TMI Blog2001 (10) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... Agency for International Development, The Indian Council of Medical Research, The Family Planning Foundation, The Council of Scientific and Industrial Research (CSIR) and UNESCO, etc. 3. During the years 1984-85, 1985-86 and 1986-87, the appellant received contributions as per the following details:- 1. Government of India, Department of Science and Technology. 2,58,60,000 2,84,60,000 3,15,17,000 2. I.D.R.C. Canada. 4,64,385 1,74,514 7,65,000 3. I.C.M.R. 20,30,440 34,04,880 28,36,660 4. Family Planning Foundation. ---- 1,00,000 ----- 5. U.N.D.P. ---- US$ 10,00,000 (For 3 years) ----- 6. Rockefeller Foundation. ---- ----- US$ 35,000 7. USAID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the property of the institution actually is the property of the Government of India and the appellant was not a commercial organisation. This being the stand, it was claimed that the appellant qualified for exemption from payment of property tax. But the respondent, MCD did not accept the claim of the appellant that it was immune from levy of property tax and communicated its views in this regard to the appellant by its letter dated 22nd October, 1985. In the letter the respondent, while drawing the attention of the appellant to Article 285(1) of the Constitution, emphasised that the appellant was liable to pay property tax. It was pointed out that appellant being an autonomous body, having been registered under the Societies Registration Act, 21 of 1860, its property had to be treated like other properties within the limits of MCD which are subject to property tax in accordance with the provisions of the DMC Act. Having said that, it asked the appellant to comply with the notice dated 5th September, 1985. The appellant vide its letter dated 23rd December, 1985 again expressed its inability to give details sought by the respondent vide notice dated 5th September, 1985 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions were received from the appellant, the rateable value of the property was confirmed by the Assessing Officer at ₹ 21,60,000/- with effect from 1st April, 1985. On the basis of the confirmed rateable value, the respondent issued a bill to the appellant on 8th September, 1986 calling upon it to pay a sum of ₹ 15,08,936.10 on account of the property tax in respect of the aforesaid buildings until the period ending 1985-87. The appellant was called upon to liquidate the tax liability within fifteen days of the presentation of the demand by the respondent. The notice also specified the options available to the respondent to recover the dues from the appellant. By yet another letter dated 29th October, 1986, the Additional Tax Recovery Collector MCD asked the respondent to pay the aforesaid demand of ₹ 15,08,936.10 to avert the emergence of an ugly situation. Again by a letter dated November, 10, 1986 the respondent asked the appellant to discharge its liability. Stirred by the threatened action, the appellant in order to buttress its claim for exemption from levy and payment of property tax furnished the requisite information/material to the respondent by means of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from levy of general tax under Section 115(4) of the DMC Act. This letter was followed by a letter dated March 10, 1987 calling upon the appellant to pay the demand. The appellant being aggrieved by letters dated 16th March; 1986; 8th September, 1986; 29th October, 1986; 10th November, 1986; 18th February, 1987 and 10th March, 1987 filed Civil Writ Petition NO. 791/87 in this Court. By the same writ petition, the appellant also impugned the action of the respondent in proposing to amend the assessment list for the year 1988-89 by amending the rateable value of the properties for the purpose of achieving the objectives of the society. The appellant filed a separate writ petition being Civil Writ Petition NO. 3820/96 challenging the notice dated September 7, 1996 and the accompanying bills by virtue of which the demand of property tax was raised in respect of residential and non-residential buildings for the period ending March 1997. Both the writ petitions were dismissed by separate orders of the learned single judges of this Court. While C.W.P. No. 791/97 was dismissed on April 27, 1989, C.W.P. No. 3820/96 was dismissed on October 7, 1996. In C.W.P. No. 3820/96 the learned Singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The primary question which requires to be determined in this appeal is whether under Section 115(4) of the DMC Act the appellant is entitled for exemption from payment and levy of property tax. In this regard ti will be appropriate to examine Section 115(4) of the DMC Act. The said provision reads as follows:- 115. Premises in respect of which property taxes are to be levied. [***] (4) Save as otherwise provided in this Act, the general tax shall be levied in respect of all land and building in Delhi except - (a) lands and buildings or portions of lands and buildings exclusively occupied and used for public worship or by a society or body for a charitable purpose; Provided that such society or body is supported wholly or in part by voluntary contributions, applies its profits, if any, or other income in promoting its object and does not pay any dividend or bonus to its members. Explanation. - Charitable purpose includes relief of the poor, education and medical relief but does not include a purpose which relates exclusively to religious teaching; (b) lands and buildings vested in the Corporation, in respect of which the said tax, if levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicable diseases; as also for improvement of the currently available vaccines with deficient immunological properties; (g) To develop immunological approaches for control and promotion of male and female fertility; (h) To interact with industry for