Gujarat High Court
Pratik Hareshkumar Shah vs Ahmedabad Municipal Corporation on 21 December, 2021
Bench: J.B.Pardiwala
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 6140 of 2019
With
CIVIL APPLICATION (FOR PRODUCTION OF ADDITIONAL EVIDENCES)
NO. 1 of 2021
In R/FIRST APPEAL NO. 6140 of 2019
With
R/FIRST APPEAL NO. 6141 of 2019
With
R/FIRST APPEAL NO. 6142 of 2019
With
R/FIRST APPEAL NO. 6143 of 2019
With
R/FIRST APPEAL NO. 6144 of 2019
With
R/FIRST APPEAL NO. 6145 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
PRATIK HARESHKUMAR SHAH
Versus
AHMEDABAD MUNICIPAL CORPORATION
==========================================================
Appearance:
MR DARSHAN B GANDHI(9771) for the Appellant(s) No. 1,2
MR SP MAJMUDAR(3456) for the Appellant(s) No. 1,2
MRS KALPANAK RAVAL(1046) for the Defendant(s) No. 1
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C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 21/12/2021
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. Since the questions of law involved in all the captioned
appeals are the same, those were taken up for hearing analogously
and are being disposed of by this common judgment and order.
2. For the sake of convenience, we treat the First Appeal
No.6140 of 2019 as the lead matter.
3. This appeal under Section-411 of the Gujarat Provincial
Municipal Corporation Act, 1949 [for short 'The Act, 1949'] is at
the instance of the owner of a premises situated at Sharda Society,
Opposite Bank of India, New Sharda Mandir School Road, Paldi,
Ahmedabad, questioning the legality and validity of the judgment
and order passed by the Small Cause Court, Ahmedabad dated
12.04.2019 in the Municipal Valuation Appeal No.138 of 2008, by
which, the Small Cause Court dismissed the appeal upholding the
assessment of tax by the Ahmedabad Municipal Corporation.
2. The facts giving rise to the present appeal may be
summarized as under:-
2.1 The appellants herein preferred the Municipal Valuation
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Appeal in the Small Cause Court at Ahmedabad against the
assessment of the Municipality Property Tax for the assessment year
2007-08 for the subject premises referred to above and in context
with the some bills issued by the Corporation bearing Nos.2921 and
2922 respectively. It appears from the materials on record that the
subject tenement is a one storied house. The total area of the entire
tenement is 171.65 sq. mtrs. The first floor of the tenement ad-
measures 80.84 sq. mtrs., whereas, the ground floor ad-measures
90.81 sq.mtrs.
2.2 It is not in dispute that the first floor of the tenement is
being used for residential purpose and the ground floor is being
used as an office. The appellant before us namely, Hareshkumar
Ramanlal Shah appears to be a practicing advocate.
2.3 The dispute between the parties arose when the Corporation
issued two separate bills; one for the ground floor portion being
used as a non-residential premises and the other one for the first
floor of the premises, which is being used for the residential
purpose.
2.4 It is the case of the appellants that the entire tenement is a
residential premises and just because the ground floor is being used
as an office, the same cannot be separated and treated as a non-
residential premises for the purpose of property tax. The Small
Cause Court adjudicated the dispute and took the view that as the
ground floor portion of the tenement is larger in size compared to
the first floor and as the ground floor is being utilized as an office,
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it is permissible for the Corporation to treat the same as a non-
residential premises and assessed the tax accordingly.
3. Being dissatisfied with the judgment and order passed by the
Small Cause Court dismissing the appeal filed by the appellants
herein, the appellants are here before this Court with the present
appeal.
4. We have heard Mr. S.P. Majmudar, the learned counsel
appearing for the appellants and Mrs. Kalpana Raval, the learned
counsel appearing for the Corporation.
5. Mr. Majmudar would submit that the impugned order passed
by the Court below could be termed as erroneous as one residential
premises located in a residential society could not have been
bifurcated into two parts i.e. (1) residential premises so far as the
first floor is concerned; and (2) non-residential premises so far as
the ground floor is concerned. Mr. Majmudar would submit that it
hardly matters whether the area of the ground floor is larger than
that of the first floor. Essentially, it is a residential premises
wherein a part of the same is being used as an advocate's office.
