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1983 Supreme(Del) 145
High Court Of Delhi
NEW DELHI HOLY FAMILY HOSPITAL - Appellant
Versus
MUNICIPAL CORPORATION OF DELHI - Respondent
Decided On : 05/03/1983
Headnote:Delhi Municipal Corporation Act 1957 - Section 115 — Levy of tax on lands and buildings owned by a society established for charitable purposes.
Held:
If one portion of a building of the society earns money and the same is applied for charitable purposes only and not used for the benefit of the members of the society-that portion of such a building does also qualify for exemption from the general tax within the meaning of Section 115(4) and there would be no assessment in such cases under Section 115(5).
When there is some income from the use of a portion of a building owned by a charitable institution or society it has to be seen as to what is the purpose which the money so earned is devoted.
Certainly. Based on the provided legal document, here are the key points:
- The Society, Holy Family Hospital, is a registered charitable organization with the main object of providing medical relief and caring for the sick and disabled without distinction of caste, religion, or race (!) (!) .
- The Society is non-profit and applies all income solely towards its charitable objectives, with no profits distributed to members (!) .
- The Society operates two departments: the General O.P.D., which charges minimal fees, and the Private O.P.D., which charges higher fees for specialized, private consultations. The income from the Private O.P.D. is used to subsidize the costs of the General Ward and General O.P.D. (!) (!) (!) .
- The Society's income from the Private O.P.D. is applied for charitable purposes, specifically medical relief, and no part of it is paid as dividends or bonuses to members (!) .
- The Society claims exemption from municipal tax on the grounds that its lands and buildings are exclusively used for charitable purposes, as permitted under the relevant municipal taxation law (!) (!) .
- The law stipulates that lands and buildings exclusively occupied and used for charitable purposes are exempt from general municipal tax, provided the organization is supported wholly or partly by voluntary contributions, and its income is applied solely for charitable objectives without dividends to members (!) (!) .
- The key distinction between charitable use and business is the purpose for which income is derived and applied. If income from a portion of property is used for charitable purposes, that portion qualifies for exemption; if used for private profit, it does not (!) (!) .
- The Society’s activities, including charging fees for services, are deemed to be for the purpose of furthering its charitable objectives, particularly medical relief, and not for profit-making or private gain (!) (!) .
- The use of a portion of the property for trade or business, where profits are not applied to charitable purposes, would render that portion liable to taxation. However, in this case, the Society’s primary purpose is altruistic, and income from the Private O.P.D. is used for charitable activities (!) (!) .
- The Society's activities and use of the premises support the conclusion that it qualifies for exemption under the relevant law, as it is primarily motivated by charitable, benevolent, and public-spirited objectives
( 1 ) THIS petition raises a question of general importance for all charitable organisations. The question is whether lands and buildings exclusively occupied and used by a society or a body for charitable purpose can be subjected to tax or they can claim relief from municipal taxation.
( 2 ) THESE are the facts. The New Delhi Holy Family Hospital Society is a charitable Society duly registered under the Societies Registration Act, 1860. Its objects are "to perform works of charity by caring for the sick and disabled without distinction of caste, religion or race. " It can establish hospital for the care of the sick in pursuance of these objects. The Society runs a hospital known as Holy Family Hospital at Okhia. This hospital has indoor as well as outdoor patients departments. It also imparts instructions to nurses, medical technicians, pharmacists, etc. For this purpose it has erected a huge complex of buildings.
( 3 ) THE important point to notice about the Society is that it is a nonprofit making society. It is provided in the Memorandum of Association of the Society that "all the income of the Society from properties vesting in it or from wheresoever derived shall be expended solely on the objects of the Society and for no other purpose, and no portion thereof shall be distributed among its members by way of profits, dividends, bonuses etc. "
( 4 ) THERE are two departments of the hospital with which we are immediatelv concerned in this case. One is called the General O. P. D. The other is called the Private O. P. D. In the General O. P. D. any one can go for medical help and treatment. He has to pay Rs. 3. 00 for the first time and Rs. 1. 00 for every subsequent visit that he make to the General O. P. D. In the Private O. P. D. things are different. The patient has to pay Rs. 40. 00 for every visit. In the Private O. P. D. he has not to jostle with the crowd of hundreds of patients. He can have a prior appointment with the doctor and go at the appointed time and consult him. This is a special facility provided to those who can afford to pay. In General O. P. D. no patient is denied the facility of medical care, it is true. But there is a long queue where he has to wait, may be for hours together.
( 5 ) THE arrangement made by the Society with regard to the doctors is this. The same doctors who examine the patients in General O. P. D on Mondays, Wednesdays and Fridays available for consultation to the patients in the Private O. P. D. on Tuesdays, Thursdays and Saturdays If a patient wants to consult a particular doctor and can a:tord to pay Rs. 40. 00 he can consult him in the Private O. P. D. on one of these days. He neednot take the trouble to going to the General O. P. D. and wait there for his turn
( 6 ) FOR the purpose of opening the Private O. P. D. the Society has set apart eight rooms. The income received from this Private O. P. D. patients who -have the capacity to pay Rs. 40. 00 per visit is used to subsidise and meet the costs of patients in the General Wards and the General O. P. D. of the hospital. The Society on affidavit has said that the income that is derived from there eight rooms of Private O. P. D. is applied for charitable purpose that it seeks to promote. That charitable purpose is medical relief. No part of the profits or income is paid as a dividend or bonus to its members.
( 7 ) THE Deputy Assessor and Collector of the Municipal Corporation of Delni, the respondent in this case, assessed these eight rooms and levied general tax under Section 115 (5} of the Delhi Municipal Corporation Act 1957 (the Act ). He arrived at Rs. 31 10. 00 as the ratable value of these 8 rooms which are the subject matter of this writ petition. The Society has brought this writ petition to challenge his decision on the ground that general tax cannot be levied in respect of these premises are being exclusively occupied and used by the Society for a charitable purpose. It is the case of the Society that they
