{"id":212315,"date":"2005-07-21T00:00:00","date_gmt":"2005-07-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mahila-vikas-mandal-colaba-and-ors-vs-the-state-of-maharashtra-and-anr-on-21-july-2005"},"modified":"2015-01-17T12:52:13","modified_gmt":"2015-01-17T07:22:13","slug":"mahila-vikas-mandal-colaba-and-ors-vs-the-state-of-maharashtra-and-anr-on-21-july-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mahila-vikas-mandal-colaba-and-ors-vs-the-state-of-maharashtra-and-anr-on-21-july-2005","title":{"rendered":"Mahila Vikas Mandal Colaba And Ors vs The State Of Maharashtra And Anr on 21 July, 2005"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Mahila Vikas Mandal Colaba And Ors vs The State Of Maharashtra And Anr on 21 July, 2005<\/div>\n<div class=\"doc_author\">Author: A Pasayat<\/div>\n<div class=\"doc_bench\">Bench: Arijit Pasayat, H.K. Sema<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  4399 of 2005\n\nPETITIONER:\nMahila Vikas Mandal Colaba and Ors.\n\nRESPONDENT:\nThe State of Maharashtra and Anr.\n\nDATE OF JUDGMENT: 21\/07\/2005\n\nBENCH:\nArijit Pasayat &amp; H.K. Sema\n\nJUDGMENT:\n<\/pre>\n<p>JUDGMENT<\/p>\n<p>ARIJIT PASAYAT, J.\n<\/p>\n<p>Leave granted.\n<\/p>\n<p>Appellants call in question legality of the judgment rendered by a Division<br \/>\nBench of the Bombay High Court upholding the demand made by the Collector,<br \/>\nMumbai City from the appellant No. 1. The writ petition filed by the<br \/>\nappellants questioning the demand was dismissed by the impugned order of<br \/>\nthe High Court. The demand was made for commercial use of the land leased<br \/>\nout to the appellant No. 1.\n<\/p>\n<p>Factual position is almost undisputed and needs to be noted in brief. The<br \/>\nMaharashtra State Government in the Revenue at Forest Department, leased<br \/>\nout 2250 square meters of land (plot No.1 Queens Barrack Area) to the<br \/>\nappellant No.1 for construction of a women&#8217;s hostel for working women and<br \/>\nits allied activities. The grant was made for 30 years from the date of<br \/>\nhanding over possession and the memorandum dated 18th May, 1984. It was<br \/>\nclearly stipulated in Condition No. (iii) that if lessee utilizes any areas<br \/>\nspecifically set up for non-remunerative activities for any remunerative<br \/>\npurposes, it has to take prior approval of the Collector of Bombay and if<br \/>\ngranted the same will be subject to payment of 50% of the &#8220;net profit&#8221;.<br \/>\nAlleging that the appellant No.1 was letting out the premises for<br \/>\ncommercial purposes and using the premises for commercial purposes, a<br \/>\ndemand was made for an amount of Rs. 19,03,103 stated to be 50% of the net<br \/>\nincome. It was alleged that there was violation of the land grant terms and<br \/>\nconditions. In the Notice dated 15.2.2003 the appellants were notified that<br \/>\nsince there was violation of the terms and conditions of the land grant,<br \/>\naction was to be taken and in addition the defaulted amount i.e. Rs.<br \/>\n19,03,103 was to be recovered. It was also indicated that coercive action<br \/>\nshall be taken if payment is not made within three days of the receipt of<br \/>\nthe notice. Reply was submitted by the appellants on 20.2.2003 stating that<br \/>\nthere was no violation as alleged, and further the demand as raised was<br \/>\nwithout any basis. After receipt of the reply notice of recovery as land<br \/>\nrevenue as per Section 267 of the Maharashtra Land Revenue Code, 1966 (in<br \/>\nshort the Code) was issued granting 20 days&#8217; time for making payment. Writ<br \/>\npetition was filed before the Bombay High Court questioning legality of the<br \/>\ndemand. After notice the respondents filed counter affidavit justifying the<br \/>\naction and demand