9911796707
TMI Blog2020 (11) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... inistry of Government of India and the concerned State Governments. The contraceptives that it distributes as part of its social marketing initiatives are provided by the Ministry of Health and Family Welfare (GOI). 3. As regards the education of the youth, using formal and non-formal platforms, it provides counselling in ante-natal and post-natal care, measures for immunisation and for AIDS/HIV prevention, STI/RTI screening and treatment, sterilization, a wide range of contraceptives including injections, IUD, condoms and pills and services of medical termination of pregnancy. 4. The petitioner in this writ petition is the clinic run by the Sanstha in Chennai and the target group is the economically weaker sections of the society. Only outpatients are entertained and no inpatients are admitted. The question that arises in this writ petition is whether the petitioner is entitled to exemption from the payment of property tax in terms of the Madras City Municipal Corporation Act, 1919 ('Act') that extends an exemption for various categories of organisations and activities under Section 101 thereof. 5. The petitioner, in response to demands of property tax in the year 2002 had comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organization under nominal amount 9. The discussion and operative portion of the order rejecting the claim for exemption read thus: It is observed on hearing, grounds on your representation and field inspection carried by this authority that the following facts nevertheless to be mentioned: Under the provisions of the Chennai City Municipal Corporation Act, 1919 section 101 defined the general exemptions from levying property tax, in sub-section (e) charitable hospitals and dispensaries but not including residential quarters attached thereto. The Director of Income Tax (Exemptions) in their order no.DIT(E)/2012-13/973, dt.13.08.2012 had granted exemption for the period A.Y.2012-13 onwards till it is rescinded stipulating certain conditions. In such condition- (ii) every receipt issued to donor shall bear the number and date of the order issued by the Director of Income Tax (Exemptions) and shall state the date up to which this certificate is valid from A.Y.2012- 2013 onwards till it is rescinded. (iii) no change in the deed of the trust/association shall be affected without the due procedure of law and its intimating should have been given immediately to the Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own Panchayat (merged with Coimbatore Corporation), exemption was granted as per orders of this Court dated 10.05.1994 in W.P.No.3235 of 1985 and 23.01.2009 in W.P.Nos.14414 and 14415 of 1999 respectively. Likewise, in respect of hospital at Theni, Allinagaram, the Commissioner has himself accepted the request for grant of exemption. The demands of property tax raised by the Coimbatore Corporation, came to be challenged by the Trust and had come to be decided by this Court in favour of the Trust, confirmed by the Supreme Court in Special Leave. Following the rationale of the aforesaid orders, the writ petition was allowed. 12. Per contra, the decisions relied on by the revenue are discussed below: In The Special Officer and Commissioner, Tiruchirapalli Corporation, Tiruchirapalli Vs. Hindu Mission Hospital, represented by its secretary (2008 2 L.W. 159), a Division Bench of this Court considered the grant of exemption to the Hindu Mission Hospital in terms of the Tami Nadu District Municipalities Act, 1920, specifically Section 86(e) thereof, which enumerated that certain categories of buildings and lands including 'charitable hospitals and dispensaries but not including resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Batch) (2017 SCC online Madras 37345), a learned Single Judge considered a claim put forth by the Velammal Educational Trust that claimed exemption on the ground that its activities centered around the achievement of various noble and socially oriented objectives. After taking note of the decisions of the Division Bench that I have referred to above, the learned Judge held that the grant of exemption was not automatic but has to be established by way of evidences put forth by the applicant. The petitioners were granted liberty to make a representation seeking exemption, to be considered and appropriate orders passed by the respondent. In Sundaram Medical Foundation Vs. Commissioner, Corporation of Chennai (2017 7 MLJ 802), a learned Single Judge of this Court considered a similar claim by the petitioner foundation and the same view as expressed by the Division Bench was reiterated in this case as well. 17. In Municipal Corporation of Delhi Vs. Children Book Trust (1992 3 SCC 390), the Supreme Court considered the grant of exemption under the Delhi Municipal Corporation Act, 1957 wherein an exemption was available under Section 115(4)(a) to lands and buildings occupied and used b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh it may have some income by the activities of the society. The word "part' must mean an appreciable amount and not an insignificant one. The "part" in other words, must be substantial part. What is substantial would depend upon the facts and circumstances of each case. 83. The word "contribution" used in the proviso must also be given its due meaning. It cannot be understood as donations. If that be so, a voluntary contribution cannot amount to a compulsive donation. If the donor, in order to gain an advantage or benefit, if he apprehends that but for the contribution some adverse consequence would follow, makes a donation certainly it ceases to be voluntary. 