Judgment

THAKKAR, J. : - Believe it or not, the most incongruous arguments can sometimes find a suitor. Were it not so, the High Court of Andhra Pradesh could not have taken the view that occupation or user of lands and buildings for the purpose of running horse races, and for training the horses, etc. constitutes occupation or user of the property for a charitable purpose.

2. The High Court has taken the said view, an impossible view in our opinion, in the context of the exemption from levy of municipal taxes claimed by the Race Course Club (respondent herein) in respect of 127 acres, 14 gonthas and 95 sq. yards of land along with structures standing thereon, which were sought to be assessed to general tax under S. 202 of the Hyderabad Municipal Corporation Act (Act in short). The respondent boldly contended, and strangely enough succeeded in convincing the High Court, that S. 202(l)(b) of the Act was attracted as occupation and user of the property for running horse races and training of horses, etc., constituted occupation and user of the property for a charitable purpose within the meaning of the said provision.

Now, S. 202(l)(b) of the Act is in these terms :

"202(l) The general tax shall be levied in respect of all buildings and lands in the city except-

(a)XXXX

(b) buildings and lands or portions thereof solely occupied and used for public worship or for a charitable or educational purpose;

(c)XXXX

(d)XXXX"

3. The High Court launched upon an exercise to ascertain whether the income of the Race Club was used for a charitable purpose. And on perceiving that some of the purposes for which the income was to be employed were charitable purposes concluded that the exemption under S. 202(l)(b) was available. The test to apply is to seek an answer to the question : to what use is the property put or for what purpose is the property put. And to ascertain whether such occupation or user is for a charitable purpose. In the present case the occupation and user is to conduct horse races and to train horses for racing. Unless it can be posited that conducting of horse races is a charitable purpose, it cannot be concluded that the exemption envisioned by S. 202(l)(b) is attracted. And even if one were to take the most charitable view as regards the meaning and content of the expression charitable, conducting of horse races or training of horses for the races cannot be said to be charitable activity. The expression charitable in the context of S. 202(l)(b) means a benevolent activity calculated to benefit the poor or the deprived. Surely horse racing is not such a benevolent activity, however charitable a view one takes. It has also to be emphasized that it must be the very activity which is carried on, on the property, which must be charitable and not the application of the income of such activity.

4. What the High Court has completely failed to realize is that the occupation of the land and buildings or the user of the land and buildings must be for a charitable purpose and that it is altogether irrelevant as to the manner in which the income of the club is utilised. Section 202(l)(b) makes no reference. to the question as regards the employment of the income of the club or the purpose for which the income is so employed. Exemption is granted only in respect of buildings which are solely used, meaning thereby exclusively used, for charitable purpose. For instance, if the premises are occupied for the purposes of benevolent activities such as the running of a free dispensary or clinic or for running of a free school for the children, such user of the building would constitute a user for a charitable purpose and entitle the owner of the building to claim exemption. It is impossible to subscribe to the view that occupation or user for any purpose would constitute a user for a charitable purpose provided the income is used for a charitable purpose. Clutching at the tail of this reasoning, one would be induced to the conclusion that user of a build