ANNEX 1. The fundamental rule which underlies all rating law is that the valuation is calculated from the rent which would be paid from year to year by a tenant. Since public utility undertakings are, in the nature of things, never let from year to year, certain conventional practices have grown up and been recognised by the Courts; the method adopted for railways is known as the "profits principle", the object being to determine what rent a hypothetical tenant would be prepared to pay for the undertaking as a going concern.