P L D 1959 (W (PLP)

Rs.73,555 Rs. 3,45,000, Rs.1,50,000 722 104 Total . . . Rs. 1,15,527 Rs. 4,95,000 826 Hie also proposed that the shops, houses, bungalows and Cinemas should be placed in different categories according to their 'localities and assessed to land revenue at various rates, ranging between Rs. 2 to Rs. 90 per kanal, per annum. These proposals were accepted by the Government and, acting under sub section (1) of section 51 of the Act, the Settlement Officer first determined the assessments of the various estates and then, acting under subsection (1) of section 56 of the Act, distributed the assessment over the various holdings.

4. The revenue estate of Mozang, in which the Faletti's Hotel is situated, was previously assessed to an annual land revenue demand of Rs. 15,019, which was apportioned between the land under the buildings and other land as under :‑ Rs. Land under the buildings ... 12,919 Other land used for purposes of agriculture ... 2,100 Under the new assessment the annual demand of this estate has been fixed at Rs. 1,12,272‑12‑0, which has been apportioned between the two categories as under :‑ Rs. a. p. Land under the buildings ... ... 1,07,772 12 0 Other land used for purpose of agriculture ... 4,500 0 0

5. A reference to the definition of "net assets", as given in clause (18) of section 3 of the Act, would show that the net assets of an estate, or a group of estates, mean the estimated average annual surplus produce of such land after deduction of the ordinary expenses of cultivation and have no relation to the income which any such land derives from sources other than that of agriculture. The word "estimated" occurring in this clause does indicate that even if any land situated in an estate is net put to agricultural uses, the produce of such land which it would have yielded if it had been put to such use has to be' taken into consideration for working out the net assets. For instance, if any agricultural land is lying vacant for a number of years the estimate of its average annual surplus produce is to be based on the income which such land would have yielded if it had been under cultivation. Similarly, if any land is put to some other use, the estimate of its average annual surplus produce is to be based on the value of the produce which it would‑take yielded if it had been put to agricultural use. The income derived from such land if it is put to some use other than that of agriculture would not, however, be "produce" of such land and cannot, in our opinion, form the basis of working out its net assets, because the expression "produce" occurring in this clause cannot be considered to be synonymous with the expression "income". If the intention of the Legislature had 6 been that the income derived from land to whatever use it is put should form the basis of working out the net assets, they would have used the expression "income" to make the intention quite clear. It cannot, however, be denied that under subsection (1) of section 48 of the Act all land "to whatever purpose applied and wherever situate" is liable to the payment of land revenue, unless it is exempted from such payment. The correct meaning of this provision of law, in our opinion, is that though for working out the net assets of an estate, or a group of estates; the estimate cannot be, based on income other than that from agriculture, after the net assets have been so ascertained, all that land, whether it be used for' purposes of agriculture or not; would be so liable for payment of land revenue. This inter pretation, in our opinion is in accord with the language of sub section (1) of section 48, as well as with that of section 48‑A of the Act. In' fact, this interpretation has always been taken to be the basis of assessment before a contrary decision was taken in the year. 1936, on the reference made by Mr. Abell regarding the assessment of the urban areas of Pattoki and Kasur, in the Lahore District.

6. In view of what has' been stated above, the method adopted by the Settlement Officer, Lahore, in working out the net assets of the Lahore Urban Assessment Circle was not in accordance with law. He should, in our opinion, have worked out the net assets of the total area of 11,448 acres on .the assumption that the whole of at was agricultural land. On the basis of cash rents, however, he found that the net assets of 5,754 acres of land, which were put to agricultural use, came to Rs. 15,93,

969. If the net assets of the remaining 5,691 acres, which were under buildings, had also been worked out on' the basis of agricultural income, the net assets of the total area of 11,445 acres would have been in the neighbourhood of about Rs. 30,00,

000. Section 48‑B permits the State to levy land revenue not exceeding one‑fourth of the total net assets of an assessment circle and if this limitation had been kept in view, for the Lahore Urban Assessment Circle a total amount of Rs. 7,50,000, per annum, could have been assessed as land revenue. The amount actually assessed is Rs. 4,95,000 per annum, which is well within the limit fixed by this provision of law. Thus, although the method of working out the net assets was not according to law, as the assessment has not exceeded the maximum limit fixed by section 48‑B, the legality of the assess ment should not be allowed to be challenged on this ground.

7. Regarding the distribution of the assessment between the various estates and. holdings, though sections 51 and 56 give this power to the Revenue Officer (Settlement Officer), by the very nature of things that power has to be exercised reasonably and equitably. In fact, rule 23 of the Land Revenue Assessment Rules, 1929, which is worded as follows, envisages the exercise of this power in an equitable manner :‑ " Before making or revising the distribution of a fixed assessment over the several holdings of an estate, the Revenue Officer shall enquire into the usage followed in the previous distribution and in deciding the method of the new distribution, he shall have regard to that usage and to the wishes of the land‑owners, so far as may be practicable and equitable." It was contended on behalf of the respondents that due notice was given to the land‑owners and some of them appeared before the Settlement Officer and approved of his proposals. There is, however, nothing on the record to show that the petitioners were given a notice of the proposed assessment, which the revenue estate of Mozang was to pay, or of the distribution of the demand on the various holdings including that of the petitioners. The record also does not indicate the basis on which the various properties have been categorised and how some of the urban properties have been assessed to a land revenue demand of Rs. 2 per kanal per annum, and some, like that of the petitioners, to a demand at about forty‑five times that amount. If there had been any material on the record to show that the "letting value" of the land under the Faletti's Hotel was about forty‑five times the "letting value" of the bungalows described as' "III Class", which have been assessed to land revenue` at the rate of Rs. 2 per kanal, per annum, and was also about forty‑five times the income of canal‑irrigated agricultural land which was assessed, to land revenue at the same rate, we could have said that the distribution of demand between the various holdings, as well as between the various estates of this Circle, was .made on an equitable basis. In the absence of such material we cannot avoid an inference that arbitrary standards may have been applied. For this reason and also on account of the fact that the petitioners were not heard before the demand in their case was fixed, we direct that the Board of Revenue should hear them and give them an opportunity of placing their point of view before the Board. If after' considering their representation and all other circumstances of the case the Board comes to the conclusion that the assessment in the case of the petitioners was not made on an equitable basis, it will adopt an equitable basis so far as the petitioners are concerned. To this extent only, we set aside the orders passed by the Settlement Officer. In the peculiar circumstances of the case, however, we make no order as to costs. K. B. A. Order accordingly.