1. SALEEM AKHTAR, J.---By this appeal the appellant has challenged the judgment passed by a Division Bench of the High Court of Sindh in a Constitution petition whereby the order of the Director-General of Excise and Taxation, Sindh was maintained. The petitioner is the owner of Bungalow No,20-C, Block 6, PECHS, Karachi, constructed in 1954-55. By an order dated 27-4-1968 passed by the Assessing Authority its gross annual rental value (GARV) was fixed at Rs,10,508. In the respondent's register late Mr. Justice M. B. Ahmad husband of the petitioner was recorded as owner who died on 7-7-1979 and intimation to this effect was also sent to respondent No, 1 on 7-11-1979.
2. Respondent No, 1 sent a notice dated 4-10-1982 alleging that material additions and 'alterations/change in the use of the property unit had occurred warranting reassessment under section 9 of Sindh Urban Immovable Property Tax Act, 1958. The appellant sent a reply on 26-10- 1982. The appellant received no reply thereafter, but in 1983 ale received an intimation of payment of property tax at an Annual Valuation of Rs, 1,68,000 in the name of late Justice M.B. Ahmed effective from 1-7-1983. The appellant after obtaining copy of the order dated 13-11-1983 issued in Form PT-I filed an appeal before respondent No, 2 who while maintaining the GARV allowed a rebate of 20% on fixtures and fittings. This order was challenged in revision before respondent No, 2 who reduced the GARV to Rs,1,44,000. The appellant filed Constitutional petition, in-the High Court which was dismissed. Leave to appeal was granted to consider whether the High Court has failed to appreciate the provisions of section 9 of the Act and whether there is a complete bar to the enhancement of the assessment by virtue of proviso to section 5 of the Urban Immovable Property Tax Act, 1958 which was introduced on 1-7-1977.
3. The learned Advocate for the appellant has contended that in view of section 5 of the Act the GARV could not be amended and further that by letting out the premises to Collector of Customs, the use was not changed and consequently section 9 was not attracted. The contentions of the learned counsel require interpretation of sections 5, 7-A and 9 which are reproduced hereunder:--- "Sec.5. Annual value.--(1) The annual value of any land or building shall be the gross annual rent at-which such land or building together with any fixtures such as lifts, or electric or other such fittings, may be let out.
(2) The gross annual rent shall be the prescribed amount not exceeding ten per cent. Of the total value of the land or building.
(3) The total value of any land or building shill, in the prescribed manner, be determined by the prescribed officer or authority on the basis of the market value thereof and the value of fixtures, if any, therein.
(4) For the purpose of determining the market value, a rating area may be divided in such sub- rating area, and each rating or sub-rating area may comprise one or more such categories of lands or buildings and there may be such different rates for determination of the market value for the lands or buildings in each rating area, sub-rating area or category, as the case may be, as may be prescribed: Provided that the annual value of a building which is subject to any law for the time being in force relating to restriction of rent shall not be greater than the annual value of such building immediately before the coming into force of this section.
4. 7-A. Continuance of valuation lists.---Notwithstanding anything contained in this Act--
(i) the valuation lists of properties, other than the industrial properties, existing on the 30th June, 1978, shall continue to be in force from the said date and be the basis of levying the tax until the date on which the new lists are enforced in accordance with the provisions of section;
(ii) for the purposes of the said valuation lists the annual value of a building shall be determined in accordance with section 5 as it stood immediately before Ist July, 1977;
(iii) the valuation lists made on Ist January, 1977 in respect of the properties used wholly or partly for industrial purposes shall continue to be in force from the said date and be the basis of levying the tax until the date on which the new lists are enforced in accordance with the provisions of section '7.
