TMI Blog2004 (3) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruing it as Charitable Hospital and hence eligible for exemption from payment of the property tax. However, the said benefit was not extended to it by the defendant in spite of repeated pleas. In fact, the plaintiff has availed the exemption from payment of property tax in pursuance of the Coimbatore Municipal Council Resolution 693 dated 18.6.1980 with effect from 1.4.1980 and by later resolution No. 1121 dated 23.7.1980, the defendant has cancelled the earlier resolution for mala fide and extraneous reasons. The said cancellation is also illegal as no opportunity of hearing was given before the said cancellation, which is violative of the fundamental principles of natural justice. In spite of several representations submitted by the plaintiff, no order was passed by the defendant even though the plaintiff satisfies the scope and ambit of Section 86(e) of the Act and Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. In fact, the Trust has been recognised as Charitable Institution for the purpose of the provisions of the Income Tax Act, 1961 and availed Customs Duty exemption for the purchase of medical equipment. Due to inaction on the part of the defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of payment of property tax under the above said two Acts. The learned senior counsel further contended that the plaintiff has not established the fact that it is a Charitable Hospital within the meaning of the Act, except pleading in this regard in the plaint as well as the assertion during the oral evidence adduced on behalf of the plaintiff. The learned single Judge of this Court as well as the trial Judge have overlooked the material evidence on record, more particularly the evidence adduced before the trial Court which discloses that the hospital is not providing free treatment even to 10% of the patients. 7. Per contra, the learned counsel for the respondent/plaintiff has submitted that the trial Court as well as the appellate Court have rightly found that the plaintiff is a Charitable Hospital within the meaning of the Section 83(e) of the Act and 123(e) of the City Municipal Corporation Act. The learned counsel for the respondent contended that a perusal of the Trust deed discloses that the main object of the Trust is to promote, establish, administer the hospitals, Surgical Homes and Nursing Homes for providing medical relief to the needy people. It is further contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we receive their payments as donation. Many times the donation amount was much higher than the fees, and the Trust and Hospital gained by accepting as donation.... It has also been our endeavour to charge a patient at least a nominal fee, because anything received grant is not valued... A perusal of the above discloses that most of the patients volunteer to pay their fees as donations to the trust. If the said statement of the plaintiff is accepted, it should have produced documents in support of the same before the trial Court. Inasmuch as it is specifically mentioned that, on several occasions, the donation amount was higher than the fees, the plaintiff would have maintained registers indicating what is the amount earmarked for donation and what is the amount earmarked for fees. In the absence of production of any convincing documentary evidence, we do not agree that what ever amount paid by the patients are received as donations by the trust. 10. Further, Ex.A.12 furnishes the details relating to the number of patients, who have obtained full concession of fees and who have obtained partial concession of fees and who have paid their charges in full. A perusal of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s whose monthly income is less than ₹ 300. It further proceeds that 10% of the beds should be provided to the in-patients whose monthly income is below ₹ 300. 13. Even though the trial Court has referred to the above Exhibit, it has miserably failed to take note of the oral evidence deposed by P.W.1 as well as Ex.A. 12, which makes it clear that the conditions set out in Ex.A.31 are not satisfied. As regards the tax exemption granted by the income tax department and the customs department, the provisions contained in the said Act cannot be equated on par with the provisions under which the plaintiff/respondent is claiming tax exemption. 14. Section 2(15) of the Income Tax Act, 1961 proceeds as here under: A Charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. The scope of the above provision discloses that it has wider meaning, more particularly when a reference is made about the advancement of any other object of general public utility. Similarly, Section 25 of the Customs Act, 1962 enables the Central Government to exempt payment of duty on such conditions as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy the requirement of all charitable hospital. Moreover no prayer is sought for setting aside the resolution dated 23.7.1980 in the suit. 17. The trial Court as well as the appellate Court have failed to take into account the power of taxation of a municipal authority/Corporation. Every municipality is a local self-Government and in order to sustain itself a power of taxation has been delegated to municipal bodies. The taxes are local taxes for local needs. Such tax must obviously differ from one municipality to another. It is impossible for the Legislature to pass statute for the imposition of such taxes in local areas. In a democratic set up, the municipality which need the proceeds of these taxes for carrying out the projects to the public, it would be but proper to leave to these municipalities the power to impose and collect taxes. The local authorities do not act as Legislature when they impose tax, but they do so, as an agent of State Legislature, The power and extent of these powers must be found in the statute which create them such powers. Local bodies being subordinate branches of Governmental activities or democratic institutions managed by the representatives o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff/respondent. 21. Similarly, the Supreme Court in its decision rendered in Indian Red Cross Society v. New Delhi Municipal Committee, 2003 (6) ILD 164 , has held that the statute exemption from property tax under the said Act was not available to a charitable society if the building is not self-occupied, but is rented out even if such rental income is used for charitable purposes. In the present case, as discussed already, the plaintiff hospital is collecting rent as admitted by P.W.1 and as such it cannot claim exemption. 22. The learned counsel for the respondent strongly relies upon the observation of Supreme Court in its decision rendered in Additional Commissioner of Income Tax, Gujarat v. Surat Art Silk Cloth Manufacturers Association, [1980] 121 ITR 1 (SC) , to the effect that the activity involved in carrying out the charitable purpose must not be motivated by a profit objective, but it must be undertaken for the purpose of advancement or carrying out the charitable purpose. By relying the above observation, the learned counsel has contended that inasmuch as the ultimate object of the plaintiff/respondent is nothing but a charitable purpose, it is entitled fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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