Bombay High Court
Sir Jamshetjee Jeejeebhoy Baronet And ... vs The State Of Maharashtra And Ors. on 22 June, 2004
Equivalent citations: AIR2005BOM32, 2004(5)BOMCR40, 2004(4)MHLJ208, AIR 2005 BOMBAY 32, (2004) 4 ALLMR 759 (BOM), 2004 (4) ALL MR 759, (2004) 4 MAH LJ 208, (2004) 5 BOM CR 40, 2005 (1) BOM LR 112, 2005 BOM LR 1 112
Author: A.P. Shah
Bench: A.P. Shah
JUDGMENT
A.P. Shah, Actg.C.J.
1. The short question which falls for consideration is whether the petitioner trust is entitled to claim exemption from the liability of paying house tax under Rule 7(2)(c) of the Maharashtra Village Panchayat Tax and Fees Rules, 1960 framed under the provisions of the Bombay Village Panchayat Act, 1958, hereinafter referred to as the "said Rules" and the "said Act" respectively. The petitioner trust was established in the year 1834 and owns land and cattle sheds within the limits of Group Grampanchayat, Anne, Bhisol, Taluka Kalyan Dist. Thane. The activities of the petitioner trust are of charitable purpose including keeping cattle and other animals and birds and giving them food, shelter and medical aid and to look after old and disabled animals. The petitioner claims exemption under Rule 7(2)(c) from the liability to pay house tax leviable under the said Rules. Rule 7(2)(c) inter alia reads as under:
"7. Rate of tax on buildings and lands-
(1) -----
(2) The following lands and buildings shall be exempted from levy of tax under Sub-rule (1) namely:-
a) --
b) --
(c) lands and buildings used solely for religious, educational and/or charitable purposes".
2. By letter dated June 23, 1979, the Grampanchayat called upon the petitioner trust to submit the valuation of the buildings of the trust for the purpose of assessing the tax. The petitioner by its letter dated June 28, 1979 replied to the said notice stating that the petitioner is a registered public charitable trust and hence is not liable to pay any tax. The Grampanchayat, however, vide its bills dated July 15, 1979 purported to levy tax at the rate of Rs. 3000 p.a. upon the trust. Being aggrieved the petitioner preferred an appeal to the Panchayat Samiti which came to be dismissed by order dated April 25, 1990 without assigning any reasons. Further appeal was preferred before the Administrator and Chief Executive Officer of Zilla Parishad Thane. This appeal also came to be dismissed by order dated January 7, 1992. The Administrator observed in his order that ".....it appears that though this institution is charitable, the institution is carrying on the trade of sale and purchase of cattle and selling milk etc. which is for the purpose of profit making. Therefore it is informed that the said institution is not entitled to exemption from payment of tax levied by the grampanchayat Anne Bhisol.Tal kalyan under the Rule 7(2)(c)". The present petition is directed against this order of the Administrator.
3. Mr. Saraf, learned counsel appearing for the petitioner has contended that in view of the clear provisions of Rule 7(2)(c) the land and buildings used solely for the religious, education and charitable purpose are exempt from levy of house tax. Even if activity for profiteering is incidently carried out the primary purpose of the trust or the institution does not cease to be charitable purpose. Mr. Saraf referred to a division bench decision of Kerala High Court in Commissioner of Income tax v. Pulikkal Medical Foundation Pvt. Ltd., 1994 Vol 210 Income Tax Reports 299, where the court held as follows:
"In a case where a hospital exists solely for philanthropic purposes, even if incidentally profit is earned, the hospital is entitled to the benefit under Section 10(22A). In order to achieve the main philantrophic objects, the hospital may do some profit earning business provided such profit is appropriate towards the expansion and development of the hospital or to start another institution with the same philanthropic objective. The real test is to find out what the dominant or primary purpose of the institution is. If the primary purpose is philanthropic, the inclusion of some objects for earning profit for the implementation of the primary object would not alter the character of that primary object. In other words, his will not be a ground for holding that the hospital is not existing solely for philanthropic purposes. All cumulative factors will have to be taken into consideration in order to decide whether the institution exists for philanthropic purposes and not for purposes of profit. Neither the fortuitous factor of having large surplus in any particular year, nor the fact of diverting some income to objects which are not philanthropic in themselves would be decisive of the matter".
4. Mr. Saraf next cited a decision of the Apex court in Addl. Commissioner of Income Tax, Gujarat v. Surat Art Sil Cloth Manufacturers Association and Ors., 1980 121 Income Tax Reports 1, where Bhagwati J. (as His Lordship then was) speaking for the bench observed:
"The law is well settled that if there are several objects of a trust or institution, some of which are charitable and some non charitable and the trustees or the managers in their discretion are to apply the income or property to any of those objects, the trust or institution would not be liable to be regarded as charitable and no part of its income would be exempt from tax. In other words, where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust or institution might be upheld as a valid charity: vide Mohd Ibrahim v. CIT (1930) 57 IA260 and East India Industries (Madras) P. Ltd. v. CIT . But if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity".
5. Mr. Saraf also drew our attention to a decision of the Apex court in P.C. Raja Ratanma Institution v. Municipal Corporation of Delhi and Ors., 1990 (Supp) SCC 97 where the court categorically held that the test of 'charitable purpose' is satisfied by the proof of any of the three conditions namely relief of the poor, education, or medical relief. The fact that some fee is charged from the students is also not decisive inasmuch as the expenditure incurred in running the society may be supported either wholly or in part by voluntary contributions. In that case a non profit making registered society which was running a school in Delhi was denied exemption under Section 115(4)(a) of the Delhi Municipal Corporations Act, 1957. The learned single Judge of the Delhi High Court held that though the school was imparting education but in order to qualify for exemption it had to give education and medical relief. Admittedly fees are charged from students and mere imparting of education cannot be called giving relief. This view of the Delhi High Court was expressly overruled by the Apex Court.
6. In the present case the petitioner trust is a charitable trust and carrying on activity of a Goshala (Panjarapol). There can be no doubt that running a Goshala is a charitable activity. We may quote the words of Chagla C.J. in D.R. Pradhan Charity Commissioner, Bombay v. The Bombay State Federation of Goshalas and Panjrapoles, 1957 ILR 140, "....that any society which seeks to advance the object of saving cows from destruction and improving the standard of cattle would be working for an object of general public utility." We are satisfied that the petitioner trust whose sole object is running and maintaining Goshala is entitled to exemption from levy of house tax under Rule 7(2)(c). The main object of the petitioner Trust is to run Goshala and even if the petitioner is earning some profit by selling cattle or milk for meeting the expenses of Goshala it cannot be said that the petitioner trust ceased to be a charitable trust. In this connection, it is relevant to note, that the authorities have not recorded a finding that any surplus arising from the operation of the petitioner is not utilised for the trust or distributed to any individuals. Merely because the trust is also conducting incidental activity of selling milk and cattle to needy farmers does not mean that it is not a charitable trust within the meaning of Rule 7(2)(c).
7. The authorities under the Act are thus clearly in error in denying exemption to the petitioner trust from payment of house tax solely on the ground that the petitioner trust was selling milk and cattles to the farmers. Petition is allordingly allowed. Rule is made absolute in terms of prayer Clauses (a) to (c).