In a significant victory for advocates in Delhi, the Delhi High Court has ruled that lawyers running their offices from residential buildings will be exempt from property tax under the Delhi Municipal Corporation Act. The court emphasized that the professional activities of lawyers should not be considered as commercial activities, thereby excluding them from the classification of a "business building."

The division bench, comprising Justice Najmi Waziri and Justice Sudhir Kumar Jain, highlighted that the Master Plan for Delhi (MPD), 2021 allows for professional activities in residential buildings, subject to certain conditions. However, the court clarified that this provision does not grant the Corporation the authority to impose taxes on professional activities conducted from residential premises.

The legal dispute arose when the South Delhi Municipal Corporation (SDMC) issued a notice in 2013 demanding property tax from a lawyer operating his office within a portion of his residential property. The lawyer challenged this action, arguing that his services should be recognized as professional activities and not subjected to taxation as a business establishment. The single bench upheld the lawyer's argument, stating that merely conducting official work or reviewing files within a residential setting does not transform the premises into a business establishment.

The SDMC argued that it possesses the power to levy property taxes on all lands and buildings within its jurisdiction, including those involved in professional activities. They contended that lawyers' services fall within the scope of commercial and non-domestic activities, making them eligible for taxation. However, the High Court rejected this argument, affirming that lawyers' professional activities do not align with the definition of a commercial establishment or business activity.

The court referenced a Division Bench judgment from the Bombay High Court and a Supreme Court judgment, both affirming that the discharge of professional activities by advocates should not be categorized as a business or commercial establishment.

This ruling brings relief to advocates in Delhi who operate their offices from residential premises, as they will no longer be liable for property taxes. The court's decision underscores the distinction between professional activities and commercial activities, recognizing the unique nature of lawyers' work.

Case Title: "South Delhi Municipal Corporation Versus B N Magon"

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