manufacture of vaccines and immunological reagents; (i) To establish, maintain and manage laboratories, workshops, stores and other facilities for the efficient prosecution of scientific and technological research in immunology, vaccine development and related areas; (j) To collaborate with foreign research institutions and laboratories and other international organisations in fields relevant to the objectives of the Institute; (k) To public and disseminate information relating to results of research; (l) To institute professorships, other faculty positions, fellowships, research cadre positions and scholarships etc., for Realizing the objectives of the Institute; (m) To establish affiliation with recognised universities and institutions of higher learning for the purpose of enabling research scholars to register for post-graduate degrees; (n) To receive grants-in-aid in cash or in other forms from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its to its members. This is clear from para 51 of the memorandum of association which reads as under:- 51. The income and property of the Society, howsoever derived, shall be applied towards the promotion of the objects thereof as set forth in this Memorandum of Association subject nevertheless in respect of the expenditure of grants made by the Government of India to such limitations as the Government of India may from time to time impose. No portion of the income and property of the Society shall be paid or transferred, directly or indirectly by way of dividends, bonus, or otherwise howsoever by way of profit, to the persons who at any time are to have been members of the Society or to any of them or to any persons claiming through them or any of them provided that nothing herein contained shall prevent the payment in good faith of remuneration of any member thereof or other person in return for any service rendered to the Society. 14. In view of the aforesaid para, the respondent rightly did not dispute the fact that the appellant was not paying any profits, dividends or bonus to any member of the society or any person claiming through them. Even the learned Single Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the grants-in-aid are being regulated by statutory rules and are being paid to the appellant subject to certain checks and balances, which show that they are not voluntary in nature. Since such an argument has not been advanced by the learned counsel for the respondent and there is nothing on record to substantiate the observations of the learned Single Judge, it appears to us that the grants-in-aid which are paid to the appellant by the Government of India are voluntary in nature and they can be stopped at any point of time by the latter. It is not the case of the respondent that the appellant strikes fear in the mind of the donor for securing the grants. It is also not the case of the respondent that the appellant coerces or pressurises the Government to pay the grants to it. The appellant is not in a position to command the Government to pay the grants-in-aid to it. It may be noted that the Government of India, Ministry of Science and Technology, Depart of Science and Technology, has issued guide-lines for implementing research projects. According to para 13 of the guide-lines, the Department of Science and Technology reserves the right to terminate the grant at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent before review of its earlier decision was sent by the appellant to the respondent. The information comprised of balance sheets and audited accounts, and the list of donors. It was also pointed out that the appellant is fully dependent on the grants. Besides, it was pointed out that the appellant has not let out its properties and the residential accommodation which have been constructed in the campus of the Jawaharlal Nehru University for any commercial purpose and the same are meant for this scientists working with the appellant and the rents are being recovered from their salaries as per Government rules and credited to the Government grants. It is not disputed that after the receipt of this letter the respondent reviewed the matter though ultimately it maintained its earlier view. It is also not disputed that after the appellant had sent the information, no further information was sought from it by the respondent before taking a view which was communicated to the appellant by its letter dated February 18, 1987. In case the respondent had any doubt as to the utilisation of the donations, it could have sought further information from the appellant, and in case the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of mankind. The dominant and in fact the sole purpose of the appellant is to undertake activities which subserve charitable purposes mentioned in its memorandum of association. There is no allegation that the donations received from donors are compulsive in nature. Thus, the premises of the appellant which are exclusively occupied and used for the research projects are being undoubtedly used for charitable purposes within the meaning of Section 115(4) of the DMC Act. 18. In the light of the aforesaid discussion, we may now sum up the position as regards the test or the requirements to be satisfied for claiming exemption from levy of property tax under Section 115(4) of the Act and the question whether the society satisfies the requirements of the test. (1) The Test: Lands and Buildings which are exclusively occupied and utilised for charitable purposes by a society or body qualify for exemption from levy of the 'general tax' provided the society or body is supported wholly or in part by voluntary contributions and applies its profits and other income in promoting its objects and does not pay any dividend or bonus to its members. (2) Whether the society satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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