TMI Blog2022 (9) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument that a hospital ancillary to a Medical College assumes a special status as a teaching hospital, also and equally engaged in the dissemination of medical education, such an argument bears looking into, including specifically whether the hospital is being run along commercial lines, how the income earned is being utilized as well as other relevant factors in arriving at a considered decision in regard to the claim of the petitioner. The impugned order is entirely silent on all these aspects. Claim under Section 124(e) - HELD THAT:- There is to be a detailed verification as to whether the petitioner satisfies the requirement of 'charitable institution'. The mere fact that it has obtained an exemption under Section 12(A) and 11 of the Income tax Act, 1961 would not come to its rescue and the officer must undertake a detailed verification of its financials, including the deployment of its funds and record his satisfaction that receipts/income are being ploughed back into the charitable activity. The matter remanded to the file of the authority for denovo adjudication - Petition allowed by way of remand. - W.P.No.8326 of 2019 & WMP.No.8871 of 2019 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d indicate that it is premised on three points (i) other identically placed medical colleges are not being visited with property tax demand; (ii) the petitioner is a charitable institution and should thus be treated as exempt from the levy; and (iii) the request for exemption is premised on the basis of Section 124(e) of the Act, though the statutory provision does not find reference. 6. In fine, the prayer of the petitioner is for an exemption both as an educational institution as well as a charitable institution, that is, both under clauses (c) and (e) of Section 124. The impugned order bifurcates the properties of the petitioner as follows: Sl. No. Particulars Extent 1. Total Plot area of PIMS campus 1,34,312 sq.m. 2. Total extent of all buildings 98,378,11 sq.m. 3. Total extent of educational buildings, place of worship, etc in PIMS 42,481,84 sq.m. 4. Total extent of commercial buildings in PIMS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oximate to the teaching hospital, with the recommendation that the teaching hospital shall be within a radius of 5 Kms of the campus. Companies registered under the Companies Act may also be allowed to open medical colleges upon condition that the colleges are not commercialized. The Regulations have the recurring theme of a composite scheme of medical instruction involving both the medical college and a teaching hospital. 12. On 28.10.2020 an amendment was brought to the 1999 Regulations by way of an amendment notification issued by the National Medical Commission. The qualifying criteria in respect of colleges to be established from academic session 2021-22 onwards were amended to included additional prescriptions as follows:- ( 2A ) For Medical Colleges being established for Academic Session 2021-22 : 1. Every medical college shall comprise of the Medical College , the attached Teaching hospital / ( s ) , and the residential area for the students with or without the residential area for faculty and other staff of college / hospital . It is desirable that the medical college , residential complex for students interns and the teaching hospital institution be in a un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly functional for a minimum period of two years . 4. In Clause 8 under the heading GRANT OF PERMISSION after the existing clause 8 ( 3 ) ( 1 ) the following new Para shall be added :- 8 ( 3 ) ( 1A ) For Medical Colleges being established from Academic Session 2021-22 : The permission to establish a Medical College and admit students may be granted initially for a period of one year and may be renewed on yearly basis subject to achievements of annual targets. Physical Verification of infrastructure, human resources and other facilities shall be carried out for first renewal, third renewal and until recognition of the MBBS qualification awarded by the Medical College is granted. It shall be the responsibility of the person to apply to the Medical Assessment and Rating Board of the National Medical Commission for the purpose of renewal in accordance with the prescribed time schedule. Further admissions shall not be made at any stage unless the requirements laid down in relevant Minimum Standard Requirement Regulations for Annual MBBS Admissions and Phase wise Requirements for grant of Permission under section 10A are fulfilled. Further, the proviso to Regulation 8 ( 3 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destitutes or animals. (d) to (k).... Provided that nothing contained in clauses (a) and (c) shall be deemed to exempt from house-tax, if any building for which rent is payable by the person or per sons using the same for the purposes referred to in the said clauses: Provided further that educational institution (nor commercial in nature) exempted from levy of house-tax, immediately before the commencement of the Act shall continue to be exempted under the said Act. Explanation. -- The exemption granted under this rule shall not extend to residential quarters attached to schools or colleges not being the hostels or residential quarters attached to hospitals, dispensaries and libraries. 14. The Bench considered the impact of the above and holds at paragraphs 7 and 20, as follows: 7. A reading of the Rule 15 shows that apart from panchayat buildings and Government maintained buildings, the various Sub Rules list out buildings entitled to exemption subject to the qualification as to the character of use and purpose provided for therein. On a reading of the exemption provision, it is clear that wherever the Rule contemplated a qualification to any cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim must, as far as possible, be liberally construed provided no violence is done to the language used. 15. In coming to the above conclusion, they note and rely upon judgments of the Hon'ble Supreme Court in The Sole Trustee Loka Shikshana Trust Vs. The Commissioner of Income Tax, Mysore, [ (1976) AIR SC 10] and Municipal Council Trichinopoly Vs. S.Venkatarama Aiyar, [(1931) AIR 55 Madras ]. The claim for exemption was upheld since the Bench was of the view that the petitioner therein satisfied the dominant purpose test, and existed solely for educational purposes only. 16. Learned Senior Counsel appearing for the learned counsel on record for R2, points out that the impugned demand notice levying property tax provides for an appeal remedy in terms of Section 180 of the Act and the petitioner has not availed such remedy. Be that as it may, and notwithstanding his challenge to maintainability, the petitioner has admittedly remitted the demand not just for the periods in question, but for earlier years as well. 17. Thus, while impressing upon the Court that it would be appropriate that the petitioner files an appeal in the present case, he would also urge that dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of medical education, such an argument bears looking into, including specifically whether the hospital is being run along commercial lines, how the income earned is being utilized as well as other relevant factors in arriving at a considered decision in regard to the claim of the petitioner. The impugned order is entirely silent on all these aspects. 22. As regard the claim under Section 124(e) as well, there is to be a detailed verification as to whether the petitioner satisfies the requirement of 'charitable institution'. The mere fact that it has obtained an exemption under Section 12(A) and 11 of the Income tax Act, 1961 would not come to its rescue and the officer must undertake a detailed verification of its financials, including the deployment of its funds and record his satisfaction that receipts/income are being ploughed back into the charitable activity. 23. For all the aforesaid reasons, the impugned order is set aside and the matter remanded to the file of the authority for denovo adjudication. The authority is directed to hear the petitioner and pass a speaking order in regard to the claim of exemption, bearing in mind the 1999 Regulations and subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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