6. Mr. Majmudar further submitted that the issue in question is
no longer res-integra in view of the decision rendered by a Co-
ordinate Bench of this High Court in the case of Kanubhai Shantilal
Pandya and others Vs. Vadodara Municipal Corporation and others
reported in 2016 SCC Online Guj. 6524. Mr. Majmudar also tried to
develop an argument by drawing a fine distinction between the
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professional activity compared to a commercial activity. According
to Mr. Majmudar, if an advocate has an office in some part of his
residential premises, the same cannot be termed as a commercial
activity, but would be a professional activity. In such circumstances
referred to above, Mr. Majmudar prays that there being merit in his
appeals, those be allowed and the impugned judgment and order
passed by the Court below be quashed and set aside.
7. On the other-hand, the present appeal and allied appeals have
been vehemently opposed by Mrs. Kalpana Raval, the learned
counsel appearing for the Corporation by submitting that no error
not to speak of any error of law could be said to have been
committed by the Court below in dismissing the Municipal
Valuation Appeals filed by the appellants. According to Mrs. Raval,
Section-141 of the Act, 1949 only talks about the residential
premises and non-residential premises. In such circumstances,
according to Mrs. Raval, there is no point in drawing a further
distinction between the professional activity and commercial
activity. Once it comes to the notice of the Corporation that a
portion of the residential premises is being used for the purpose of
an office, that part of the premises becomes non-residential and the
tax can be accordingly assessed. Mrs. Raval would submit that the
view taken by the Court below as regards the larger portion of the
house being utilized as an office compared to a smaller portion of
the house being used for residential purpose could be termed as
reasonable and not absolutely erroneous. Mrs. Raval in the course
of her submission also placed before us a chart indicating the
manner in which the various types of residential premises and non-
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
residential premises are being assessed for the purpose of property
tax. We shall look into the chart a little later.
8. In such circumstances referred to above, Mrs. Raval prays
that there being no merit in the appeals, those may be dismissed.
ANALYSIS:-
9. Having heard the learned counsel appearing for the parties
and having gone through the materials on record, the only question
that falls for our consideration is whether the Court below
committed any error in passing the impugned order.
10. We must first look into the judgment of this High Court
passed by a Co-ordinate Bench in the case Kanubhai Shantilal
Pandya [supra]. In the said case, the petitioners were advocates
practicing at Vadodara. They were all occupying the premises as
owners of various residential units, which were either flats,
tenements, bungalows situated in Vadodara. It was not disputed by
the Vadodara Municipal Corporation that such units were residential
units situated in a residential society or residential complex. It was
also not in dispute that the petitioners of the said case occupied
majority of the portion of their individual units for the residential
purpose and small portion was set a part for their legal practice.
The case put up by the Vadodara Municipal Corporation in the said
litigation was that as the petitioners were occupying their houses
for residential purposes, the same would be charged as residential
use, whereas, the remaining area used by the petitioners for the
purpose of their office would be charged as commercial or non-
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
residential purposes. The Vadodara Municipal Corporation on such
basis issued special notices followed by tax bills. In such
circumstances referred to above, the tax bills came to be challenged
by way of writ-applications invoking the writ jurisdiction of this
High Court under Article 226 of the Constitution of India.
11. The Co-ordinate Bench first took notice of Section-141B of the
Act. Paragraph-7 of the judgment has quoted the entire provisions
of Section-141. The same reads thus:-
"141B [General Tax] at what rate leviable.-(1) For the purposes of
[clause(c) of section 141AA, general tax] shall, subject to such
exceptions, limitations and conditions hereinafter provided, be
levied annually on buildings and lands in the City at such rate
per square meter of the carpet areas of buildings and of the
areas of lands (hereinafter referred to as the rate of tax) as the
Corporation may determine.
(2) For the purpose of levy of tax on buildings in the City under
sub-section(1),
(a) the buildings may be classified into residential buildings and
buildings other than residential; and
(b) the Corporation may determine one rate of tax for residential
buildings and the other rate of tax for buildings other than
residential;
Provided that it shall be lawful for the Corporation to determine
for residential buildings, the carpet area of which does not
exceed forty square meters, such rate of tax as is lower than the
rate of tax determined for residential buildings generally under
this sub-section.
