"Annual value" means--
(a) in the case of hotels, colleges, schools, hospitals, factories and such other buildings, a proportion not exceeding five per centum, to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building, less depreciation at the rate to be fixed by rule to the estimated value of the land appurtenant thereto, and
(b) in the case of a building or land not falling within the provisions of clause (a), the gross annual rent for which such buildings, exclusive of furniture or machinery therein or such land is actually let, or where the building or land is not let or in the opinion of the municipality is let for a sum less than its fair letting value, might reasonably be expected to let from year to year:
Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the municipality be excessive if calculated in the aforesaid manner, the municipality may fix the annual value at any less amount which appears to it suitable:
Provided further that the rules framed in this behalf shall be subject to the prior approval of the Government.