9. Amendment of current valuation list.--(1) Subject to such rules, if any, as the Government may think fit to make in this behalf, the assessing authority may at any time make such amendments in a valuation list as appear to it to be necessary in order to bring the list into accord with existing circumstances and in particular may--
(a) correct any clerical or arithmetical error in the list;
(b) correct any erroneous insertion or omission or any misdescription;
(c) make such additions to or corrections in the list as appear to the authority to be necessary by reason of--
(i) a new building being erected after the completion of the valuation list;
(ii) a building included in the valuation list being destroyed or substantially damaged or altered since its value was last previously determined;
(iii) any change in the ownership or use of any building or land: Provided that not less than fourteen days before making any such amendment in the valuation list for the time being in force, other than the correction of a clerical or arithmetical error, or the correction of an erroneous insertion, omission or misdescription, the assessing authority shall send notice of the proposed amendment to the owner of the building or land and shall also consider, any objection thereto which may be made by him.
(2) Any amendment made under subsection (1) shall be effective from the date such amendment was necessitated."
5. The scheme of the Act is that the tax shall be levied on lands and buildings situated in urban area as notified by the Government of Sindh. Under section 5(1) the tax shall be charged on the annual value of the property which is the gross annual rent at which it may be let out. Subsection (2) of section 5 further illucidates that the gross annual rent shall be the amount prescribed by rules and will not exceed 10% of the total value of the land or building which may be determined on the basis of market value. However, proviso to section 5 restricts the maximum limit of the gross annual rent in respect of building to which the law relating to rent restriction applies. The gross annual rent shall not be higher than the gross annual rent of such building immediately before 1-7-1977 when the present section; 5 was substituted. The process of assessment starts by first preparing a valuation list which inter alia contains the gross annual value of the building as determined and remains valid for five years or such extended period as may be permitted by law. By virtue of Sindh Act X of 1976, section 7(1)(a) was amended and the Provincial Government was empowered to extend the operation of a valuation list by a period not exceeding 5 years instead of three years, in the manner -provided therein and in terms of section 7(2) subject to the provisions of the Act including section 9. Finally new section 7-A was added by Sindh Urban Immoveable Property Tax (Amendment) Ordinance, 1978 (Ordinance XVII of 1978). By this amendment the valuation list for properties other than industrial properties, existing on 30-6-1978 was to continue in force till a new list is prepared and enforced as provided by section 7.
6. The learned Judges of the High Court while repelling the contention that in view of proviso to section 5 of the Act the valuation list existing immediately before 1-7-1977 remains operative, observed as follows:-- "We do not agree with the submission of the learned counsel because the words used at the end of this proviso are 'immediately before the coming into force of this section', which was 1958.
7. It is therefore, clear to us that the proviso did not want to sanctify the annual value of building as it was before 1-7-1977 but wanted to sanctify the value of the building before coming into force of the section itself which was 1958."
8. With respect, we are unable to subscribe to this observation as it has been made under a misconception of the date of enforcement of section 5 which was substituted on 1-7-1977 and was not in existence from 1958.. The proviso speaks of the date of coming into force of section 5 and not the Act.
