The Supreme Court of India has reinforced the stance that the professional activities of advocates conducted from their homes are not subject to taxation under the "commercial establishment" category. The ruling upholds the earlier judgment of the Delhi High Court in the case of Municipal Corporation of Delhi v. BN Magon.

A Bench comprising Justices BV Nagarathna and Augustine George Masih dismissed an appeal filed by the Municipal Corporation of Delhi (MCD), which sought to impose property tax on advocates practicing from their residences under the commercial category. This decision aligns with the verdict of a Delhi High Court Bench led by Justices Najmi Waziri and Sudhir Kumar Jain in June of the preceding year. The High Court had then upheld an appeal against the January 2015 decision of a single judge, asserting that the services provided by advocates do not qualify as "commercial activity" and, therefore, should not be subjected to such tax.

The controversy originated in 2013 when the MCD assessed property tax on a lawyer for allegedly conducting "commercial activity" from his residence in Greater Kailash 2. However, these orders were subsequently overturned by a single judge of the High Court and have now been affirmed by a division bench of the High Court and the Supreme Court.

The High Court, in its ruling, found the MCD's contentions "ex facie untenable," highlighting the absence of any legal provision deeming professional activities of advocates as taxable under commercial establishment criteria. This judgment serves as a significant clarification in the tax treatment of professional services rendered by advocates, especially those operating from residential premises.

The Supreme Court's decision establishes a clear precedent, emphasizing that the nature of services provided by advocates from their homes does not fall within the ambit of commercial activity. This distinction is crucial in safeguarding the interests of legal professionals and ensuring that they are not unduly burdened with commercial taxation for their practice conducted within the confines of their residences.

Case: Municipal Corporation of Delhi vs. BN Magon,

SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 53916/2023.

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