rateable value under the governing principles.

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Issues: (i) Whether, in assessing rateable value of self-occupied recently constructed premises, the assessing authority must apply the principles of standard rent and take into account comparable premises in the locality so as to avoid disproportionate disparity. (ii) Whether the municipal authority can decline to apply those principles on the ground that it lacks machinery to collect comparative material.

Issue (i): Whether, in assessing rateable value of self-occupied recently constructed premises, the assessing authority must apply the principles of standard rent and take into account comparable premises in the locality so as to avoid disproportionate disparity.

Analysis: The controlling test for rateable value is the annual rent that the owner may reasonably expect from a hypothetical tenant. That figure is influenced by the size, situation, locality, condition and amenities of the premises, but it cannot exceed the standard rent. In the case of newly constructed premises, if standard rent alone is treated as the measure without regard to comparable older premises in the same or adjoining locality, it may produce a wholly irrational disparity between old and new properties. The assessment must therefore be made within the upper limit of standard rent while also considering the rent reasonably obtainable for similar earlier constructions in the locality.

Conclusion: Yes. The assessing authority must apply the settled principles and ensure that the rateable value does not suffer from disproportionate disparity.

Issue (ii): Whether the municipal authority can decline to apply those principles on the ground that it lacks machinery to collect comparative material.

Analysis: The assessment authority acts in a quasi-judicial capacity and cannot disregard binding legal principles on the plea of administrative inconvenience. Relevant assessment records are available with the municipal body, notices for enhancement must rest on reasons on record, and the statutory duty to determine rateable value in accordance with law cannot be avoided by asserting an absence of machinery or by treating the exercise as impossible.

Conclusion: No. The municipal authority cannot refuse to follow the legal principles on the ground of lack of machinery.

Final Conclusion: The appeals succeeded, the High Court's judgments were set aside, and the matters were sent back for fresh determination of rateable value in accordance with the governing principles.

Ratio Decidendi: In determining rateable value of self-occupied property, the assessing authority must fix the value by reference to the rent reasonably obtainable from a hypothetical tenant, subject to the ceiling of standard rent and the need to avoid irrational disparity with comparable properties; administrative difficulty does not justify departure from that legal standard.

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