9. Section 5 lays down the principles and conditions by which gross annual rent of a building or land is to be determined. Rule 6 of West Pakistan Urban Immovable Property Tax Rules, 1958 prescribes the manner in which gross annual rent is to be determined for purpose of preparation of Draft Valuation List. According to Rule 6(e) the Assessing Authority is first required to make inquiry about the actual gross annual rent received by the owner or which could reasonably be earned during the immediately preceding financial year. In cases where a building or land has been rented out the same can be ascertained but for those properties which have not been rented out the likely gross annual rent which reasonably can be earned is to be ascertained. But if such ascertainment of gross annual rent does not seem to be reasonable, fair or bona fide Rule 6(f) empowers the Assessing Authority to make further inquiry to ascertain the gross annual rent which may reasonably be expected to be earned. However, in this exercise the proviso to section 5 has to play an important role as it restricts the maximun limit of the annual value in respect of building to which law relating to restriction of rent is applicable. According to it the annual value of such building will not be greater than its annual value immediately before 1-7-1977. Therefore in all cases where annual value of such building is to be determined after 1-7-1977 till a fresh list is enforced, it will be governed by this proviso. The annual value shall be either the gross annual rent at which such building may be let out, has been let out or is reasonably expected to be let out immediately before 1-7-1977. According to Mr. Muhammad Naseem the annual rent should be the rent fixed by the provisions of law relating to restriction of rent. In this regard reference may be made to Sindh Rented Premises Ordinance, 1979 hereinafter referred as the Ordinance. Under this Ordinance the agreement between the landlord and the tenant should be in writing. Section 7 prohibits the landlord from charging rent higher than the agreed rent and if a fair rent has been fixed by the Controller under section 8 then not higher than the fair rent. It therefore follows that in the absence of fair rent having been fixed, the Ordinance does hot prohibit the landlord to charge agreed rent which may be higher, equal or lower than the fair rent which could have been fixed. The Controller is empowered to determine the fair rent by taking into consideration the following factors:-- "(a) the rent of similar premises situated in similar circumstances, in the same or adjoining locality.
(b) the rise in cost of construction and repair charges;
(c) the imposition of new taxes, if any, after commencement of the tenancy, and
(d) the annual value of the premises, if any, on which property tax is levied."
(e) Section 5 of the Act read with Rule 6 clearly implies that the gross annual rent of a building shall be the annual rent of the said building or similar building in the rating area which could reasonably be let out or expected to be let out. These provisions do not come in conflict with sections 7 and 8 of the Ordinance. In order to determine the rent which could reasonably be earned or expected to be earned the Assessing Authority will have to inquire about the rent of similar building in similar circumstances in the rating area. The criteria fixed by section 8 of the Ordinance will be a relevant factor for determining the annual rental value. Thus the fair rent fixed by the Rent Controller and annual rent determined by the Assessing Authority will be almost on the same principles. The Assessing Authority has to make its own inquiry and may take into consideration the fair rent, if fixed by the Controller. In support of his contention that only fair rent should be adopted as gross annual rented value the learned Advocate for the appellant has referred to the following judgments of the Supreme Court of India: (1) Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee (1980) 122 ITR 700 and (2) Mrs. Sheila Kaushish v. Commissioner of Income Tax, Delhi (1981) 131 ITR 435.
10. Before examining these judgments we would first refer to Abdullah Muhammad Peer Muhammad v. Karachi Municipal Corporation PLD 1971 SC 130. In this case property tax was to be charged under section 97 of the City of Karachi Municipal Act, 1933 and the question arose whether the 'annual rental valueof a building could not be fixed in excess of fair rent fixed by the Karachi Rent Restriction Act, 1953. After taking note of the provisions of Karachi Rent Restriction Act providing a formula for fixing fair rent, it was observed as follows:-- "It is unnecessary to pursue the argument any further for even if the Karachi Rent Restriction Act, 1953, in terms did not apply to assessment under the City of Karachi Municipal Act, 1933 its provisions constituted a relevant consideration in determining what a hypothetical tenant might reasonably be expected to pay for a building or land from year to year.
11. We agree, however, in the view that in the absence of any mode prescribed in the statute the Chief Assessor and Collector is not bound to apply any particular formula for determining the 'annual valueand that in terms the provisions of the Karachi Rent Restriction Act, 1953, did not apply to the assessm ent of 'annual valueunder the City of Karachi Municipal Act, 1933. But as required by section 107(1) the Municipal Commissioner must act in accordance with the principle prescribed in section 97(2) and determine annual . Rent (less a deduction of 10 per cent.) for which any building or land exclusive of furniture or machinery contained or situate therein might reasonably be expected to let from year to year. In arriving at this conclusion he should take all the circumstances into consideration one of them being the ceilings fixed in the Karachi Rent Restriction Act, 1953, since replaced by the West Pakistan Rent Restriction Ordinance VI of 1959. As observed earlier a hypothetical tenant would not be acting reasonably in offering or agreeing to pay rent at a rate forbidden by It was further observed: "It may be added that as section 97(2) provides that 'annual valueshall include the rent, taxes and insurance etc. Agreed to be paid to the owner by the tenant the Municipal Commissioner is not bound to treat the 'fair rentas 'annual valueif what the tenant has agreed to pay to the owner is more than the 'fair rentunder the Rent Restriction Act.