(3) The rate of tax determined under sub-section(1) read with
sub-section(2) shall not-
(a) in respect of residential buildings, be less than ten rupees per
square meter of carpet area and more than forty rupees per
square meter of carpet area, and
(b) in respect of buildings other than residential, be not less than
twenty rupees per square meter of carpet area and more than
eight rupees per square meter of carpet area.
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
(4) The Corporation may, subject to rules, increase or decrease or
neither increase nor decrease the rate of tax determined under
sub-section(1) read with sub-sections(2) and (3),-
(a) in the case of residential buildings, having regard to the
following factors, namely:-
(i) the market value of the land in the area of the City in
which the buildings are situated;
(ii) the length of time of the existence of buildings.
(iii) the type of the buildings, and
(iv) whether the buildings are occupied by owners or tenants.
(b) in the case of buildings other than residential having regard
to the following factors, namely:-
(i) the market value of the land in the area of the city in
which the buildings are situated.
(ii) the length of the time of the existence of the buildings,
(iii) the purpose for which the buildings are used, and
(iv) whether the buildings are occupied by owners or tenants,
(5) In lieu of the [general tax] leviable under sub-section(1) read
with sub-sections (2) and (3), there shall be levied annually on,-
(a) residential huts, and
(b) residential tenements in a chawl, each such tenement
having carpet area not exceeding twenty-five square meters,-
such amount of tax as the Corporation may determine:
Provided that the amount so determined shall not be less than
such amount as the State Government may, by notification in
the official Gazette, specify Explanation-For the purpose of
levy of tax under this section, where an addition is made to
an existing building whereby the carpet area of that building
is increased, such addition shall be treated as a separate
building and the length of the time of its existence shall be
computed from the year in which the addition is made."
12. In Paragraph-8 of the judgment, the Court recorded the
submissions canvassed on behalf of the petitioners that the
occupation of the premises was only for residential use and only a
small portion thereof was set apart for legal work. This would not
change the fundamental character of the use of the building. The
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same building cannot be split into two parts for consideration of
the taxation namely, residential and non-residential.
"8. On the other hand, petitioners strongly contended that
the occupation of the premises is for residential use, only a small
portion thereof is set apart for legal work. This does not change
the fundamental character of the use of the building. Same
building cannot be split in two parts for consideration of taxation
namely, residential and non residential. Counsel for the
petitioners placed relied on various decisions as was done by the
counsel for the respondent. In face of such facts, we may see
how different Courts have viewed this situation."
13. From Paragraph-9 onwards the Court took into consideration
the various decisions on the subject. We quote as under:-
"9. In a judgment dated 17.6.2013 passed in First Appeal
No.3642/2006 and connected matters in case of Ahmedabad
Municipal Corporation v. Shantilal Ambalal Sukhadia while
dealing with the First Appeal of Ahmedabad Municipal
Corporation against the judgement of Small Causes Court,
Ahmedabad, Division Bench in somewhat similar circumstances
observed as under :
"9. In our view, if on behalf of the Corporation, no evidence is
produced and the evidence produced on behalf of the respondent
shows that the flat in question was also used for residence and
profession, and on that basis the learned Judge has directed to
consider the use of the premise as residential, such an approach
cannot be said to be erroneous. We may record that had it been
a case, where the proof had come on record that the flat in
question was exclusively used for professional purpose or had the
premise or flat been situated in a commercial complex, it might
stand on a different footing and in those cases, treating the use
as commercial may be justified, but in a case where a premise in
part is used for residential and a portion is used for profession,
the use of premise cannot be treated as commercial use."
10. Learned Single Judge of Bombay High Court in case of
Municipal Corporation of city of Pune v. Bhagwan Ganesh Sabne
reported in 2006(5) BCR 511, considered a question whether use
of the premises by the Chartered Accountant for his profession
can make him liable to taxes in respect of the premises used for
the purpose of trade and business. It was held that the profession
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
of Chartered Accountant is neither a trade nor a business.
