Interpretation of S.6(4)(d) of the Kerala Building Tax Act to exclude movable items intended for specific use from the definition of 'amenities' impacting rental value.

This writ petition arises out of an assessment to tax under the Kerala Building Tax Act, 1975 (the act) in respect of a building put up by the petitioner. It is a cinema theatre, the construction of which was completed on August 27,1985 and in which exhibition of films commenced on September 14,1986. The petitioner declared the capital value of the building for purposes of assessment under the Act at Rs. 2,80,000. But the assessing authority determined the capital value at Rs. 7,58,344/- and completed the

assessment accordingly. In fixing the annual value and consequently the capital value at this figure, the assessing authority took into account the projector, the furniture (ie. seats for the film viewers) and the generator installed in the theatre, treating them as amenities provided in the building, made relevant by S.6(4)(d) of the Act. This order was set aside in appeal and the matter remitted back to the assessing authority for reconsideration of the question whether the aforesaid items were liable to be taken into account, in the determination of the annual value of the building. The assessing authority however stuck to his view and by his proceedings Ext. P5, affirmed the earlier determination of the capital value made by him at Rs. 7,58,344/-. This was confirmed in appeal by the second respondent Revenue Divisional Officer by his order Ext. P6.

2. The ratio of the order Ext. P6 was that items like projector, generator etc. are "unavoidable parts" for the profitable running of the building as a cinema theatre and therefore they were liable to be taken into account in fixing the capital value.

3. The writ petition is filed challenging Exts. P5 and P6. The only quest ion raised is that the authorities should have eschewed the projector, the furniture and the generator from consideration while determining the annual value of the building.

4. The charge to tax under S.5 of the Act is in respect of a building constructed after April 1,1973 and whose capital value exceeds Rs. 75,000/-. The taxable event is the construction of the building and the tax becomes payable when the construction is completed. Explanation 1 to S.5 deems the construction to have been completed when the building is ready for occupation or is actually occupied, whichever is earlier.

5. "Capital value" of the building which is the base of the charge is defined in S.2(f) as the value arrived at by multiplying the annual value by ten. "Annual value", under S.2(a) means the gross annual rent at. which the building may at the time of completion be expected to let from month to month or from year to year. S.6 lays down the mode of determination of the capital value. Sub-section (1) provides that for determining the capital value for purposes of the Act, the annual value of a building shall be the annual value fixed for that building in the assessment books of the local authority within whose area the building is situate. But sub-section (2) vests the assessing authority with the power to fix the annual value differently, if he is of opinion that the annual value fixed by the local authority is too low. He can however do so only after giving the person affected, namely the assessee, an opportunity of being heard. Further in determining the annual value, he is also bound by sub-section (4) to have regard to the following factors enumerated therein, namely (a) the location of the building; (b) the nature and quality of the structure of the building; (c) the capability of the building for profitable use; (d) amenities provided in the building; (e) access to the building from public roads or water ways; (f) value of the land on which the building is constructed; (g) the estimated cost of construction of the building; and (h) such other matters as may be prescribed. It is with reference to (d) above that the respondents have taken into account the items in question, namely the projector, the furniture and the generator in fixing the annual value of the buil