12. It would indeed be anomalous to say that though the owner recover more than what the law permits the 'annual valueshall be assessed in accordance with the law."
13. In this regard reference can be made to Lyallpur Cotton Mills Ltd. v. The Commissioner, Sargodha Division and another (1976 SCMR 615). In this case the appellant had challenged the enhancement of gross annual rental value of the quarters situated in the factory premises for the use of the staff.
14. Holding that as there was no dispute about the actual rent received it should have been the basis for the assessm ent of the gross annual rent. It was observed:-- "The section read with rule 6(e) clearly contemplates that the basis of assessment should be either the actual gross annual rent or the gross annual rent that could reasonably be earned during the financial year immediately preceding the current financial year or might reasonably be expected to be let from year to year. In the present case as there is no dispute as to the actual rents received for the disputed quarters, the basis of assessment should have been the gross annual rent earned.
15. The interpretation sought to be put by the learned Assistant Advocate-General will result in an unreal and unreasonable situation which according to the accepted principle of interpretation of statutes cannot be accepted. The interpretation canvassed for disregards the actual position on the contrary accepts as basis a condition that does not exist, and the owner is called upon to pay tax on the basis of rents which he never received and perhaps never can receive. There is no allegation that the rents were deliberately kept low to illegally deprive the authorities of their rightful dues."
16. These two judgments are relevant for consideration of the contention raised by the learned Advocate for the appellant. In the case of Abdullah Muhammad Peer Muhammad the basis for determining the gross annual rental value is the rent which a hypothetical tenant would reasonably be expected to pay for the building or land year to year. Therefore, it may not be necessary for the Assessing Authority to entirely base its assessment on the actual rent at which the building or land has been let out. Although it may be a very firm basis for assessing the gross annual value, yet not the only basis. The authority has to base its finding on the rent which can reasonably be expected from a hypothetical tenant. To arrive at this finding, it should consider the nature and age of the construction, the locality in which it is situated, the nature of user, fair rent if fixed by the Controller or which may be fixed under the law relating to rent restriction, the actual rent earned or expected to be earned for the building or similar building in the locality and other relevant considerations. Rule 6(e) empowers the Assessing Authority to make such inquiry. The principles for determining fair rent by the Controller under the Ordinance and the annual rental value by the Assessing Authority are similar.
17. Therefore for a hypothetical tenant the reasonable rent would be the fair rent which has a sanction of law behind it. We are conscious of the observations made in the Lyallpur Cotton Mills case in which Abdullah Muhammad Peer Muhammad's case was not noticed and the question there was completely different. The issue turned out on special facts of that case where property was situated within the factory premises and was rented out to staff members and labourers. In these circumstances the rent which could be earned in respect of the quarters if they were let to the outsiders was not considered to be reasonable and the agreed rent was held to be the basis for determining the annual rent value. It may be clarified that section 5 lays down in mandatory terms that the annual value of any building or land shall be the gross annual rent at which such building or land may be let out with fixtures and fittings. The Assessing Authority prepares the valuation list as provided by Rule 6. The gross annual rent can be determined after making enquiry about the gross annual rent earned or could reasonably be earned in respect of the property. If in such enquiry the gross annual rent earned is found to be reasonable and can be expected to be earned, it will be accepted for purposes of assessment. Proceedings under rule 6 ends there. But if such determination is not fair or reasonable compared to the rent of similar property in the locality, then the Assessing Authority can under rule 6(f) determine the gross annual rental value on the basis of the rent at which property in the rating area could reasonably be let out. The law does not require the actual rent received by the owner to be accepted in all circumstances as the gross annual rent of the property. It is one of the several grounds on which it is determined. Following Abdullah Muhammad Peer Muhammad's case ibid in Abdullah v: Excise and Taxation Officer (PLD 1977 Karachi 702) the ceiling fixed for determining fair rent was held to be a relevant consideration for assessing the annual rental value of a property. This is the well-established law declared by this Court.