11. The Supreme Court in case of V. Sasidharan v. M/s. Peter
and Karunakar and others reported in AIR 1984 Supreme Court
1700 in context of Kerala Shops and Commercial Establishments
Act held and observed that office of lawyers or firm of lawyers is
not a commercial establishment. Like-wise in case of Devendra
M. Surti v. State of Gujarat reported in AIR 1969 Supreme Court
63, in context of Bombay Shops and Establishment Act, the
Supreme Court held that a doctor's dispensary was not a
commercial establishment within the meaning of the said Act.
Learned Single Judge of this Court in case of Gujarat Electricity
Board, Junagadh v. Ashwinbhai Maniyar & ors. reported in
2010(1) GLR 679 in context of Electricity Regulatory Commissions
Act, considering the question whether office of an advocate can
legally be charged with tariff at commercial rate, it was held
that the advocate's office falls in the category of non residential
premises and question whether office of advocate is a commercial
activity is not relevant. The Supreme Court in case of Chairman,
Madhya Pradesh Electricity Board & Ors. v. Shiv Narayan & Anr.
reported in 2006(1) GLR 387 in context of Electricity(Supply) Act
held that legal profession cannot be compared to trade and
business. There is a distinction between professional activity and
activity of commercial character. With these observations,
decision in case of New Delhi Municipal Council v. Sohal Lal
Sachdev reported in 2000 (2) Supreme Court Cases 494, in which
broad categorization of commercial and domestic uses for the
purpose of levy of electricity charges was made, came to be
referred to larger Bench. We however, need not go into such a
larger issue. Since from the facts on record, we gather that all
the petitioners are occupying residential units situated in
residential areas or complexes for their residential purpose. Only
a small portion of these units have been set apart for their legal
work. That being the position, the Vadodara Municipal
Corporation committed an error in splitting the properties in
question for separate consideration for tax purpose. Section 141B
of the BPMC Act does refer to classification of building into
residential buildings and buildings other than residential use,
nevertheless, it is doubtful whether such classification can be
provided for the same building. If the unit was a commercial
unit used by the lawyer for his legal profession or even if the
entire residential unit was occupied by lawyer for his legal work,
different considerations would perhaps apply. In the present case,
when the predominant use of the residential unit was for
residence of the owner-occupier for his family, mere setting apart
a small area therein for his legal work would not change the
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predominant use of the property and resultantly, we do not find
that Vadodara Municipal Corporation could have charged such
area separately at non residential or commercial rate.
12. Decision in case of R.K. Mittal and others v. State of
Uttar Pradesh and others reported in (2012) 2 Supreme Court
Cases 232, relied upon by the counsel for the respondent was
rendered in vastly different background. It was a case of large
scale violation of Town Planning scheme and occupation by
various occupiers of premises allotted by development authority
for uses other than those for which they were earmarked. It was
in this background the Supreme Court gave certain directions in
paragraph-74 of the judgment in order to discontinue such
unauthorized uses. Even in such directions in sub-paragraph-(5),
the Supreme Court permitted doctors, lawyers and architects to
use 30% of area on the ground floor in their premises in
residential sector for running their clinics and offices. This
judgment therefore, would not throw any light on the
controversy at hand.
13. Under the circumstances, the petition is allowed to the
extent of quashing the Municipal tax bills at Annexures-A2, A5,
and A12. It would however be open for the Vadodara Municipal
Corporation to issue fresh bills for such properties treating the
entire occupation as residential use. If the petitioners have made
payment of any of the bills, same shall be adjusted against the
new bills to be issued.
14. Petition is disposed of."
14. The decision of this High Court in the case of Kanubhai
Shantilal Pandya [supra] clinches the issue. We are in complete
agreement with the view taken therein. One important feature of
the judgment of this Court in the case of Kanubhai Shantilal
Pandya [supra] is the fine distinction, which came to be drawn
between a professional activity and a commercial activity. By any
means an office run by a practicing advocate would not fall within
the ambit of commercial activity, but would remain in the realm of
a professional activity. This would have some bearing when it
comes to drawing distinction between residential premises and non-
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residential premises. We are saying so keeping in mind the chart,
which has been produced before us by Mrs. Raval. For Non-
residence, the use factor has been specified in no uncertain terms.
We quote the entire part of that particular Chart.
