Coimbatore Masonic Charity Trust v. The Corporation of Coimbatore

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 14.07.2010CORAMTHE HONOURABLE MR. JUSTICE T.S. SIVAGNANAMW.P.No.1422 of 2003 andW.P.M.P.Nos.1773 of 2003, 34802 & 3380 of 2005Coimbatore Masonic Charity Trust,Rep. by its Trustee,No.232, Race Course Road,Coimbatore – 641 018.... PetitionerVersusThe Corporation of Coimbatore,Rep. by its Commissioner,Coimbatore.... Respondent Prayer: Petition filed under Article 226 of the Constitution ofIndia for the issuance of writ of certiorarified mandamus, callingfor the proceedings of the respondent in Ref. Roc.No.009294/99/EA7dated 09.12.2002 and quash the same and consequently direct therespondent to exempt the properties belonging to the petitioner frompayment of property tax.For Petitioner :Mrs. K.Priya for Mr.A.K.MylsamyFor Respondent :Mr.R.SivakumarO R D E RThe prayer in the writ petition is for issuance of a writ ofcertiorarified mandamus to quash the proceedings of the respondent inRef. Roc.No.009294/99/EA7 dated 09.12.2002.2. The petitioner is the Coimbatore Masonic Charity Trust,which was established as a Public Charitable Trust on 06.10.1978.The petitioner purchased the subject property, by sale deed dated28.02.1979, for the purpose of activities of the trust and the IncomeTax Department has granted exemption under Section 80-G of the IncomeTax Act, in favour of the petitioner's trust. In the land purchasedby the petitioner's trust, initially it established an OutpatientMedical Center during 1982, and subsequently with the aid of thedonation received, put up additional buildings and as on date, it isfully fledged hospital. According to the petitioner, the buildingsbelongs to the trust, and being used for hospital and dispensaries, https://hcservices.ecourts.gov.in/hcservices/ are exempted from the payment of property tax in terms of Section 123(e) of the Coimbatore City Municipal Corporation Act. The petitionerhad challenged the notice issued by the respondent Corporation,demanding property tax, by filing writ petitions before this Courtand the writ petitions were dismissed and the petitioner filed WritAppeal Nos.1832 to 1834 of 2000 dated 01.12.2000 and the DivisionBench of this Court, directed the Competent Authority to consider therepresentation made by the petitioner and the petitioner was directedto pay a sum of Rs.3,65,380/-. The petitioner is stated to compliedwith the direction issued by the Honourable Division Bench.Thereafter, the respondent by letter dated 03.03.2001, stated thatthough the petitioner had forwarded various documents such as deed oftrust, exemption certificate under Section 80 G of the Income TaxAct, Abstract of Statement of Income and Expenditure for thefinancial year 31.12.2000, copy of the building plan, etc, thematerials are not sufficient to consider the petitioner's claim forexemption and requested to furnish further documents in the form ofProperty Tax details at the time of purchase of the property, plan,area of the building, contribution made by the life members of thetrust from its inspection and details about the members of thebuilding committee and their contribution to the Coimbatore MasonicCharity Trust and the details about the Ex-officio members of theCoimbatore lodges and relationship to the petitioner, inspectionreport of the company etc. According to the petitioner, theparticulars sought for, are irrelevant and the petitioner sent areply on 19.04.2001, giving details to the extent possible.Thereafter, the respondent again by communication, dated 28.02.2002,called for various others particulars to which the petitionersubmitted a detailed reply on 19.08.2002, stating that thepetitioner's trust is a Charitable Institution registered underSection 12(A) of the Income Tax Act and also exempted under Section80 G of the Act. In spite of such reply, the respondent by orderdated 09.12.2002, rejected the request for exemption. Aggrieved bysuch order, the petitioner is before this Court by way of the presentwrit petition.3. The learned counsel for the petitioner would contend thatthe respondent corporation has overstepped its authority and theexemption contemplated is a statutory exemption in respect ofproperty and the petitioner satisfied the requirement of various sub-clauses of Section 123 and the only issue to be considered by therespondent is whether the hospitals/dispensaries run by thepetitioner is charitable one or not so as to qualify for statutoryexemption. It is further contended that the exemption granted underthe provision of the Income Tax Act is a valuable evidence to showthat the petitioner is a true and bonafide charitable institution.Further, it is submitted that the respondent did not considered anyof the documents submitted by the petitioner, therefore, the impugnedorder is liable to be set aside. https://hcservices.ecourts.gov.in/hcservices/

4. The learned standing counsel appearing for the respondent byrelying upon the counter affidavit filed would submit that it isfalse to state that the petitioner's hospital is providing medicalaid to poor and needy, as per the object of the trust, and thereforethe claim for exemption under Section 123 (e) of the Act was rightlyrejected. It is further contended that the income and expenditurestatement for the years 1998, 1999 and 2000 which were forwarded bythe petitioner along with their representation, dated 07.02.2001,will prove that the hospital received substantial income from thepatients. Further, these documents are not audited by the CharteredAccountant. The learned counsel also relied on the Income andExpenditure account produced by the petitioner, which had been filedin the typed set of papers filed by the respondent and submitted thatthe rejection of the claim for exemption is fully justified. It isfurther contended that the exemption granted under Section 80 G ofthe Income Tax Act, may not by itself prove the charitable nature ofthe petitioner's trust and in spite of repeated opportunity, thepetitioner failed to produce the relevant documents. On thesegrounds, the learned standing counsel prayed for dismissal of thewrit petition.5. The learned counsel for the petitioner relied on the replyaffidavit filed by the petitioner to