IMPORTANT POINT
Claim of statutory exemption under Section 62, New Delhi Municipal Council Act, in respect of the rented portion of the building is not maintainable.

Headnote:New Delhi Municipal Council Act, 1994-Sections 62, 72(1)(e) and 124-Punjab Municipal Act, 1911-Section 115(4)-Exemption from payment of house tax for years 1977-78 to present day-Charitable organisation-Appellant society constructed a building on premises, consisting of a basement, ground floor and five floors above the ground floor-A portion of building being used for purposes of its Headquarters and its various offices-Balance portion of building rented out by appellant-Claim of exemption in respect of tax leviable on rented portions-Whether maintainable-(No).
       Held : Section 62(1) of the NDMC Act, if the appellant-society fulfils these three conditions it is entitled as a matter of right to be exempted from payment of property tax. Where the Assistant Secretary erred, was in treating the right to exemption in respect of the self-occupied portions of the appellant s building as a matter of discretion. It is not. It is a matter of right provided of course of the conditions laid down in Section 62(1) are fulfilled by the society. Sub-section (2) of Section 62, however, carves out two exceptions to this exemption, namely if (a) any trade is carried out in such lands and buildings, or (b) in respect of any portion of such land or building or portion thereof any rent is derived. In such a case, under sub-section (3), the portion of the land or building exclusively occupied and used for charitable purposes under Section 62(1) and the portion, which is excepted under sub-section (2) are deemed to be separate properties for the purpose of municipal taxation. Thus the statutory exemption under Section 62(1) is not available to the society if the building is not self-occupied but is rented out. The section does not make any allowance even if the rental income is used for charitable purposes. The phrase for a charitable purpose only qualifies self occupation under Section 62(1)(a). The appellant s claim for the benefit of such statutory exemption under Section 62 of the Act in respect of the rented portion of the building is, therefore, untenable and the Assistant Secretary had rightly rejected it. (Paras 13 and 14)
       Under Section 124, as far as the present controversy is concerned, the Council s power must be exercised, if at all, in favour of a class of persons or a class of property. This power may be contrasted with the Punjab Municipal Act where exemption may have been allowed, even in respect of an individual by the Committee under Section 70(2)(c) and the State Government under Section 71. While dismissing the appellant s appeal in so far as it has claimed statutory exemption under Section 62 in respect of the rented portion of the building, we grant the liberty to the appellant-Society to apply to the Council for exemption from payment of taxes leviable in respect of the rented portion. It would be open to the Council to resolve under the provisions of Section 124 to exempt all persons who are similarly situated as the appellant-society on the application of the appellant. (Paras 21 and 22)

JUDGMENT

Ruma Pal, J.-The appellant-Society is a charitable organisation. In 1930, it was granted a permanent lease of premises No.1. Red Cross Road, New Delhi. Between 1975-77 the appellant constructed a building on the premises. The building consists of a basement, ground floor and five floors above the ground floor. A portion of the building is used by the appellant for the purposes of its Headquarters and its various offices which include a Blood Bank, St. John s Ambulance Brigade Maternity and Child Welfare Bureau and also the Hindkusht Nivaran Sangh. The balance portion of the building is rented out by the appellant. It is the appellant s case that the rent is utilised wholly for charitable purposes. The appellant has claimed exemption from payment of house tax in respect of the building for the years 1977-78 to the present day.

2. Prior to 1994, house tax in respect of properties in Delhi was imposed under the Punjab Municipal Act, 1911. The Punjab Act was repealed by the New Delhi Municipal Council Act, 1994 (briefly the NDMC Act) as far as New Delhi is concerned with affect from the day that the respondent No. 1 Council was established under Section 3 read with Section 416(1) of the latter Act. According to the appellant, it had, till that time, paid some amounts of money towards the demands raised by the respondent No. 1 on account of property tax and had also applied to the respondents for grant of exemption. According to the appellants, there was no response to the appellants representation. The appellant filed a Writ Petition before the High Court at Delhi specifically impugning two bills raised by the Municipal Corporation dated 20-7-90 and 31-5-91 which were for the sums of Rs. 69,14,792.71 and Rs. 6,13,492 respectively. Interim protection was given to the appellant No.1 by the High Court and the demands were stayed. The appellant then filed eight more writ petitions before the High Court questioning the subsequent demands on account of property tax raised by the respondent No. 1 in respect of the appellant s building. The writ petitions were heard and disposed of by the High Court by directing the appellant to make a fresh representation to the Director (Tax) of the respondent No. 1 who was required to consider and dispose of the same. Liberty was also granted to the appellant to re-agitate the grounds on which the writ petitions were filed in the event the decision of the Director (Tax) went against the appellant.

3. The appellant made a representation pursuant to the order of the High Court. This was disposed of on 26 2.2001 by the Assistant Secretary (Tax). The Assistant Secretary noted that he was examining the claim for exemption only for the period 1991-92 to 2000-2001. The position under the Punjab Municipal Act, 1911 was examined and it was found that the appellant had filed an application claiming exemption under that Act only in respect of the self-occupied portion of the building. The Municipal Committee which was the competent authority under Section 70 of the Punjab Act had resolved to grant exemption from payment of property tax under the Punjab Act in respect of the self-occupied portion of the building. The resolution of the Committee was approved by the State Government. The exemption was granted upto the year 1990-91. The order also stated that there was no application for exemption by the appellant for 1991-92 to 1993-94 as such no resolutions had been taken by the Committee.

4. The Assistant Secretary then considered Sections 60, 61 and 62 of the NDMC Act, 1994 and noted that exemption could be granted, if at all, under the provisions of the NDMC Act in respect of that portion of the building occupied by the appellant and used for charitable purposes. Although the Assistant Secretary was of the view that even the portion occupied by the appellant did not qualify for exemption as the premises were not used exclusively for charitable purposes, nevertheless as the Committee under the Punjab Act

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2003 Supreme(SC) 518

IMPORTANT POINTClaim of statutory exemption under Section 62, New Delhi Municipal Council Act, in respect of the rented portion of the building is not maintainable.

IMPORTANT POINT
Claim of statutory exemption under Section 62, New Delhi Municipal Council Act, in respect of the rented portion of the building is not maintainable.