* For Non-Residence: Use Factor
The designated rate shall be increased or neither be increased
nor be decreased or decreased having regard to the purpose for
which the buildings other than residential are used as follows,
namely:-
* (a) The designated rate shall be increased by multiplying it -
1. Commercial properties by 7.0 in respect of the buildings
used as under:-
Bank, Dispensary, Hospital, Clinic, Maternity Home, Laboratory,
Central Government Office, State Government Office, Local bodies
Office, Post Office, Commercial and/or Industrial Office, Oil
Company's Office, Offices of Corporations, Tuition Classes,
Typing Institute, Go-downs and Warehouses of the properties
falling in the above categories and those buildings which do not
fall within any other sub-clause of this clause.
2. Shop, Hotel, Restaurant Entertainment Places etc. by 6.0
in respect of the buildings used as under:-
Shop, Hotel, Restaurant, Entertainment Places, Open Air Theatre,
Petrol-pump, Service Station, Cinema, Club house, Gymkhana,
Club smess, Lodging, Lodging and Boarding, Party Plots (except
community halls), Dish antennae, Pager Antenna towers,
Signboard, hoarding, Mobile phone towers, godownsand
warehouses of the properties falling in the above categories.
3. Industrial Units & Factories (only processing &
manufacturing units) by 2.0 in respect of the buildings used as
under:-
Electricity Power House, Electric substation, Aerated Water
Factory, Bhattha, Brass Works, Brick and ceramic works, Cement
Articles, Clay Mfg. Unit, Chemical Factory, Confectionery, Dairy,
Distillery, Foundry, Flour Factory, Iron Factory, Zinc Factory,
Silver Ornament Factory, Jaggary manufacturing unit, Leather
manufacturing unit, Lime chakki, Limebhatthi, Oil extraction,
Paper manufacturing, Plastic Factory, Potter, Sagol
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manufacturing, Soap manufacturing, Sugar manufacturing, Tin
factory, Tobacco Factory, Workshop Factory, Steam-Gill, Auto-
Garage, Factory A, B, C, D, E, F, Mill, Powerloom, Handloom,
Bleaching, Bone washing, cotton spinning & dyeing, dyeing
bleaching, Dhanadal Factory, Leather processing, Screen printing,
Sulfur processing, Starch processing, Variyali processing, Wool
processing, Cold storage, Wood pitha, Bhathiyarkhana, Repairing
works, Nursery (flower plants) Animal market, Cattle-stable,
Poultry farm, Kennel, Milk cattles table, Weigh bridge, Binding
press, Printing press, Process studio, Photo studio, Common
effluent treatment plant, Godown sand Warehouses of the
properties falling in the all above categories.
4. Educational & Social Institutions by 2.0 in respect of the
buildings used as under:-
Private Nursery(Bal-Mandir), Private and Govt. Schools,
Privateand Govt.Colleges,University campus,Museum,Community
halls,Social institutes run by public charitable trust(forthe welfare
of women,old people,deaf,dumband blind, physically
handicapped, mentally retarded people) and non grantable
schools.
15. Thus, the commercial properties would include a Bank,
Dispensary, Hospital, Clinic, Maternity Home, Laboratory, Central
Government Office, State Government Office, Local bodies Office,
Post Office, Commercial and/or Industrial Office, Oil Company's
Office, Offices of Corporations, Tuition Classes, Typing Institute, Go-
downs and Warehouses of the Properties falling in the above
categories and those buildings. The endeavour on the part of Mrs.
Raval is to bring the case on hand within the ambit of commercial
office. It is difficult for us to say that an office of a lawyer is a
commercial office. For bringing it within the ambit of a commercial
office, the activity has also to be a commercial in nature. The office
of an advocate would fall within the ambit of professional activity.
16. We may refer to and rely upon a decision of the Supreme
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Court in the case of M.P. Electricity Board and Others (Supra) as
the same has been referred to and followed by this Court in the
case of Kanubhai (Supra).
17. The question that fell for the consideration of the Supreme
Court in the said case was whether the legal profession is a
commercial activity or not. The Madhya Pradesh Electricity Board
and its functionaries charged the respondent No.2 therein
[Advocate] for electricity consumption at the rate applicable for the
commercial consumers. The demand was questioned by filing a writ
petition before the Madhya Pradesh High Court, which held that
the legal profession does not involve a commercial activity. The
High Court took the view that the office of a lawyer or a firm of
lawyers is not a 'commercial establishment' and therefore, the rates
applicable to the commercial consumers cannot be charged in
respect thereof.