18. 'We now revert to the judgments cited on behalf of the appellant. Dewan Daulat Rai Kapoor's case has exhaustively dealt with the relevant law which was followed by the subsequent cases. We will therefore consider this case alone. In this case while considering the effect of rent control legislation on the detemination of annual value, referring and explaining the decisions of Supreme Court of India in Corporation of Calcutta v. Life Insurance Corporation AIR 1970 SC 1417, Corporation of Calcutta v. Sm Padma Delhi AIR 1962 SC 151, Guntur Municipal Council v. Guntur Town Rate Payers Association AIR 1971 SC 353, Municipal Corporation. Indore v. Smt. Rataiiprabha AIR 1977 SC 308 and M.M. Chawla v. J.S. Seth (1970) 2 SCR 390 Bhagwati, J. Observed:- "Now, it is true that in the present cases the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in each of the cases, the tenant was precluded by section 12 from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance. But from this factual situation which prevailed in each of the cases, it does not follow that the landlord could thereafter, reasonably expect to receive the same amount of rent from a hypothetical tenant. The existing tenant may be barred from making an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent at any time within two years of the hypothetical letting and the limit of the standard rent determinable under the Act would, therefore, inevitably enter into bargain and circumscribe the rate of rent at which the building could reasonably be expected to let. This position becomes absolutely clear if we take a situation where the tenant goes out and the building comes to be self-occupied by the owner. It is obvious that in the case of a self-occupied building, the annual value would be limited by the measure of standard rent determinable under the Act, for it can reasonably be presumed that no hypothetical tenant would ordinarily agree to pay more rent than what he could be made liable to pay under the Act. The anomalous situation which would thus arise, on the contention of the revenue, would be that, whilst the tenant is occupying the building, the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self-occupied the annual value would be restricted to the standard rent determinable under the Act. It is difficult to see how the annual value of the building could vary according as it is tenanted or self-occupied.
19. It (Rent Control Legislation) lays down the norm of reasonableness in regard to the rent payable by the tenant to the landlord. Any rent which exceeds this norm of reasonableness is regarded by the legislature as unreasonable or excessive. When the legislature has laid down this standard of reasonableness, would it be right for the Court to say that the landlord may reasonably expect to receive rent exceeding the measure provided by this standard? Would it be reasonable on the part of the landlord to expect to receive any rent in excess of the standard or norm of reasonableness laid down by the legislature and would such expectation be countenanced by the Court as reasonable."
20. In substance the reasoning and conclusion in this judgment are the same which were declared in Pakistan in the year 1971. The Act aims at realising tax on the annual rental value of the property and not on the actual rent of the property. Therefore rent which can reasonably be expected to be realised from a property is the criteria for levy of tax. The Act and the Rules do not prescribe any mathematical formula for calculating it. Where fair rent has been fixed it may be taken to be rent reasonably expected to be earned but if on the principles laid down by Rent Legislation it seems to be low, collusive or excessive then the Assessing Authority is not bound to accept it. It would be free to make its own assessm ent according to the Act and the Rules and also taking into consideration the provisions of Rent Restriction Legislation.
21. The question arises whether in such state of law the annual rental value can be changed under section 9 of the Act. Section 9 empowers the Assessing Authority to amend the valuation list which is prepared in Form P.T.5 as prescribed by Rule 6(2). It consists of 13 columns. Besides the full address to be described in columns 1, 2 and 3 the following columns require particular mention:-- Col. 4 Nature of the property.
