Madras High Court
Coimbatore Masonic Charity Trust vs State Of Tamil Nadu on 10 August, 2017
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 10.08.2017 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.No.25494 of 2005 & W.P.M.P.No.27928 of 2005 & W.V.M.P.No.8 of 2013 Coimbatore Masonic Charity Trust, Rep. by its General Manager, K.V.Ranganathan, 232, Race Course, Coimbatore 641 018. ... Petitioner Vs. 1.State of Tamil Nadu, Rep. by Secretary to Government, (ULT), Revenue Department, Fort St. George, Chennai 600 009. 2.The Asst. Commissioner, Urban Land Tax Act, Coimbatore. 3.The Special Tahsildar, Urban Land Tax Act, Coimbatore 18. ... Respondents Prayer: Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorarified Mandamus to call for the records of the first respondent made in Govt. of Tamil Nadu G.O.(T) No.472, Revenue (ULC) Department, Chennai 600 009, dated 28.06.2005 quash the same and direct the first respondent to consider the application of the petitioner trust for granting exemption under Section 29(K) of the Urban Land Tax Act on merits. For Petitioner : Mr.K.Mylsamy For Respondents : Mr.K.Venkatesh, Government Advocate O R D E R
The petitioner is a public Charitable Trust created in 1979 and has been established with the object of running Medical Institutions, Hospitals, Schools, Colleges, Recreation Centers etc. The objects of the trust have been spelt out in the Deed of Trust dated 06.10.1978. The petitioner purchased vacant land measuring an extent of 37 grounds and 144 square feet at No.232, Race Course, Coimbatore-18 vide Sale Deed dated 28.02.1979. On such purchase, the petitioner and their vendor made joint application in Form No.9 before the second respondent during March 1979 as per the Tamil Nadu Urban Land Tax Act, to transfer the urban land assessment in the name of the petitioner. A notice was sent by the second respondent dated 02.06.1979, directing the petitioner to appear before him and confirm the sale executed by the petitioner's vendors. The petitioner's representatives are stated to have appeared before the second respondent and furnished all information and records that were sought for.
2.The petitioner's case is that they purchased the property for constructing Children's Hospital in the year 1980 and on the date when the writ petition was filed, the hospital was 80 bedded hospital with 11 Doctors and 95 para-medical staff and the hospital was established as a no-profit-no-loss organization to help the poor children. The petitioner-trust would further state that if there is any surplus left after meeting the expenditures, the same is ploughed back to improve the infrastructure facilities. The petitioner is stated to have constructed a hostel for working women with a grant of Central Government, which has the strength of about 96 inmates and the hostel is also running on no-profit-no-loss basis. The petitioner-trust has been registered under Section 12(A)(A) of the Income Tax Act and also obtained exemption under Section 80(G) of the Act for donations received from the members of the public.
3.Though application was made to transfer the urban land tax assessment in the name of the petitioner as early as March 1979, relevant entries were not made ready. Therefore, the petitioner could not make an application seeking exemption. While so, during November 1996, for the first time, the petitioner was assessed to urban land tax for the faslis 1389 to 1406. The petitioner immediately moved an application before the first respondent under Section 29(K) of the Urban Land Tax Act and prayed for exemption. The petitioner sought for exemption by referring to Government Order in G.O.Ms.No.1947 dated 17.09.1976, by which the Government exempted the properties owned by the Charitable and Philanthropic, Educational and Religious institution from payment of urban land tax. This Government Order stood amended from time to time imposing various conditions. The application filed by the petitioner during 1996 seeking exemption under Section 29(K) was rejected by the first respondent on 18.04.2002.
4.The petitioner has already challenged the assessment order by filing a writ petition in W.P.No.3082 of 1997, dated 25.02.2005. Subsequently, the said writ petition was disposed of with a direction to the first respondent to dispose of the pending application within three months. Since the plea of exemption was negatived, the petitioner challenged the same by filing writ petition in W.P.No.30894 of 2000. This writ petition was disposed of on 29.08.2003, directing the first respondent to give another opportunity to the petitioner trust to furnish the documents and to consider the application for exemption on merits. After which, the petitioner submitted representations dated 24.07.2004 and 08.11.2004. Pending consideration of the exemption, the petitioner has paid a sum of Rs.94,152/- on 26.01.1997 towards the urban land tax for the faslis 1389 to 1400. Later the petitioner has paid a sum of Rs.1,00,000/- on 10.04.2002 towards the urban land tax.