18. The Board challenged the said decision before the Supreme
Court. The Supreme Court while dismissing the appeal filed by the
Board and affirming the view taken by the High Court held as
under:-
5. The word 'commerce' is a derivative of the word
'commercial'. The word 'commercial' originates from the word
'commerce' which has been defined in Black's Law Dictionary-
Sixth Edition as under:
"Commerce.-The exchange of goods, productions, or
property of any kind, the buying, selling, and exchanging of
articles. Anderson v. Humble Oil and Refining Co.226
Ga.252, 174 S.E.2d 415,
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417. The transportation of persons and property by land,
water and air. Union Pacific R.Co. v. State Tax
Commissioner, 19 Utah 2d 236, 429 p.2d 983, 984.
Intercourse by way of trade and traffic between different
people or States and the citizens or inhabitants thereof,
including not only the purchase, sale, and exchange of
commodities, but also the instrumentalities and agencies by
which it is promoted and the means and appliances by
which it is carried on, and transportation of persons as well
as of goods, both by land and sea. Brennan v. Titusville,
153 U.S. 289, 14 S.Ct.829, 38 L.Ed.719; Railroad Co. v.
Fuller, 84 U.S. (17 Wall.) 568, 21 L.Ed. 710; Hoke vs.
United States, 227 U.S. 308, 33 S.Ct 281, 57 L.Ed.523. Also
interchange of ideas, sentiments, etc. as between man and
man.
The term 'commerce' means trade, traffic, commerce,
transportation or communication among the several States,
or between the District of Columbia or any Territory of the
United States and any State or other Territory, or between
any foreign country and any State, Territory, or the District
of Columbia, or within the District of Columbia or any
territory, or between points in the same State but through
any other State or any Territory or the District of Columbia
or any foreign country. National Labour Relations Act
2......"
6. The word 'commercial has been defined to mean:
"Commercial. Relates to or is connected with trade and
traffic or commerce in general; is occupied with business
and commerce. Anderson vs. Humble Oil & Refining Co.
226 Ga.252, 174 S.E. 2d 415, 416. Generic term for most
all aspects of buying and selling."
The expression 'commerce' or 'commercial' necessarily has a
concept of a trading activity. Trading activity may involve any
kind of activity, be it a transport or supply of goods. Generic
term for most all aspects is buying and selling. But in legal
profession, there is no such kind of buying or selling nor any
trading of any kind whatsoever. Therefore, to compare legal
profession with that of trade and business is far from correct
approach and it will totally be misplaced.
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7. Similarly, in the Advanced Law Lexicon 3rd Edition 2005,
Volume 1 at page 878 by P. Ramanatha Aiyar, word 'commerce'
has been defined as under:
'Commerce' is a term of the largest import. It comprehends
intercourse for the purposes of trade in any and all its
forms, including transportation, purchase, sale, and
exchange of commodities between the citizens of one
country and the citizens or subjects of other countries, and
between the citizens of different provinces in the same State
or country. Walton v. Missoury, 91 US 275; 23 L Ed.347.
Buying and selling together, exchange of merchandise
especially on a large scale between different countries or
districts; intercourse for the purpose of trade in any and all
its forms (S.2 (13), Income Tax Act).'
8. The word 'profession' has been defined in Black's Law
Dictionary- Sixth Ed. as under:
'Profession- A vocation or occupation requiring special,
usually advanced education, knowledge, and skill; e.g. law
or medical professions. Also refers to whole body of such
profession.
The labour and skill involved in a profession in
predominantly mental or intellectual, rather than physical or
manual.
The term originally contemplated only technology, law and
medicine, but as applications of science and learning are
extended to other departments of affairs, other vocations
also receive the name, which implies professed attainments
in special knowledge as distinguished from mere skill.
Act of professing; a public declaration respecting something.
Profession of faith in a religion."
