Case Law Details

Case Name : CIT Vs Rajkot Municipal Corporation (High Court of Gujarat)
Appeal Number : Tax Appeal No. 33 of 2014
Date of Judgement/Order : 21/01/2014
Related Assessment Year :
Courts : All High Courts (4258) Gujarat High Court (362)

Municipal Corporation has to carry out certain functions of obligatory and some of discretionary character. In carrying out such functions, it has powers granted under the Act. It can generate revenue and apply the same for the purpose of carrying out its functions. Section 386 of the GPMC Act, in particular, authorises the Municipal Corporation to issue licences, permissions and to charge such fees as may be sanctioned by the Corporation.

The activity of the Corporation of granting licences for putting up hoardings in its property and also for granting licences to private property owners to put up hoardings, by no stretch of imagination, can be stated to be business of the Corporation. The Corporation merely charges licence fees to regulate such activities.In terms of its function, it would also be necessary for the Corporation to regulate such activities.E.g.Under sub­section (10) of section 63 of the GPMC Act, it is the duty of the Corporation to regulate and abate the offensive and dangerous trades or practices.Under sub­section (18) thereof, it is the duty of the Corporation to construct, maintain, alter and improve public streets, bridges, sub­ways, etc. Under sub­section (19) thereof, it is the duty of the Corporation to remove obstructions and projections in or upon the streets, bridges and other public places. Sub­section (22) of section 64 of the GPMC Act requires the Corporation to secure or remove the dangerous buildings or places.Likewise, under sub­section (42) of section 66 of the GPMC Act, at the discretion of the Corporation, it may undertake any measure not specifically hereinbefore named, likely to promote public safety, health, convenience or instruction.

If the Corporation, therefore, permits hoardings to be put up in its property by issuing licences, for which it charges licence fees and also charges licence fees from the owners allowing hoardings to be put up in their private properties, in our opinion, the same cannot be said to be business activity of the Corporation. Such licence fees are collected for regulating the activity of putting up hoardings to ensure that it does not damage the public safety and does not offend the public morality and decency. The safety measures, standards of morality and decency, all have to be maintained by the Corporation since such hoardings would be either in the Corporation property or private property, in number of cases on the plots abutting a public street.We have noticed that the collection from such licence fees is less than 1% of the total revenue of the Corporation. In our opinion, therefore, the view of the Tribunal that such income was not business income, but must be “income from other sources”, therefore, calls for no interference.

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0 responses to “Licence fee for putting up hoardings is taxable as income from other sources”

  1. Dipak J Shah says:

    Why this judgment is not getting downloaded?
    C A Shah D J
    USA

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