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TMI Blog2001 (10) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... eller Foundation of U.S.A, The United States Agency for International Development, The Indian Council of Medical Research, The Family Planning Foundation, The Council of Scientific and Industrial Research (CSIR) and UNESCO, etc. 3. During the years 1984-85, 1985-86 and 1986-87, the appellant received contributions as per the following details:- 1. Government of India, Department of Science and Technology. 2,58,60,000 2,84,60,000 3,15,17,000 2. I.D.R.C. Canada. 4,64,385 1,74,514 7,65,000 3. I.C.M.R. 20,30,440 34,04,880 28,36,660 4. Family Planning Foundation. ---- 1,00,000 ----- 5. U.N.D.P. ---- US$ 10,00,000 (For 3 years) ----- 6. Rockefeller Foundation. ---- ----- US$ 35,000 7. USAID ---- US$ 10,00,000 US$ 25,000 8. C.S.I.R. 11,850 39,230 61,920 9. UNESCO ----- 35,780 ----- 4. The appellant has been provided with fifteen acres of land, free of cost and without any consideration on long term lease in Jawharlal Nehru University Campus to enable the appellant to construct necessary buildings and infrastructure to carry out its objects. The respondent, MCD by its notice dated 5th September, 1985 called upon the appellant to furnish a true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant being an autonomous body, having been registered under the Societies Registration Act, 21 of 1860, its property had to be treated like other properties within the limits of MCD which are subject to property tax in accordance with the provisions of the DMC Act. Having said that, it asked the appellant to comply with the notice dated 5th September, 1985. The appellant vide its letter dated 23rd December, 1985 again expressed its inability to give details sought by the respondent vide notice dated 5th September, 1985 on the ground that the construction work was still in progress. Besides, it was stated that being engaged in vital research project of national importance it would be exempted from payment of property tax. 5. There was further exchange of correspondence between the aforesaid parties. Special reference, however, needs to be made to the letter of the MCD dated 5th February, 1986 and the response of the appellant thereto dated 17th March, 1986. In its letter of 5th February, 1986, the respondent again drew the attention of the appellant to the notice dated 5th September, 1985 and its grievance that the information sought by it had been withheld by the appellant despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. By yet another letter dated 29th October, 1986, the Additional Tax Recovery Collector MCD asked the respondent to pay the aforesaid demand of ₹ 15,08,936.10 to avert the emergence of an ugly situation. Again by a letter dated November, 10, 1986 the respondent asked the appellant to discharge its liability. Stirred by the threatened action, the appellant in order to buttress its claim for exemption from levy and payment of property tax furnished the requisite information/material to the respondent by means of its letter dated December 11, 1986. This letter reads thus:- NATIONAL INSTITUTE OF IMMUNOLOGY SHAHEED JIT SINGH MAR, NEW DELHI B. Bose Manager (Administration) D.O. No. 19/1/84-NIL Dated 11.12.1986 Dear Shri Swami, Kindly refer to your D.O. letter No. TAX/HQ/CRP/86/1465 dated 26.11.86 regarding payment of property taxes in respect of buildings of the NIL at Shahid Jeet Singh Marg, New Delhi. The information required by you in para 2 thereof is sent herewith. 1. The copies of the balance sheet and audited accounts for the year 1984-85 and 1985-86 of the Institution are enclosed. 2. The Donors (Grantee) are as under:- (a) Ministry of Science & Techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice dated September 7, 1996 and the accompanying bills by virtue of which the demand of property tax was raised in respect of residential and non-residential buildings for the period ending March 1997. Both the writ petitions were dismissed by separate orders of the learned single judges of this Court. While C.W.P. No. 791/97 was dismissed on April 27, 1989, C.W.P. No. 3820/96 was dismissed on October 7, 1996. In C.W.P. No. 3820/96 the learned Single Judge took the view that the appellant not having preferred any appeal against the bills, the writ petition was not competent. In C.W.P. No. 791/97 the learned single Jude while dismissing the petition held that the appellant does not qualify for exemption under Section 115(4) of the DMC Act for the following reasons:- (1) The appellant is not a voluntary organisation as its governing body consists of ex-officio officers of the Government of India. (2) the appellant has been floated by the Government of India and its grant-in-aid is regulated by statutory rules and is claimed as a matter of right. This being so the grant-in-aid received by the appellant from the Government of India cannot be said to be a voluntary contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus