( 1 ) THE unsuccessful plaintiff, a partnership firm is the appellant. It is impugning the fixation of the half yearly rental value of the building in guntur Municipality taken by the appellant, on lease from Guntur merchants Gin and Rice Factory Limited. The previous assessment was rs. 1438-35. Under the special Notice Ex. A-1 dated February 3, 1977 with effect from October 1, 1976 the assessment was proposed to be enhan dec to Rs. 25,734-48. Assailing the legality thereof the appellant filed a revision before the Asst. Appellate Commissioner (property Tax ). The Asst. Appellate Commissioner by his order under Ex. A-2 dated February 22, 1977 reduced the assessment to Rs. 23,161-04 towards half yearly tax. The appellant is seeking a declaration that the assessment of the annual rental value of the building is being illegal, arbitrary and without jurisdiction. The trial court gave a direction to reduce 20% and in other respect confirmed the assessment. Thus this appeal.

( 2 ) ADMITTEDLY the appellant has taken the demised premises on rent and leased out to K. Ramakrishna Murthy and Co. in a total annual premium of Rs. 45,000/- towards building and Rs. 35,000/- for machinery and the factory and therefore it is contended that the appellant is not liable to the annual rental value as determined by the authority. The respondent municipality has come forward with the plea that Ramakrishna Murthy and co. itself leased out 3 sheds to the Food Corporation of India on a monthly rent of Rs. 7,523-60 and therefore the annual rentals received by the said tenant of the appellant is Rs. 87,877-92. Apart from those three sheds other 18 sheds are situated within the premises which is capable of fetching rs. 62,382-08 and thereby the total rental value is Rs. 1,50,250/. After giving statutory deductions it comes to Rs. 1,35,234/ -. Accordingly half yearly rental value was determined at Rs. 23,105-05. The trial court accepted the case of the respondents.

( 3 ) SRI Ram Mohan Rao, learned counsel for the appellant as contended that under Section 87 of the A. P, Municipalities Act (Act 6/1965) (for short the Act) provides the method of assessment of the property tax. Under sub-sec. 2 (a) of Section 87 the annual rental value of the lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year less a deduction. . . . . . Under sub-section (2) (b) of Section 87 the provisions of the A. P. Buildings (Lease, Rent and Eviction) Control Act 1960 shall be taken into account in determining the annual rental value taking into consideration the location, type of construction, plinth area, nature of the use of which it was put and such of the criteria as may be preseribed. The contention therefore is that under the provisions of this Act the assessing authority should not only consider the actual rent received but also the rent reasonably expected to fetch if it is normally leased out. The fortuitous circumstances or racket rent or rent got due to supervening circumstances would not furnish the reasonable rent. The reasonable rent is what is expected of in the normal circumstances to be fetched, has to be taken into account. The authorities below have not taken this aspect of the matter and arbitrarily determined the fixation of the fair rent. In support thereof he placed strong reliance on a judgment of the Supreme Court in Devan daulat Rai Kapoor vs. New Delhi Municipality.

( 4 ) SRI Venkata Reddy, learned standing counsel for the Municipality has resisted the contentions stating that the appellant had not come to the court with clean hands. He did not furnish the income derived by the subtenant of the tenant of the appellant. The rents fetching in the neighbourhood and the actual rents received and the building capable of fetching the rents were taken into account in determining the annual rental value. Therefore there is no illegality in fixing o