P. S. NARAYANA, J. ( 1 ) HEARD Sri C. C. S. Sastry counsel representing the appellant-plaintiff and Sri. Dommalapati Srinivas, the Counsel representing the respondent/defendant. The unsuccessful plaintiff in both the Courts below had preferred the second appeal. The appellant-plaintiff, Kadiam Venkata ratnam filed a suit O. S. No. 282 of 1983 on the file of Principal District Munsif, kovvur for declaration that the enhancement of tax from Rs. 653-04 ps. to Rs. 1,312-37 ps. per half year for Assessment No. 894 for the schedule building is null and void and for a permanent injunction restraining the defendant-the Nidadavole Municipality represented by its Commissioner Nidadavole from collecting the enhanced tax and for costs of the suit. The learned Principal district Munsif, Kowur by its judgment dated 12th day of August, 1987 had dismissed the suit with costs and aggrieved by the same, the plaintiff carried the matter by way of an appeal A. S. No. 52 of 1987 on the file of Subordinate Judge, Kovvur and the appellate Court also had dismissed the appeal with costs and aggrieved by the same, the present second appeal is preferred. ( 2 ) SRI C. C. S. Sastry, learned Counsel representing the appellant-plaintiff had pointed out that there is only one substantial question of law involved in the present second appeal which is as hereunder: whether the Courts below are justified in negativating the relief without properly appreciating the procedure to be followed while assessing the tax in the light of the provisions of Section 87 of a. P. Municipalities Act, 1965? The learned counsel had drawn the attention of this court to the findings recorded by the Court in the first instance and also the appellate court and had pointed out that just placing reliance on Ex. Bl and also recording a finding that there is no evidence placed on record by the appellant-plaintiff as to the actual rental value, the Courts below had confirmed the assessment. The Counsel also had drawn the attention of this Court to a decision K. Ramayya v. Guntur municipal Council, 1988 (2) ALT 131 , in this regard. ( 3 ) PER contra Sri Dommalapati srinivas had pointed out that the Courts below had arrived at a correct finding by placing reliance on Ex. Bl in the absence of any other acceptable evidence placed on behalf of the appellant-plaintiff. ( 3 ) PER contra Sri Dommalapati srinivas had pointed out that the Courts below had arrived at a correct finding by placing reliance on Ex. Bl in the absence of any other acceptable evidence placed on behalf of the appellant-plaintiff. The learned counsel also would point out that except the vague evidence of P. W-2, there is no other evidence adduced on behalf of the appellant-plaintiff. The learned Counsel also had drawn the attention of this Court to the self same decision in K. Ramayya v. Guntur Municipal Council and had pointed out that normally the rent actually received would furnish the criteria for determining the market value. The Counsel in all fairness had stated that it is no doubt not conclusive, but in the absence of contrary material when procedure had been followed, the Courts below are well justified in affirming thy assessment made by the respondent-defendant, Nidadavole Municipality. ( 4 ) HEARD both the Counsel. The only substantial question of law raised in the present second appeal had been already referred to supra. The respective pleadings of the parties are as hereunder:"it was pleaded in the plaint that the plaintiff is the owner of the schedule house which is an old one and requires repairs. The entire house is being occupied by one Dr. Rajarao and after him by Rama nursing Home and they have been paying rs. 600/- per month as rent. The tenants are income tax assesses. The defendant issued a special notice, proposing enhancement of tax to Rs. 1,312-37 ps from Rs. 653-04 ps which was questioned by the plaintiff in a revision. But the defendant rejected the revision and. confirmed the tax at Rs. 1,306-08 ps per half year. The rental value arrived at by the defendant is arbitrary and illegal and against the procedure prescribed under the Act. Hence, suit for declaration that the enhancement is illegal. " ( 5 ) THE respondent as defendant- nidadavole Municipality had filed a written statement denying all the allegations in the plaint and had further pleaded in the written statement that the building is in a good condition and does not require any repairs. It was further pleaded that the present tenants Dr. Seshagirirao and Dr. Srirama laxmi who are running a Nursing home are paying a rent of Rs. 900/- per month. It was further pleaded that the present tenants Dr. Seshagirirao and Dr. Srirama laxmi who are running a Nursing home are paying a rent of Rs. 900/- per month. The valuation Officer taking into consideration the rent received by the plaintiff and the rents prevailing in the locality and as per the declaration given by the tenants themselves revised the assessment. It is not excessive or arbitrary, but proper and just. The plaintiff s suit is frivolous and vexatious and hence liable to be dismissed with exemplary costs. ( 6 ) ON the respective pleadings of the parties, the following issues were settled: (1) Whether the plaintiff is entitled to the declaration and injunction prayed for? (2) To what relief? ( 7 ) AFTER recording the evidence of