84. Therefore, we conclude that the test to be applied is not merely qualitative but quantitative as well. 85. The last aspect of the matter is utilisation of the income in promoting its objects and not paying any dividend or bonus to its members. The learned counsel for the appellant and the intervener would urge that on the basis of Cane (Valuation Officer) and Another (supra) (1961(2) Queen's Bench Division 89) the position in the instant case is the same. At Page 121 the following observation is found: "O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitive income, I hold that the activity carried out by the society is not a charitable activity. The second confusion that the institute/ society should be supported wholly or in part by voluntary contribution is also not fulfilled. The element of voluntary contributions comes only if there is an excess of expenditure over the receipts of the society. Even otherwise the donations received by the society if any cannot be treated as voluntary in view of the fact that they are all forced on the student/parents. The very fact that the tax payer society has claimed depreciation in the income and expenditure account of the school shows that what they are preparing is not the income and expenditure account, but a Profit and Loss Account as is done in commercial establishments. Depreciation is not an expenditure but is only a deduction @ certain percentage of the capital assets for arriving at profits and gains of the business. In view of the foregoing discussions I have no hesitation to decline exemption from payment of general tax in respect of the property known as Green Field School, A-2 Block, S.J.D.A New Delhi. Accordingly, all property taxes are payable by the tax payer." 20. Great ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim for exemption from income tax, observing at para 16, as follows: Where an activity is carried on as a matter of advancement of the charitable purpose or for the purpose of carrying out the charitable purpose, it would not be incorrect to say as a matter of plain English grammar that the charitable purpose involves the carrying on of such activity, but the predominant object of such activity must be subserve the charitable purpose and not to earn profit. The charitable purpose should not be submerged by the profit-making motives; the latter should not masquerade under the guise of the former. 25. In order to, prima facie, examine the flow of funds the petitioner was directed to circulate its financials for the period 2004-05 till date along with income tax assessment orders. An additional affidavit dated 31.08.2020 has been filed on behalf of the petitioner that sets out the details of income and expenditure for the financial years 2004-05 to 2019-20 as follows: Financial Year Income Expenditure 2004-05 Rs. 170,632,253 Rs. 164,348,671 (+) 2005-06 Rs. 169,228,902 Rs. 171, 562,558 2006-07 Rs. 166,595,926 Rs. 192, 742,981 2007-08 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner clinic also incidentally noting the financial position that there was no surplus of income over expenditure for any of the periods in question. The provisions of Section 115(4) of the Delhi Municipal Corporation Act under which the exemption was sought and granted in that case reads as follows: Section 115 (4) of the Act reads as under:- "115 - Premises in which property taxes are to be levied. (4) Save and otherwise provide in this Act, the General Tax shall be levied in respect of all lands and buildings in Delhi except (a) lands and buildings or portions of lands and buildings exclusively occupied and used for public worship or by society or body for charitable purposes provided: that such society is supported wholly or in part by voluntary contribution, applies its profit, if any, or other income in promoting its objections and does not pay any dividend or bonus to its members. " 29. The decision of the learned single Judge was challenged by the Corporation in LPA No.1348 of 2007 and by decision dated 20.02.2009 the order of the learned single Judge was confirmed. The Bench at paragraphs 5 and 6 notes that the operational expenditure was far in exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as points (iii), (iv) and (v) are concerned, they are questions of fact and it is for the respondent to call for the requisite particulars and satisfy himself with the compliance of those conditions and for the petitioner to comply with the same. It is primarily the first issue that has been decided in this Writ Petition as to whether the levying and collecting of charges for the services and the earning of surplus income for the periods in question would automatically debar the petitioner from the exemption claimed. 33. The grant of exemption to the clinic run by the Sanstha at Defence Colony, New Delhi would also support the position that the activity carried on by the organisation has been accepted to be charitable in nature, subject of course, to the examination of accounts and deployment of surplus earned, if any, for each financial period in question to satisfy the test of pre-dominant activity carried on by the organisation. 34. Though profit earning should not be the dominant object of the institution, there is no bar to it being a mere incident of its operations. To hold that there should be a bar on the earning of profits would only serve to make the institution unvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