5.First respondent issued notice for the hearing on 20.01.2005, in which the petitioner's representatives appeared and made submissions and produced documents. However, the petitioner's claim has been once again rejected by the impugned order. The only reason given in the impugned order is by stating that 90% of the petitioner-trust income has not been spent for the objects of the trust. This order has been challenged in the present writ petition.
6.Heard Mr.K.Mylsamy, learned counsel for the petitioner and Mr.K.Venkatesh, learned Government Advocate for the respondents and perused the materials placed on record including the counter affidavit filed by the second respondent. The Government in G.O.Ms.No.1834 dated 29.10.1983 issued certain instructions for grant of exemption from the levy of urban land tax and laid down revised norms and guidelines to be adopted while examining the cases for grant of exemption of urban land tax for charitable and philanthropic organization. One of the conditions which would be relevant for the purpose of this case is contained in paragraph 7(3) of the Government Order, which states that after deducting all the ineviable charges like payment of local taxes, repairs and maintenance etc., the institutions should spent at least 90% of the net income on their objectives and purposes. Such expenditure could be incurred in a block period of three years.
7.The petitioner's case is that the Income-tax records produced by the petitioner would reveal that the said condition has been fulfilled in the relevant assessment order for the block period of three years. However, without taking note of the same, the first respondent has mechanically rejected the claim for exemption. The petitioner's further case is that they have registered under Section 12(A)(A) of the Income Tax Act and also obtained exemption under Section 80(G) of the Act. The stand taken by the respondent is that though the petitioner might be registered as a charitable organization for the purpose of income tax and might have been exempted from the levy of income tax on donations etc., that have absolutely no parity on the claim for urban land tax.
8.The second respondent may be right in contending that merely because the petitioner enjoys an exemption under the Income Tax Act, he is automatically entitled for exemption of urban land tax. However, the fact which has to be borne in mind is that Income Tax authorities on scrutiny of the objects of the trust, its activities and books of accounts granted the registration and it is only on proper scrutiny, such registration was granted under Section 12(A)(A) of the Act and equally proper scrutiny was done before granting exemption under Section 80(G) of the Act.
9.Therefore, the second respondent could not have brushed aside the order passed by the Income Tax Authorities and that is not the way the Tax Authorities functioning under a State enactment should discharge their duties. The petitioner's specific case is that when they have fulfilled the condition imposed in the Government Order and the expenditure for the block period of three years is taken into consideration it would be evident that the petitioner complied with the condition laid down for being entitled to exemption. The various charitable activities mentioned by the petitioner has not been disputed, while passing the impugned order. It appears that the property owned by the petitioner wherein the hospital has been established has also been exempted from the levy of property tax by the authorities concerned. The respondents ought to have examined the plea of exemption in a proper manner and not mechanically as had been done in the instant case. Thus, the impugned order deserves to be set aside.
10.Accordingly the writ petition is allowed and the impugned order is quashed and the matter is remanded to the first respondent for fresh consideration who shall afford an opportunity of personal hearing to the authorized representatives of the petitioner, peruse all the documents and take a fresh decision on merits and in accordance with law, uninfluenced by any observations made in the earlier proceedings or order. It is submitted that the petitioner has deposited 50% of the demand as a condition precedent for grant of stay. The said deposit shall remain as such and it shall abide by the orders to be passed by the first respondent in terms of the above directions. Till fresh decision is taken, the respondent shall not raise any fresh demand on the petitioner. No costs. Consequently, the connected miscellaneous petitions are closed.
10.08.2017 Index:Yes/No abr To
1.The Secretary to Government, (ULT), The State of Tamil Nadu, Revenue Department, Fort St. George, Chennai 600 009.
2.The Asst. Commissioner, Urban Land Tax Act, Coimbatore.
3.The Special Tahsildar, Urban Land Tax Act, Coimbatore 18.
T.S.SIVAGNANAM, J.
abr W.P.No.25494 of 2005 10.08.2017