p. W-1-the plaintiff and also other witness p. W. 2 and D. W-1 and marking Exs. Al to a4 and Exs. Bl and B2, the Court of first instance mainly relying on Ex. Bl had arrived at a conclusion that the assessment is well justified. ( 8 ) AS already referred to supra, the matter was carried in appeal by preferring a. S. No. 52 of 1987 on the file of Subordinate judge, Kovvur and the said findings recorded by the Court of first instance had been confirmed. ( 9 ) SECTION 87 of Municipalities Act, 1965 reads as hereunder: (1) Every building shall be assessed together with its site and other adjacent premises occupied as an appurtenance thereto unless the owner of the building is a different person from the owner of such site or premises. (2) The annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to be let from month to month or from year to year with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed. (3) Notwithstanding anything in the Andhra pradesh Buildings (Lease, Rent and Eviction) control Act, 1960, the gross annual rent at which the lands and buildings might reasonably be expected to be let from month to month or from year to year, shall be determined by the Commissioner, with reference to its location, type of construction, plinth area, age of the building, nature of use to which it is put and such other criteria as may be prescribed: provided that in the case of any Government or railway building or any building or a class of buildings not ordinarily let, the gross annual rent of which cannot in the opinion of the Commissioner be estimated, the annual rental value of the premises shall be deemed to be nine per cent of the estimated value of the land and the present cost of erecting the building after deducting a reasonable amount towards depreciation which shall in no case be less than ten percent of such cost. (4) The annual rental value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or from year to year, less a deduction at the rate of ten per cent for buildings up to the age of 25 years and twenty per cent for buildings above the age of 40 years of that portion of such gross annual rent which is attributable to the building apart from their sites and adjacent lands occupied as an appurtenance thereto and the said dedication shall be in lieu of all allowances for repairs or on any other account whatsoever: provided that a rebate of forty per cent of the annual rental value shall be allowed in respect of the residential buildings occupied by the owner inclusive of the deduction permissible under this sub-section; provided further that in respect of such municipalities on the seashore as may be specified by notification from time to time, a rebate of five percent of the annual rental value shall be allowed in addition to the rebates allowed under the other provisions of the Act in respect of all the buildings. Explanation: For the purposes of this section, an area not exceeding three times the plinth area of the building including its site or a vacant land to the extent of one thousand square meters, whichever is less shall be deemed to be adjacent premises occupied as an appurtenant to the building, and assessed to tax in accordance with the provisions of this section, and the area, if any, in excess of the said limit shall be deemed to be land not occupied by or adjacent and appurtenant to such building and the tax shall be levied thereon in accordance with the provisions of sub-section (3) of Section 85 as if it were land to which that sub-section applied. ( 10 ) THE main grievance ventilated by the unsuccessful plaintiff in the Courts below is that the procedure specified in the method of assessment of properly tax had not been followed and the assessment was not made in accordance with law and negativating the relief of declaration and consequential relief of perpetual injunction, therefore cannot be sustained. ( 11 ) IN K. Ramayya v. Guntur Municipal council at page 135, it was observed that"in view of these decisions, it is now well settled that where the building is governed by the provisions of the Rent Control Act in fixing the fair rent even though the fair rent has not been determined under the Rent control Act, the authorities under Section 87 (2) (b) have to follow the criteria prescribed under the Rent Control Act and then decide the rental value in the light of the provisions laid down under the said Act. It is true that a rent actually received would normally furnish the criteria for determining the market value. But it is not by itself conclusive. Sub-section (2) (b) of Section 87 thus provides the criteria, namely, the location, the purpose for which it is put, the type of construction, the plinth area and such other relevant criteria as may be prescribed under the rules are the guiding factors. The inflated or deflated rent received due to fortuitous considerations or closeness of the relationship of the parties or conduct to suppress the rent, are outside the ken of reasonableness. The acid test is the willing owner letting to a willing tenant and the premium at such bargain. The inflated or deflated rent received due to fortuitous considerations or closeness of the relationship of the parties or conduct to suppress the rent, are outside the ken of reasonableness. The acid test is the willing owner letting to a willing tenant and the premium