raised. Essentially, two stands were taken by the writ<br \/>\npetitioner before the High Court. Firstly, it was contented that due and<br \/>\nproper opportunity was not given to the writ petitioners to present their<br \/>\ncase. Secondly, it was submitted that the quantum as demanded has no basis<br \/>\nof computation. The High Court by the impugned judgment held after taking<br \/>\nnote of the counter affidavit that the demand was in order. High Court<br \/>\nnoted that an amount of Rs. 73,82,055 was received in respect of 690<br \/>\nprogrammes as rental. Aforesaid amount of Rs. 73,82,055 included a sum of<br \/>\nRs. 35,75,850 as security deposit and the balance of Rs. 38,06,205 was<br \/>\nearned as income, and 50% thereof came to Rs. 19,03,103 which was demanded.<br \/>\nIt was held that adequate opportunity was granted to the appellant to have<br \/>\ntheir say. The writ petition was accordingly dismissed.\n<\/p>\n<p>In support of the appeal, learned counsel for the appellants submitted that<br \/>\nthe authorities and the High Court have fallen into grave errors by holding<br \/>\nthat 50% of the receipts were to be paid. What was required to be paid was<br \/>\n50% of the &#8220;net profit&#8221;. Materials on record show that there was no profit.\n<\/p>\n<p>In response, learned counsel for the respondents submitted that<br \/>\nundisputedly the appellants had carried on remunerative activities and<br \/>\nreceived Rs. 38,06,205 which was earned as income. Therefore, the demand of<br \/>\n50% thereof is in order.\n<\/p>\n<p>In order to appreciate rival submissions the condition in the Grant dated<br \/>\n18.5.1984 needs to be noted. The dispute revolves round Condition No. (iii)<br \/>\nwhich reads as follows :-\n<\/p>\n<p>\t&#8220;The lessees shall utilize the land for construction of two<br \/>\n\tbuildings, one for the women&#8217;s hostel providing necessary<br \/>\n\tfacilities like recreation, library cum reading room, indoor games<br \/>\n\tetc. and another building with a built up area of 6000 square feet<br \/>\n\tout of which a portion of 3000 square feet should be allowed to be<br \/>\n\tlet out to a bank or showrooms as permissible under the Development<br \/>\n\tControl Rules for the area and 1500 square feet to be used for<br \/>\n\tdiagnostic centre and another 1500 square feet to be used for<br \/>\n\tMandal&#8217;s other activities.\n<\/p>\n<p>\tProvided further that the permission to utilize 4500 square feet<br \/>\n\tbuilt up area for commercial purpose is granted subject to the<br \/>\n\tcondition that the lessees undertake to pay to Government 50% of<br \/>\n\tthe net income derived by them from the source.\n<\/p>\n<p>\tProvided further that if the Mandal utilizes any other area<br \/>\n\tspecifically set apart for its non-remunerative activities for any<br \/>\n\tremunerative purpose, it shall take prior approval of the Collector<br \/>\n\tof Bombay, which if granted, will be subject to payment of 50% of<br \/>\n\tthe net profit.&#8221;\n<\/p>\n<p>A bare perusal of the condition shows that requirement was to pay 50% of<br \/>\n&#8220;net profit&#8221;. What would constitute net profit has not been spelt out in<br \/>\nthe Grant. Obviously therefore, the expression &#8220;net profit&#8221; as commercially<br \/>\nunderstood had to be adopted.\n<\/p>\n<p>The fundamental meaning of the expression &#8220;profit&#8221; is the amount of gain<br \/>\nmade during a particular period. (See : Spanish Prospecting Company Ltd.,<br \/>\nin Re 1911 (1) Ch. 92 (CA)).\n<\/p>\n<p>This Court in <a href=\"\/doc\/957441\/\">Commissioner of Income Tax v. Delhi Flour Mills Company Ltd.,<\/a><br \/>\n(1959) 35 ITR 15 SC held that when question arises regarding the meaning to<br \/>\nbe assigned to the expression &#8220;net profit&#8221;, the question is to be<br \/>\ndetermined on the construction of the relevant agreement, which is to be<br \/>\nconstrued according to the words contained in it and the circumstances in<br \/>\nwhich it was made.