9. The word 'profession' has also been defined in the
Advanced Law Lexicon Volume-3 at page 3764 which reads as
under:
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"Profession- A 'profession' involves the idea of an occupation
requiring either purely intellectual skill or any manual skill,
as in painting and sculpture or surgery, skill controlled by
the intellectual skill of the operator, as distinguished from
an occupation which is substantially the production or sale
or arrangements for the production of sale of commodities.
C.I.T. v. Manmohan Das (1966) 59 ITR 699, 710 (SC)
[Income Tax Act, 1961. Sec.28.]"
10. At page 3765 it has been further stated as follows :
"One definition of a profession is an employment, especially
an employment requiring a learned education, as those of
law and physics (Worcest Dict.). In the Century Dictionary
the definition of profession is given, among others, as a
vocation in which a professional knowledge of some
department of science or learning is used by its practical
application to the affairs of others, either in advising,
guiding, or teaching them, or in serving, their interest or
welfare in the practice of an art founded on it."
"The word implies professional attainment in special
knowledge as distinguished from mere skill; a practical
dealing with affairs as distinguished from mere study or
investigation; and an application of such knowledge to use
for others as a vocation as distinguished from its pursuits for
its own purposes."
"The term is applied to an occupation or calling which
requires learned and special preparation in the acquirement
of scientific knowledge and skill.
1. The occupation which one professes to be skilled in
and to follow; any calling or occupation by which a
person habitually earns his living (S.2(36), Income Tax
Act and S.150, Indian Evidence Act); 2. S.7, North
Eastern Hill University Act."
"An activity to be a profession must be one carried on by an
individual by his personal skill, intelligence and an
individual by his personal skill, intelligence and dependent
on individual characteristics. Sakharam Narayan Kherdekar v.
City of Nagpur Corporation, (AIR 1964 Bom 200, 210
(Bombay Shops and Establishment Act (79 of 1948, S. 2 (4)).
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
The multifarious functions call for the exercise of integrity;
intelligence and personal skill by the Chartered Accountant
in the service of his client and so the preamble of the
Chartered Accountant Act, 1949 describes the avocation of a
chartered accountant as a profession. N.E. Merchant v. State.
(AIR 1968 Bom 283, 287. Bombay Shops and Commercial
Establishment Act (76 of 1048)"
"A profession or occupation is carried on for the purpose of
earning a livelihood and a profit motive does not underline
such carrying of profession or occupation. L.M. Chitala vs.
Commissioner of Labour. (AIR 1964 Mad.131, 133
(Constitution of India, Art. 19(6)"
"Profession as distinguished with 'commercial' means a
person who enters into a profession. It involves certain
amount of skill as against commercial activity where it is
more of a matter of things or business activity. In
profession, it is purely use of skill activity. Therefore, two
are distinct concepts in commercial activity one works for
gain or profit and as against this, in profession, one works
for his livelihood."
14. A professional activity must be an activity carried on by
an individual by his personal skill and intelligence. There is a
fundamental distinction, therefore, between a professional activity
and an activity of a commercial character. Considering a similar
question in the background of Section 2(4) of the Bombay Shops
and Establishments Act (79 of 1948), it was held by this Court in
Dr. Devendra M. Surti v. The State of Gujarat (AIR 1969 Sc 63)
that a doctor's establishment is not covered by the expression
"Commercial establishment".
19. In view of the aforesaid, we agree with the submissions
canvassed on behalf of the appellants that the residential premises
of the appellants herein could not have been split into two parts
i.e. residential and non-residential. It remains a residential premises
and has to be assessed accordingly for the purpose of fixation of
tax.
C/FA/6140/2019 JUDGMENT DATED: 21/12/2021
20. For all the reasons afore-stated, the appeal succeeds and is
hereby allowed. The impugned judgment and order passed by the
Small Cause Court is hereby quashed and set aside.
21. In view of the aforesaid, all connected appeals also succeed
and the individual judgments and orders impugned therein also
stand quashed and set aside.
22. It would be however open for the Ahmedabad Municipal
Corporation to issue fresh bills for the property in question treating
the entire occupation as residential use. If the appellants have made
payment of any of the bills, the same shall be adjusted against the
new bills to be issued.
23. All connected Civil Applications also stand disposed of.
(J. B. PARDIWALA, J)
(NIRAL R. MEHTA,J)
A. B. VAGHELA
