TaxTMI 
TaxTMI 
2014 (2) TMI 186
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....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 exempt under Section 10(20) of the Income Tax Act ?" 2. Briefly stated the facts are as under : 2.1 The respondentassessee is the Rajkot Municipal Corporation. For the assessment year 200506, the return was not filed by the Corporation. A notice under section 142(1) of the Incometax Act, 1961 (hereinafter referred to as 'the Act') for filing the return was issued to the respondentassessee, which direction also the assessee did not comply. Eventually, after one round of remand, the proceedings were placed before the Assessing Officer, in which he noted that the assessee claimed exemption of various receipts basing reliance on provisions of section 10(20) of the Act. Such amounts were received for letting out the community halls, market land, rent, planetarium, stadium rent, etc. A sum of Rs.76.42 lakh was shown as income from hoardings. The assessee stated that the total re....
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.... 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 jurisdiction is exempt income. We find that leasing out or arising from letting out the place for hoarding/ advertisement is concerned it is not disputed that this income has been arising out in the jurisdiction area of the assessee, therefore, this income is an income from other sources. Therefore, we are of the view that AO is justified in treating this income as "Income from other sources"." 2.5 The Tribunal resultantly rejected the Revenue's appeal and, therefore, present appeal has been presented before us. 3. The learned advocate for the Revenue vehemently contended that the Tribunal having been convinced about the validity of the Revenue's contention ought not to have rejected the appeal merely following its earlier judgment. Independently, he contended that the income generated from the hoardings cannot be stated to be income from other sources and must be categorised a....
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....me 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 hoardings in private property, could be stated to be the business of the assessee. The Bombay Provincial Municipal Corporation Act, 1949, now renamed as Gujarat Provincial Municipal Corporation Act, 1949 (hereinafter referred to as 'the GPMC Act') provides for constitution of Municipal Corporations, their activities, functions, powers, duties, etc. Chapter VI of the GPMC Act pertains to duties and powers of the Municipal Authorities and officers. Section 63 pertains to obligatory duties of the Corporation. Subsection (1) of section 63 thereof provides for various obligatory duties, which include : "(10) the regulation and abatement of offensive and dangerous trades or practices; xxx xxx xxx (18) the construction, maintenance, alteration and improvement of public streets, bridges, subways, culverts, causeways and the like; (19) the removal of obstructions and pro....
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.... 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 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. 9. 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 Corpo....