The first proviso to clause (e) of section 3(1) of the Punjab Municipal Act, 1911, applies to the entire sub-section (1) and not just to clause (e). Therefore, machinery and electrical appliances should not be included in the annual value of any premises for the purpose of municipal taxation.

( 1 ) THESE two writ petitions No. 563-D and564-D of 1965 have been placed before us on areference made by our brother Mr. Justice P. N. Khanna. The said two petitions involve the construction of the first proviso to clause (e) of sub-section (1) of section 3 of the Punjab Municipal Act (hereinafter called the "act" ). Section 3 (1) of the Act read as :

"3. In this Act, unless there is something repugnant in the subject or context,- (1) annual value" means- (a) in the case of land, the gross annual rent at which it may resonably be expected to let from year to year : Provided that, in the case of land assessed to land-revenue or of which the land-revenue has been wholly or in part released, compounded for, redeemed or assigned, the annual value, shall if the State Government so direct, be deemed to be double the aggregate of the following amounts, namely :- (i) the amount of the land-revenue for the time being assessed on the land, whether such assessment is leviable or not ; or when the land-revenue has been wholly or in part compounded for or redeemed, the amount which, but for such composition or redemption, would have been leviable ; and (ii) When the improvement of the land due to canal irrigation has been excluded from account in assessing the land-revenue, the amount of owner s rate or water advantage rate, or other rate imposed in respect of such improvement : (b) in the case of any house or building, the gross annual rent at which such house or building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year, subject to the following deductions:- (i) such deduction not exceeding 20 per cent of the gross annual rent as the committee in each particular case may consider areasonable allowance on account of the furniture let therewith; (ii) a deduction of 10 per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. The deduction under this subclause shall be calculated on the balance of the gross annual rent after the deduction (if any) under sub-clause (i) ; (iii) where land is let with a building, such deduction, not exceeding 20 per cent of the gross annual rent, as the committee in each particular case may consider reasonable on account of the actual expenditure, if any annually incurred by the owner on the upkeep of the land in a state to command such gross annual rent ; Explanation I-For the purposes of this clause it is immaterial whether the house or building, and the furniture and the land let for use or enjoyment therewith, are let by the same contract or by different contracts, and if by different contracts, whether such contracts are made simultaneously or at different times. Explanation II.-The terms "gross annual rent" shall not include any tax payable by the owner in respect of which the owner and tenant have agreed that it shall be paid by the tenant. (e) in the case of any house or building, the gross annual rent of which cannot be determined under clause (b), 5 per cent. on the sum obtained by adding the estimated present cost of erecting the building, less such amount as the committee, may deem reasonable to be deducted on account of depreciation (if any) to the estimated market value of the site and any land attached to the house building : Provided that- (i) in the calculation of the annual owner under such exceptional circumstances as to render a valuation at 5 per cent. on the cost of erecting the building, less depreciation, excessive, a lower percentage may be taken. "the question that arises for decision is whether the first proviso after clause (e) of sub-section (1) governs the entire sub-section (1) or it is a proviso only to clause (e ).

( 2 ) THE circumstances in which the said provision has come up for interpretation are these. Premises described as 16/48 Chanakyapuri, New Delhi, bearing municipal No. V