Title- Advocate’sOffice Run From Residence Not Subject To Property Tax As Business Building

Case Name- B.N. MAGON Vs South Delhi Municipal Corporation

Citation-2015:DHC:764                                                                         

Court- High Court

Bench Justice-Manmohan

Decided on- January 27, 2015

Case Laws-

·        Sakharam Narayan Kherdekar v. City of Nagpur Corporation and others AIR 1964 Bombay 200

·        M.P. Electricity Board and Others v. Shiv Narayan and Another (2005) 7 SCC 283

·        V. Sasidharan v. M/s. Peter and Karunakar and others AIR 1984 SC 1700

·        LalitBhasin v. Appellate Authority Under Payment of Gratuity Act, 1972, 2010 (116) DRJ 461

·        State of W.B. v. Kesoram Industries Ltd. & Others, (2004) 10 SCC 201

·        Percy v. Hall, [1996] 4 All ER 523

Brief Facts and Procedural History-

The petitioner is the owner and occupier of the property which is built on 250 square yards of land and comprises the ground floor, first floor and the Barsati. The petitioner resides in the aforesaid house along with his wife and his elder son who is a practicing lawyer in this Court.

The residence of the petitioner was inspected by the MCD officials and it was found that the drawing room comprising 30 sq. mtr. (323 sq. ft.) approximately out of 334 sq.mtr. (3,594 sq. ft.) covered area was being used as a lawyer's office.

Contention raised by the petitioner-

•         A lawyer's office is neither a business establishment nor a commercial establishment or an industry.

•         Self-occupied premise, predominantly used for residence, would not loose its character and would not become a professional establishment within the definition of 'business building' if a portion of the same was used for rendering professional advice or self study by a lawyer. He stated that in the present instance no portion of the residence could be termed as a business building.

•         By relying upon judgement held that office of an advocate is not covered under the expression 'commercial establishment' under the Bombay Shops and Establishments Act, 1948.

•         Relied upon the reference order of a Two Judge Bench of the Supreme Court wherein it has been held under:-The word commercialhas been defined to mean: Commercial relates to or is connected with trade and traffic or commerce in general; is occupied with business and commerce.

Contention Raised by the respondent:

•         Bye-law 9(b)(i) of Bye- Laws, 2004, a 'business building' included a portion or a part of a building which was used as a professional establishment or for professional activity such as a lawyer's profession as it involved keeping of books and records.

•         since the lawyer's activity fell within the sphere of professional activity which was carried on in an office, that part of the building which was used for professional activity clearly fell within the scope of the definition of a 'business building' under the provision of Bye- law 9(b)(i) of the Bye-Laws, 2004.

•         the expression 'business building' was wide as well as inclusive and did not violate any substantive provision of the Delhi Municipal Corporation Act, 1957 (for short 'DMC Act, 1957').

•         the "power to tax must be expressed; otherwise, there is no power to tax". Under the DMC Act, there is no power to tax "professional activities" carried out on Commercial Buildings

Issue-

 whether a portion of the residential building being used as a lawyer's office in accordance with the parameters specified in the Master Plan for Delhi 2021 falls within the ambit and scope of a 'business building' as defined in Bye-law 9(b) of the Delhi Municipal Corporation (Property Taxes) Bye-Laws, 2004 for the purpose of levy of property tax under the unit area method introduced by Delhi Municipal Corporation (Amendment) Act, 2003?

Ratio-

·        Court is of the view that there is nothing like an implied power to tax. The source of power which does not specifically speak of taxation cannot be so interpreted by expanding its width so as to include therein the power to tax by implication or by necessary inference.

·        In the case of plotted development with single dwelling unit, professional activity shall be permissible on any one floor only, but restricted to less than 50% of the permissible or sanctioned far whichever is less on that plot

·        It was held by a Division Bench of this Court that there was no misuse when a professional has an office in his residence within the parameters.

·        The intent of the MPD 2021 is to permit certain categories of 'professional activities' in residential premises subject to certain conditions and within certain parameters.

·        If professional activity is carried out by professionals mentioned in the said Clause within the parameters laid down in it, then the user of the premises, according to MPD 2021, remains residential.

Held-

As the statute has not included “professional activity” of lawyers as “commercial activity” the former cannot be put to tax. The aforesaid Bye-laws cannot seek to over-reach the statute itself. The assessment order issued by the MCD under section 123D of the DMC Act, 1957 along with any demand, was rightly quashed.