at such bargain. Even the rents prevailing in the neighbourhood also would furnish the guidance for fixation of annual rental value. But the authority before determining the annual value has to take all these factors into account and then determine the annual rental value". ( 12 ) IN Devan Daulat Rai Kapoor v. New Delhi Municipality, AIR 1980 SC 541 , while dealing with the aspect of annual value and determination thereof under Punjab municipality Act, 1911, the Apex Court observed as follows:"according to the definition occurring in section 3 (1 ) (b) of the Punjab Municipal Act 3 of 1911 annual value of a building would be the gross annual rent at which the building may reasonably be expected to let from year to year. It is obvious from this definition that unlike the English Law where the value of occupation by a tenant is the criterion for fixing the annual value of the building for rating purposes, here it is value of the property to the owner which is taken as the standard for making assessment of annual value. The criterion is the rent realizable by the landlord and not the value of the holding in the hands of the tenant. The rent which the landlord might realise of the building were let is made the basis for fixing the annual value of the building. What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value. There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from hypothetical tenant. But where the rent of the building is subject to rent control legislation, this approximation may and often does get displaced. Where a building is governed by the provision of Rent Control Legislation the landlord cannot reasonably be expected to receive anything more than the standard rent from a hypothetical tenant and the annual value of the building cannot therefore exceed the standard rent. Where a building is governed by the provision of Rent Control Legislation the landlord cannot reasonably be expected to receive anything more than the standard rent from a hypothetical tenant and the annual value of the building cannot therefore exceed the standard rent. Even in case of a building in respect of which no standard rent has been fixed within the prescribed period of limitation and thus the tenant is precluded from making an application for fixation of standard rent with the result that landlord is lawfully entitled to continue to receive the contractual rent, the annual value must be limited to the measure of standard rent determinable under the Rent Act and cannot be determined on the basis of the higher rent actually received by the landlord from the tenant. Even if the standard rent has not been fixed by the Controller, the landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent determinable under the Act and this would be so equally whether the building has been let out to a tenant who has lost his right to apply for fixation of the standard rent or the building is self-occupied by the owner. The assessing authority would, in either case, have to arrive at its own figure of the standard rent by applying principles laid down in the Delhi rent Control Act, 1958 for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent. " ( 13 ) STRONG reliance was placed on the decision of the Supreme Court in Guntur municipal Council v. Rate-Payers association, AIR 1971 SC 353 , and also guntur Town R. P. Assn v. Guntur Municipal council, 1978 (II) An. WR 201. I had given my anxious consideration to the findings recorded by the Courts below. The Courts below had recorded the findings based on Ex. Bl and also taking into consideration the aspect that except the vague evidence of P. W-2, there is no other acceptable evidence adduced on behalf of the appellant-plaintiff. It is needless to say that the findings in accordance with law relating to the procedure to be followed in this regard had not been recorded. Evidently since the courts below had been labouring under the impression that in the absence of acceptable evidence, automatically the appellant-plaintiff is bound to pay. It is needless to say that the findings in accordance with law relating to the procedure to be followed in this regard had not been recorded. Evidently since the courts below had been labouring under the impression that in the absence of acceptable evidence, automatically the appellant-plaintiff is bound to pay. In view of the aforesaid approach adopted by the Courts below, I am of the considered opinion that the judgments and decrees made by the Courts below cannot be sustained. ( 14 ) SRI C. C. S. Sastry in all fairness had submitted that the evidence of P. W-2 is of no much help to the case of appellant-plaintiff and in the facts and circumstances and in the interest of justice, an opportunity to be afforded to both the parties to let in further evidence on this aspect, since the suit is sufficiently an old one. ( 15 ) THE matter is remanded to the appellate Court. The learned Subordinate judge, Kovvur to afford an opportunity to both the parties to let in further evidence on the aspects referred to supra and record the findings in accordance with law. Accordingly, the judgments and decrees of the Courts below are hereby set aside and the matter is remanded to the appellate Court for disposal in accordance with law. ( 16 ) THE second appeal is allowed to the extent indicated above. No order as to costs.