22. Col. 5 How used Col. 6 Owner's name and address Col. 7 Occupier's particulars Col. 8 Gross rent assessed Cols.(9), (10) and (11)Deduction allowed under the Act.
23. This demonstrates that the valuation list consists of several particulars including gross annual rent assessed. Therefore section 9 which empowers the Assessing Authority to amend the current valuation list, implies that gross annual rent can also be amended. The cirmcumstances and extent to which amendment can be made have been specified in section 9(1),(a) (b)(c)(i)(ii) and (iii). The amendments can be made in the valuation list at any time to bring it in conformity with the existing circumstances. It requires the correction of any clerical or arithmetical error, erroneous insertion, omission or any misdescription. For such change or correction of errors, the law does not require any notice to the owner but it would be proper for the Assessing Authority to give notice to the owner and if necessary, the occupier as well. However, changes due to circumstances specified in section 9(1)(c), (i)(ii) and (iii) should be made after fourteen daysnotice and after hearing the objections as provided by proviso to section 9. It is significant to note that for changes due to circumstances mentioned in section 9(1)(a) and (b) the proviso does not provide for notice whereas notice is required for amendment due to circumstances specified in subsection (1)(c)(i)
(ii) and (iii) of section 9. This treatment indicates the importance attached to such changes which may be material in nature.
24. Amendment in the valuation list can be made by making alteration, addition, deletion or correction. The erection of new building after the completion of valuation list will necessitate addition in the list by including it and assessing its annual rental value. Likewise destruction, damage or demolition of a building partially or completely will affect the valuation list requiring amendment as regards gross annual rent which may be reduced or deleted in case of complete demolition or destruction. But where structural alterations or additions have been made, the annual rental value of the property is bound to be amended and if circumstances permit, has to be increased or decreased. The change of ownership of building or land would also require amendment in the valuation list. But the question is whether it empowers the Assessing Authority to increase the gross annual rent. Form PT-V referred above consists of a large number of particulars to be entered in 13 columns. Change of ownership will require amendment in Col. 6 where name of the new owner will have to be substituted. Where the building or land after change of ownership is self-occupied or rented out question of changing the gross annual rent will not arise. The Assessing Authority cannot enhance the gross annual rental value on the plea that after completion of the valuation list the ownership has changed and rent of similar properties expected to be earned now is more than what it was at the time of completion of the list. It may be pointed out that valuation list is prepared at least for a period of 5 years or such extended period as may be permissible in law. After the expiry of that period a fresh valuation list is prepared in which amongst others gross annual rent is also determined. For. Purposes of charging tax it is the gross annual rent which is the basis. All other particulars are merely to keep information about the property up to date which has little to do with the assessm ent of tax except in cases where any relief or exemption is sought. In case of addition, alteration, damage or destruction of property gross annual rent is bound to be affected and therefore there exists valid reason to amend it. But in a case where there is a change of ownership simpliciter how it will affect the gross annual rent. In such cases the fmality attached to the valuation list for a specified period will debar the Assessing Authority from changing it on the plea that now the rent likely to be earned is more than what had been determined at the time of preparation of the list. The learned Judges of the High Court having considered the meaning of the term 'circumstances used in section 9 and referring to various authorities interpreting this word observed as follows:-- "Moreover, subsection (1) of section 9 allows the amendment list, 'to bring the same in accord with the existing circumstances'. This allows the change in respect of the assessment of individual properties, if the circumstances justify the same. Since the rent on which a property may be let out is the main basis of fixation of the annual (rent) of the building under section 5, therefore, a change in the rent of a property would reasonably be a relevant circumstance which has to be taken into consideration and the list is to be changed in consequence of a change in the rent.
25. Therefore, in our view a change in rent of the rental premises would be a very relevant circumstance to change the valuation list which is based upon gross annual rental value. If any circumstance is relevant for the purposes of gross rental value, then it is primarily the rent itself.
