MAHILA VIKAS MANDAL COLABA AND ORS. versus THE STATE OF MAHARASHTRA AND ANR.

Citation: [2005] SUPP. 1 S.C.R. 753 · Decided: 21-07-2005 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

Judgment (excerpt)

II 
-
MAHILA VIKAS MANDAL COLABA AND ORS. 
A 
v. 
THE STATE OF MAHARASHTRA AND ANR. 
JULY 21, 2005 
[ARIJIT PASA Y AT AND H.K. SEMA, JJ.] 
B 
Maharahstra Land Revenue Code, J 966-Section 267-Grant of land 
for non-commercial purpose-With condition that if used for commercial 
purpose permission for the same to be sought subject to payment of 50% of C 
the net profit-Demand of 50% of net income raised alleging violation of the 
condition-Writ Petition-Dismissal of-On appeal, held: The condition 
stipulated payment of 50% of net profit not net income-Matter remanded to 
Collector for determining 'net profit'-'net profit' has to be adopted as 
commercially undertstood. 
Words and Phrases: 
'Profit'-Meaning of in the context of Maharashtra Land Revenue 
Code, 1966. 
D 
Respondent-State leased out certain land to appellant No.I. One of the E 
conditions for the grant, clearly stipulated that if lessee utilized any area 
specifically set up for non-remunerative activities for any remunerative 
purposes, it had to take prior approval of the Authorities and if granted, the 
same would be subject to payment of 50% or "net profit". Respondent 
demanded from appellant No.I, 50% or the net income alleging that the terms 
and conditions were violated. Thereafter notice of recovery was issued.~The F 
appellant filed Writ Petition which was dismissed by High Court on the ground 
that the quantum or amount as demanded was correct and that adequate 
opportunity was granted to the appellant to have their say. 
In appeal to this Court appellant contended that requirement or the 
condition was not payment or 50% orthe net income, but 50% or 'net profit' G 
and the materials on record show no profit. 
Allowing the appeal and remitting it to the Collector of fresh 
adjudication, the Court 
753 
H 
754 
SUPREME COURT REPORTS [2005] SUPP. I S.C.R. 
A 
HELD: 1. The condition of the Grant shows that requirement was to pay 
50% of"net profit". What would constitute net profit has not been spelt out 
in the Grant. Obviously therefore, the expression "net profit" as commercially 
understood had to be adduced. (757-B] 
2. The fundamental meaning of the expression "profit" is the amount 
B of gain made during a particular period. When question arises regarding the 
meaning to be assigned to the expression "net profit", the question is to be 
determined on the construction of the relevant agreement, which is to be 
construed according to the words contained in it and the circumstances in . 
which it was made. "Income" and "profits" are not synonymous in all cases. 
C In certain statutes "income" and "profits" are treated differently. In the 
ordinary economic sense the expression "income" includes not merely what 
is received or what comes in by exploiting the use of the property but also 
what one saves by using it oneself. That which can be converted into income 
can be reasonably regarded as giving rise to income. In the popular sens.e the 
two words "receipts" and "profit" are very different expressions. Profits are 
D pointed out as the surplus by which the receipts exceed the expenditure. 
Monies which are not really profits of a business may yet be income. Profit 
means the difference between the amount realized and the expenses incurred 
in realizing it; The word "profit" has well defined legal meaning, which 
coincides with the fundamental conception of profits in general parlance, 
E although in mercantile phraseology the word may at times bear meanings 
indicated by the special context, which deviate in some respects from this 
fundamental significance. (757-C. D, E, F, G, H; 758-A) 
Commissioner of Income Tax v. Delhi Flour Mills Company Ltd, (1959) 
35ITR15 SC; Bhagwan Dass Jain v. Union of India and Ors. (1981) 2 SCC 
F 135 and E.D. Sassoon and Company Ltd. v. Commissioner of Income Tax, 
Bombay City, {1955) 1 SCR 313, relied on. 
Spanish P~ospecting Company Ltd. (1911) i bh. 92(CA) and Russel v. 
Town and Country Bank, (1989) 13 A.C. 418, referred to. 
G 
The King v. B.C Fir and Cedar Lumber Company, AIR (1932) PC 121 
and Secretary of State v. Saroj Kumar, AIR (1935) PC 49, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4399 of2005. 
From the Judgment and Order dated 3.3.2004 of the Bombay High Court 
H in W.P. No. 996 of2003. 
>
MAHILAVIKASMANDALCOLABAv.STATEOFMAHARASHTRA[PASAYAT,J.) 755 
Mukul Rohtagi Ms. B. Vijayalakshmi Menon with him for the Appellants. A 
V.N. Raghupathy and Ravindra Keshavrao Adsure for the Resp

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