JUDGMENT - S.M. DAUD, J.:---These are appeals under section 218-D of the Bombay Municipal Corporation Act, being Bombay Act No. III of 1888.

2. The assessee-respondent before us-is the owner-conductor of the Sangam Theatre which screens feature and other films, the theatre being situated at 127, Kurla Andheri Road, Andheri (East), Bombay 400 059. One of the taxes which the appellants-hereinafter to be referred to as the "BMC"-are entitled to impose is the property tax on a building or land. The preliminary step towards the fixing of the property tax is the fixing of a rateable value on the building or land assessable to such property tax. Section 154(1) of the Act says that in order to fix the rateable value of any building or land...there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let.. Some difficulty has been encountered, and not only in India, in respect of fixing the rateable value for theatres being conducted by the owners of the structures in which the films are screened. To get over this difficulty, the method evolved is that known as the apportionment of a certain percentage of the gross takings. The validity of this method has been accepted by this High Court in (The Globe Theatres Ltd. v. The Chief Judge of Small Causes Court)1, 48 Bombay Law Reporter 691. The BMC fixed the rateable value of the Sangam Theatre at 71/2 per cent of the gross takings. On the sum representing the said 71/2 per cent, property tax was assessed and being aggrieved by the assessment made, the respondent preferred appeals under section 217 of the Act. The stand taken before the learned Chief Judge of the Small Causes Court by the respondent was that in respect of the other cinema theatres in the area, the BMC had fixed only 5 per cent of the gross takings for determination of the rateable value. There was no reason to discriminate against the respondent by fixing the rateable value at 21/2 per cent more as compared to that percentage accepted in the case of other theatres. The BMC's reply to this was that the Sangam Theatre was in a far more advantageous situation vis-a-vis other cinema theatres in the area. Its construction was superior and of more recent origin. It had a central air-conditioning system as also an escalator. These amenities were decisive in the matter of getting the respondent a better and more lucrative attendance as compared to the cinema-goers frequenting the other theatres in the area. In support of their rival contentions, parties examined some witnesses. Having considered the evidence and having heard Counsel for the parties, the learned Chief Judge sustained the contention advanced by the respondent. The rateable value was slashed from 71/2 per cent to 5 per cent annum of the gross takings. A consequential reduction in the property tax was made and all the five appeals having been allowed, it is the BMC which is now the aggrieved party before us.

3. Mr. Walawalkar representing the BMC submits that the learned Chief Judge of the Small Causes Court proceeded on an erroneous basis. True, the gross-takings criterion was applicable in the matter of fixing the rateable value vis-a-vis cinema theatres, but this was only as a measure for fixing the hypothetical rent which a willing tenant might offer for the occupancy and use of the property assessable to property tax. Here, the potential of Sangam Theatre could not be overlooked irrespective of what reasons there may have been for the central air-conditioning system not being used and the escalator not being repaired. The Sangam Theatre was a more recent construction vis-a-vis the other theatres in the locality and in an arms-length bargain, a tenant would offer much more of a rent for the Sangam Theatre as compared to the other theatres which did not have the advantages of the former. Mr. Makhija for the respondent answers this submission by pointing to the testimony recorded in the appeals. One of the

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