MUNICIPAL CORPORATION OF GREATER BOMBAY versus ROYAL WESTERN INDIA TURF CLUB

Citation: [1968] 1 S.C.R. 525 · Decided: 13-09-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
MUNICIPAL CORPORATION OF GREATER BOMBAY 
B 
v. 
ROYAL WESTERN INDIA TURF CLUB 
September 13. 1967 
[J. C. SHAH, S. M. SIKRI AND J. M. SHELAT, JJ.] 
Bombay Municipal Corporati01t Act Ill of 1888. •. 154-Scope· 
of-Determination of annual rateabl;e value-Nature of deductions 
that can be allowed when profits basis method used. 
The respondent club ran a race course and had built certain 
structures on land in Bombay which it had leased from the appel-
lant corporation at an annual rent of Rs. 3.75 lakhs. It had obtained 
C a licence from the State Government to hold race meetings on its 
course in Bombay as well as on another course owned by it in 
Poona for which it had paid a licence fee of Rs. 13 lakhs for the· 
relevant year and had apportioned the fee in the ratio of 2: l 
between the Bombay and the Poona courses. 
For assessment of the correct rateable value of the propert)· for 
the rating year 1954-55 the assessing authority made an assessment 
by the profits basis method on the basis of the Club's accounts for 
D the year 1953-54 and, in doing so. disallowed certain expenses claim-
ed by the .Club in determining the ne~ rateable value at Rs. 11.90,187. 
The respondent club thereupon filed an 
appeal before the small 
Causes Court under s. 217 of the Act and although that Court made 
a few adjustments, it held the Club had failed to prove that the 
net rateable value determined by the assessing authority \Vas exces-
sive. The High Court however, in appeal, upheld the Club's objec-
E tions as regards the disallov:ance of several items of expenditure 
and held that the gross annual value of the property would. after 
the deductions to be allowed, come to Rs. 2,15.750; and after deductc 
ing the~efrom the statutory allowance of IO per· cent under s. 154 
on account of allo\vances for repairs etc.. the net anni1al value 
would come to Rs. 1.94,175. 
In the appeal to this Court it was contended on behalf of the 
F appellant. inter a!ia, (i) that the 10 per cent statutory deduction 
allowed by s. Hi4(1) covers all expenses for repairs and therefore 
deduction of costs of repairs and upkeep of the course, if allow-
ed, would mean a duplicate deduction; (ii) that the totalisator main-
tained by the Club being machinery. its value was not to be in-
cluded in rating under s. 154(2); (iii) that the Club was entitled to 
a deduction of only half of the licence fee apportioned to the 
Bombay Course because that fee covered dual purpose i.e. for the 
G 
premises as a race course and for permission to conduct race meet-
ings on the race course; for the first the burden would be on the 
lessor and for the second on the tenant; that this was borne out 
by the scheme of the Bombay Race Courses Licencing Act 3 of 1912 
which was to licence the premises and then to licence the person 
who runs races on such premises; and (iv) that if the expenses 
claimed were allowed to be deducted, the net rateable value arrived 
at would be less than the actual rent of Rs. 3,75,000 payable by the 
H Club to the Corporation and that such a result cannot be contem-
plated under any method of assessing the rateable value. 
HELD: Dismissing the appeal: 
(i) The expenses in question were for the maintenance in 
good repair of the race-track which is the source of 
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SUPREME COUR'l' REPORTS 
[1968) l s.O.B 
receipts earned by the Club, Disbursements for the up- A 
keep of the course and all its adjuncts consequently are 
proper out-goings incurred for earning the receipts. They 
are not the landlord's obligation and are not part of or 
included in the statutory deduction of 10 per cent in 
s. 154(1), which is in lieu of the cost of repairs, insurance, 
etc. incurred by the lessor. The High Court was therefore 
right in deducting such expenses from the gross receipts. 
(ii) Similarly the expenses incurred for the upkeep and re-
pair of the totalisator were incurred on an adjunct neces-
sary to an efficient race course and must necessarily be 
regarded as the outgoings of the business. The contention 
that as it was machinery its value could not be included 
in rating under s. 154(2) had no merit. 
B 
'(iii) The High Court had rightly allowed the deduction of the C 
entire amount of expenditure in connection with the cost 
of sand and morum, salaries and charges of empolyees, 
motor lorry expenses, stores and charges for maintenance 
of horses and bullocks, manure and garden expenses, 
spares of trac\prs and other machinery and the wheel tax 
an

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