\n<\/p>\n<p>&#8220;Income&#8221; and &#8220;profits&#8221; are not synonymous in all cases. In certain statutes<br \/>\n&#8220;income&#8221; and &#8220;profits&#8221; are treated differently. While considering a case<br \/>\nunder the Income-tax Act, 1961 (in short the `I.T. Act&#8217;) this Court held<br \/>\nthat in the ordinary economic sense the expression &#8220;income&#8221; includes not<br \/>\nmerely what is received or what comes in by exploiting the use of the<br \/>\nproperty but also what one saves by using it oneself. That which can be<br \/>\nconverted into income can be reasonably regarded as giving rise to income<br \/>\n<a href=\"\/doc\/198371\/\">(See Bhagwan Dass Jain v. Union of India and Ors.,<\/a> [1981] 2 SCC 135).\n<\/p>\n<p>In the popular sense the two words &#8220;receipts&#8221; and &#8220;profit&#8221; are very<br \/>\ndifferent expressions. Profits are pointed out as the surplus by which the<br \/>\nreceipts exceed the expenditure (See: Russel v. Town and Country Bank,<br \/>\n(1889) 13 A.C. 418).\n<\/p>\n<p>As observed by the Privy Council in The King v. B.C. Fir and Cedar Lumber<br \/>\nCompany, AIR (1932) PC 121, monies which are not really profits of a<br \/>\nbusiness may yet be income. The Privy Council in Secretary of State v.<br \/>\nSaroj Kumar, AIR (1935) PC 49, held that profit means the difference<br \/>\nbetween the amount realized and the expenses incurred in realizing it. As<br \/>\nnoted by this Court in <a href=\"\/doc\/251775\/\">E.D. Sassoon and Company Ltd. v. Commissioner of<br \/>\nIncome Tax, Bombay<\/a> city, [1955] 1 SCR 313 the word &#8220;profit&#8221; has well<br \/>\ndefined legal meaning, which coincides with the fundamental conception of<br \/>\nprofits in general parlance, although in mercantile phraseology the word<br \/>\nmay at times bear meanings indicated by the special context, which deviate<br \/>\nin some respects from this fundamental significance.\n<\/p>\n<p>Above being the position we allow this appeal, set aside the judgment of<br \/>\nthe High Court and remit the matter to the Collector for a fresh<br \/>\nadjudication. In order to avoid unnecessary delay, let the appellants<br \/>\nappear before the concerned Collector on 24.8.2005 at 10.30 a.m. without<br \/>\nfurther notice. The Collector shall grant opportunity to the appellants to<br \/>\nplace materials necessary for the purpose of determining the net profits,<br \/>\nas required under Condition No. (iii). The Collector shall on consideration<br \/>\nof the materials to be placed pass necessary orders.\n<\/p>\n<p>The appeal is allowed to the aforesaid extent without any order as to<br \/>\ncosts.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Mahila Vikas Mandal Colaba And Ors vs The State Of Maharashtra And Anr on 21 July, 2005 Author: A Pasayat Bench: Arijit Pasayat, H.K. Sema CASE NO.: Appeal (civil) 4399 of 2005 PETITIONER: Mahila Vikas Mandal Colaba and Ors. RESPONDENT: The State of Maharashtra and Anr. DATE OF JUDGMENT: 21\/07\/2005 BENCH: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-212315","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Mahila Vikas Mandal Colaba And Ors vs The State Of Maharashtra And Anr on 21 July, 2005 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/mahila-vikas-mandal-colaba-and-ors-vs-the-state-of-maharashtra-and-anr-on-21-july-2005\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mahila Vikas Mandal Colaba And Ors vs The State Of Maharashtra And Anr on 21 July, 2005 - Free Judgements of Supreme Court &amp; 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