TMI Blog2014 (2) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ner : Mr. Pranav G. Desai, Advocate ORDER (Per : Honourable Mr. Justice Akil Kureshi) 1. Revenue is in appeal against the judgment of the Income tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as 'the Act') dated July 12, 2013, raising the following questions for our consideration : (A) Whether on the facts and in the circumstances of the case, ITAT is justified in law and on facts in holding that the income from hoarding is income from other sources and not business income and hence, exempted under section 10920) of the Income Tax Act ? (B) Whether on the facts and in the circumstances of the case, ITAT was correct in following the judgment of a coordinate bench and holding that income from hoardings was to be taxed under the head 'Income from other sources' instead of 'Business Income' rather than deciding the case on merits and despite conceding the fact that the submission of the Revenue were not only convincing but also carried sufficient force ? (C) Whether in the facts of the case and in law, the ITAT was justified in coming to the conclusion that the income of the assessee from systematic and continuous letting out of hoardings is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporation for putting up the advertisements. The Corporation only provides its space on payment of licence fees to the licence holders. Such fees form only a small part of assets of the Corporation. The Corporation does not carry on such activities on regular basis with an intention to carry on business of that nature. It was pointed out that such income was less than 1% of the total revenue of the Corporation. 2.4 The Tribunal in the impugned judgment was prima facie convinced with the argument of the Revenue that such income from the hoardings is liable to be assessed as business income under section 28 of the Act and would not be exempt under section 10(20) of the Act. However, the Tribunal felt bound by the earlier decision of the Coordinate Bench in the case of DCIT v. Jamnagar Municipal Corporation in I.T.A. Nos.372 and 373/Rjt/2009, in which the Tribunal held as under : 10. We have considered the rival contentions of both the parties. We find that the assessee is a Municipal corporation and it is local authority and so far as the income of the local authorities are concerned it is exempt but the only income from supply of commodity and services within its jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, if the Revenue is correct in contending that the income from hoardings can be stated to be business income of the assessee, the business carried on by the Municipal Corporation which accrues or arises from the supply of commodity or service within its local jurisdictional area or from the supply of water or electricity within or outside its local jurisdictional area, such exemption may not be available. 6. In the present case, however, we have no hesitation in approving the decision in the case of Jamnagar Municipal Corporation (supra) that such income cannot be stated to be business income and must be held to be income from other sources . 7. Section 28 of the Act pertains to profits and gains of business or profession and provides inter alia that the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year, was chargeable to incometax under the head Profits and gains of business or profession . The moot question is, can the activity of granting licences and collecting licence fees for permitting hoardings in the Municipal property and collecting licence fees from advertisers putting up hoardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. 7.5 Section 264 of the GPMC Act pertains to removal of structures, which are in ruins or likely to fall. 7.6 Section 386 of the GPMC Act provides for general provisions regarding grant, suspension or revocation of licences and written permissions and levy of fees, etc. Subsection (1) thereof provides that whenever it is provided by or under this Act that a licence or a written permission may be given for any purpose, such licence or written permission shall specify the period for which and the restrictions and conditions subject to which, the same is granted and the date by which the application for the renewal of the same shall be made and shall be given under the signature of the Commissioner or a municipal officer. 7.7 Subsection (2) of section 386 of the GPMC Act provides that except as may otherwise be provided by or under this Act, for every such licence or written permission a fee may be charged as such rate as shall from time to time be fixed by the Commissioner, with the sanction of the Corporation. 8. From the above statutory provisions, it can be seen that the Municipal Corporation has to carry out certain functions of obligatory and some of discretionary ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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