Advocate's office in residence not subject to property tax as business building: Delhi HC

New Delhi, June 29 The Delhi High Court has held that an advocate's office located in a residential building should not be subject to property tax as a "business building".

The court said that the professional activity of lawyers should not be considered a commercial activity, and therefore, the Delhi Municipal Corporation Act does not authorise the imposition of taxes on such activities conducted from residential premises.

It referred to the Master Plan for Delhi 2021, which allows professional activities in residential buildings under specific conditions. However, it clarified that this provision does not empower the Corporation to levy taxes on these activities.

The case arose when the South Delhi Municipal Corporation demanded property tax from a lawyer who operated his office from a portion of his residential premises.

A single judge bench's decision, which held advocates' services as professional activities exempt from business establishment taxes, was upheld by the division bench of Justice Najmi Waziri and Justice Sudhir Kumar Jain.

The court emphasised that taxation powers must be explicitly mentioned in the statute and cannot be inferred or presumed. It concluded that the taxation laws and bylaws cannot extend their scope to include professional activities that are not explicitly classified as commercial activities in the applicable statutes.

It cited previous judgments from the Bombay High Court and the Supreme Court, which held that the discharge of professional activities by lawyers should not be considered business or commercial establishments. It further stated that taxation powers must be specifically mentioned in the law, rejecting the argument that a lawyer's office should be deemed a business establishment.

In light of these findings, the court dismissed the appeal filed by the South Delhi Municipal Corporation, highlighting that the professional activities of lawyers should not be subject to taxation under the Delhi Municipal Corporation Act or the property tax bye-laws.

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