the counter affidavit andsubmitted that the name of the petitioner itself discloses that ithas been created for the laudable object of treating the poorchildren and the down trodden and that the exemption granted underthe income tax Act cannot be brushed aside by the respondent.Further in the reply affidavit in Paragraph 8, the petitioner haspointed out that in respect of two other charitable trust, which havebeen running hospitals have been granted exemption and the petitioneralone has been singled down. The learned counsel relied on thedecision of the Honourable Division Bench of this Court reported in1993 (2) Law Weekly 100 in support of her contention.6. Heard submission on either side and perused the materialsavailable on record. Section 123 of the Coimbatore City MunicipalCorporation Act, 1981, (hereinafter referred as to Act) deals withthe general exemption from property tax and in terms of Clause 'e' ofSection 123, Charitable Hospitals and dispensaries not includingresidential quarters attached thereto are entitled for exemption.Therefore, for a person or an organisation to avail exemption underSection 123 (e), it has to be established that it is a charitablehospital and dispensaries and even in respect of such buildings theresidential quarters will not be included. Thus essentially thedecision has to be arrived at by the respondent by appreciating thefacts available on records. 7. According to the petitioner, they have submitted all therelevant documents to establish that they are a charitable hospital https://hcservices.ecourts.gov.in/hcservices/ entitled for full exemption. As per the impugned order, therespondent corporation, by their communication, dated 02.08.2002 hadcalled for certain details and the petitioner had sent a reply on09.08.2002, stating that the payment made by the corporation is vagueand indefinite and it is not necessary for the corporation to demandsuch details. Such stand taken by the petitioner may not beappropriate since the respondent corporation has to arrive at adecision based on the material placed before it. If the materialcalled for, are not available with petitioner, it would be theanother matter. As already observed the question of exemption hasto be decided on the facts available. 8. In the instant case, apart from arriving at decision basedon records, the respondent is also required to conduct the inspectionof the premises, since what claim is exemption from levy of propertytax on building. Therefore, unlike in orders of exemption grantedunder the Income Tax Act or the Sales Tax Act, the respondent cannotproceed only based upon the documents available on record. In myview, the exemption granted under the Income Tax Act cannot brushedaside by the respondent, while considering the claim for exemptionfor property tax. As long as the exemption granted under 80 G of theIncome Tax Act exempting the Income Tax on the donations received bythe petitioner's trust remains valid it is substantial piece ofevidence to prove about the activities of the petitioner trust. Inthe provision of the Income Tax Act, detailed procedure has beencontemplated prior to the grant of such exemption. Therefore, therespondent Corporation is bound to take note of exemption granted bythe Income Tax Department. It is seen that though initially, orderof interim stay was granted by this Court, by subsequent order dated10.09.2003, the interim stay has been vacated and the learned counselfor the petitioner submits that already the petitioner has paid a sumof Rs.6,00,000/- towards the property tax. The learned counsel forthe petitioner placed reliance on the decision of the HonourableDivision Bench of this Court in S.N.R.Sons Chairtable Trust Vs. TheCommissioner, Coimbatore City Municipal Corporation, 1993 (2) LawWeekly 100. The Honourable Division Bench considered the effect ofthe payment made by the patients to the hospital, whether it could beequated to rent and held as follows:" In this case, the amounts paid by thepatients, who use the hospital as well as therange of services provided by it, cannot beregarded as 'rent' paid by them in the narrowersense in which it is intended under the provisionsreferred to earlier."9. On perusal of the entire material available on record andafter going through the counter affidavit and the reply affidavit, inmy view, this is a fit case, where the entire issue has to bereconsidered by the respondent and the petitioner is also bound toproduce all documents in support of their claim as well as such those https://hcservices.ecourts.gov.in/hcservices/ documents called for by the respondent. Further, if such records arenot available to the petitioner or if they claim privilege to suchdocuments, it is always open to them to take such a stand, but theessential documents to prove their charitable activity is required tobe produced. Further, the respondent is also required to conduct aninspection of the premises to satisfy themselves as regards of natureof activity carried on in the premises. 10. In the result, the writ petition is allowed, the impugnedorder is set aside and the matter is remanded to the respondent forfresh consideration. The petitioner is granted liberty to file acomprehensive fresh representation including documents in support oftheir claim for exemption within a period of three weeks from thedate of receipt of a copy of this order. On receipt of suchrepresentation, the respondent corporation shall fix a date forinspection of the premises and after inspection, afford anopportunity of personal hearing to the petitioner and then decide thematter on merits and in accordance with law within a period of sixweeks from the date of which the personal hearing is afforded to thepetitioner. The respondent while deciding the matter will also takenote of the law laid down by this Court in the Judgment reported in1993 (2) Law Weekly 100, referred supra.11. The writ petition is allowed accordingly. No costs.Consequently, connected miscellaneous petitions are closed.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarogyToThe Commissioner,The Corporation of Coimbatore,Coimbatore.1 cc To Mr.A.K.Mylsamy, Advocate, SR.50583.1 cc To Mr.R.Sivakumar, Advocate, SR.50528.W.P.No.1422 of 2003 RSY(CO)RVL 23.08.2010