26. The expression 'annual letting valueitself shows that annual letting value is the most important factor in respect of the determination of the rent of a property and, therefore, the reduction or enhancement in the annual rent of a property would react naturally upon the annual letting value of the property."
27. These observations, if we may say so, with respect, do not correctly lay down the law. The gross annual letting value is the basis of assessment of tax but mere increase of rent during the currency of a valuation list cannot by itself be a circumstance providing an opportunity to the Assessing Authorities or empower them to reopen the question of gross annual rental value and amend it according to the increased rent. Such an interpretation is neither in consonance with the scheme nor with the object of the Act.
28. Now we will deal with the second part of section 9(1)(0(iE) of the Act which refers to amendment of valuation list due to change of use. Col. 5 of PT-V requires the manner of user to be mentioned in Valuation List. Rule 12 requires the owner to report to the Assessing Authority, any transfer, gift, sale, lease in perpetuity, addition, alteration, destruction, and increase in rent subsequent to the assessm ent. Where a property is self-occupied and is rented out, the owner is required to inform the Assessing Authority so that proper entries may be made in Form PT-V and the rebate allowed to self-occupied building be withdrawn. Likewise if the user is converted from residential to non- residential use the same may be recorded in relevant record but such change does not warrant change in the annual rental value of the building. This conclusion finds support from the fact that section 3-A has charged and levied a betterment tax @ 5% of the annual value of building or land if it is used wholly or partly for commercial purpose. Therefore the change of use from residential to commercial will automatically attract levy of betterment tax. It seems unreasonable that on the basis of change of use first the annual rental value be enhanced and then make it a basis for charging property tax and betterment tax. The betterment tax is intended to levy extra charge on the property in addition to property tax for using it for commercial purposes. In this regard it is to be noted that section 9 vests the Assessing Authority with restricted and limited power and does not authorise it to go on constantly changing the annual rental value within its validity period merely on the basis that the rate of rent has been continuously or from time to time increasing. This will create uncertain and disturbing condition which is not favoured in the field of taxation. In Hashmat Ali v. Director-General, Excise was Taxation, Karachi (PLD 1978 Kar. 686) it was rightly observed that for taking into consideration subsequent events affecting the rental value the Act provides for a very limited scope in terms of section 9. The limits contemplated by section 9 have already been discussed above and need no further illucidation.
29. However, it is to be noticed that section 7-A which has been added in 1978 protects, validates and gives continuance to the valuation list existing on 30-6-1978 and has made it the basis for levy of tax until the date new lists are enforced as provided by section 7. It further provides that the fresh valuation list so prepared shall be in accordance with section 5 as it stood before 1-7-1977.
30. Therefore such list will not be prepared in accordance with the existing section 5 which was substituted on 1-7-1977. Section 7-A opens with the non obstante clause "Notwithstanding anything contained in this Act" and thus intends to waive the limits imposed on the continuance of the periodical valuation list whose life otherwise has expired. If the operation of all other provisions of the Act is excluded then it will create confusion and lead to absurdity. Section 7-A serves the limited purpose to validate the continuance of the valuation list till a fresh list is prepared. By implication it excludes changes which may amount to introducing a new valuation list. However, amendments which by their nature are bound to be made in the valuation list to keep it in accord with the existing circumstances have to be made. Thus even gross annual rental value can be amended if there is addition, alteration, destruction or damage to the property. However, if any amendment in the gross annual rental value is made it will be assessed as provided by section 5.
31. The appeal is allowed and the case is remanded to the respondent No,1 who will after notice to the petitioner decide whether she has rented out the building for commercial use and made any structual changes in the building by way of addition or demolition. If the finding is in the affirmative then respondent No,1 would make necessary amendments in the valuation list as discussed above and also levy betterment tax. There will be no order as to cost.