Standard rent limits house-tax annual value where rent-control law bars recovery of higher rent.

Under Section 3(1)(b) of the Punjab Municipal Act, the annual value for house-tax purposes is the gross annual rent at which a building may reasonably be expected to let from year to year. That standard of reasonableness must be read with rent-control law, so a landlord cannot reasonably be expected to let at a rent above the legally recoverable standard rent. The SC treated illegal excess rent as outside the assessment base and relied on the binding standard-rent line of authority, reinforced by the statutory prohibition on recovering higher rent and its penal consequences. The assessment based on actual rent was therefore not accepted, and standard rent operated as the ceiling for rating.

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Issues: Whether the annual value for house-tax assessment under Section 3(1)(b) of the Punjab Municipal Act, 1911 is confined to the standard rent fixed under rent control law, or whether it may be based on the actual rent received by the landlord.

Analysis: The measure of annual value under Section 3(1)(b) is the gross annual rent at which the building may reasonably be expected to let from year to year. The Court held that this concept of reasonableness must be read in the light of rent-control legislation and its penal consequences. A landlord cannot reasonably be expected to let a building for rent higher than the standard rent legally recoverable, and the municipal authorities cannot treat illegal excess rent as the basis of assessment. The earlier decision in the standard-rent context remained binding, and the subsequent statutory scheme, including the prohibition on recovering rent above standard rent and the penal consequences for doing so, reinforced that construction.

Conclusion: The annual value for rating purposes cannot exceed the standard rent fixed under the applicable rent-control law, and the assessment based on actual rent was not accepted.

Ratio Decidendi: For rating under a provision framed in terms of rent at which a property may reasonably be expected to let, the legally recoverable standard rent sets the upper limit where rent-control law prohibits recovery of higher rent.

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