to its members. Explanation. - "Charitable purpose" includes relief of the poor, education and medical relief but does not include a purpose which relates exclusively to religious teaching; (b) lands and buildings vested in the Corporation, in respect of which the said tax, if levied, would under the provisions of this Act be leviable primarily on the Corporation; (c) agricultural lands and buildings (other than dwelling houses). xx xx xx " 10. A bare reading of the aforesaid provision including explanation to (a) above shows that property tax will not be levied on a premises provided the following requirements are satisfied:- (1) Lands and buildings or portions thereof are exclusively occupied and used for public worship or by a society or body for a charitable purpose; (2) The society or body which is constituted for charitable purpose is supported wholly or in part by voluntary contributions; (3) The society or body applies its profits or other income in promoting its objects; (4) The society does not pay any dividend or bonus to its members. 11. We are supported in our view by the following decisions:- 1. New Delhi Holy Family Hospital So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute; (m) To establish affiliation with recognised universities and institutions of higher learning for the purpose of enabling research scholars to register for post-graduate degrees; (n) To receive grants-in-aid in cash or in other forms from the Government of India, State Government, Charitable Institutions/Trusts, individuals and industry within the country; (o) To receive, with the prior approval of the Central Government, monetary assistance from foreign sources including international organisations for training programmes, scientific research and other activities; (p) To acquire by gift, purchase, exchange, lease, hire or otherwise howsoever any property moveable and/or immoveable and to construct improve, alter, demolish or repair buildings and structures as may be necessary or convenient for carrying on the activities of the Institute; (q) For the purpose of the Institute, to draw and accept and make and endorse, discount and negotiate Government of India and other Promissory Notes, Bills of Exchange, Cheques or other negotiable instruments; (r) For investing the funds of or money entrusted to the Institute, to open such securities or in such manner as may fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the aforesaid para, the respondent rightly did not dispute the fact that the appellant was not paying any profits, dividends or bonus to any member of the society or any person claiming through them. Even the learned Single Judge in CWP 791/87 has found that the appellant is not transferring any profits, dividends or bonus to any of the members of the society. It has also not been urged and claimed by the respondent before us that the profits, if any, to the appellant do not feed the charity and are being diverted to non-charitable purposes. 15. The real controversy between the parties appears to be on the question whether or not funds received by he appellants from the Government of India can be considered to be voluntary contributions of the Government of India. In order to resolve the controversy we will first scan the relevant paras of the memorandum of association of the appellant dealing with the matter of acquisition of funds. Paras 49 and 50 of the memorandum of association need to be noticed. These reads as under:- "49. The funds of the Society will consist of the following: i) Lumpsum and recurring grant made by the Government of India. ii) Fees an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology, Depart of Science and Technology, has issued guide-lines for implementing research projects. According to para 13 of the guide-lines, the Department of Science and Technology reserves the right to terminate the grant at any stage if it is convinced that the grant has not been properly utilised or appropriate progress is not being made. This shows that the grant cannot be claimed as a matter of right by any research institute funded by the Government. The grant can be stopped at any stage. It is not compulsive in nature. The Supreme Court in Commissioner of Income-tax, Bombay City-IV v. Gem & Jewellery Export Promotion Council, (1983) 143 ITR 579; while examining the nature of grants-in-aid made by the Government to provide certain institutions with sufficient funds to carry on their charitable activities, held that the institutions to which the grants-in-aid are made have no right to ask for the grants and it is solely within the discretion of the Government to provide grants to institutions of charitable nature. Thus, it appears to us that the learned Single Judge was not right in coming to the conclusion that the grant is being claimed by the appellant as a matter of righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unicated to the appellant by its letter dated February 18, 1987. In case the respondent had any doubt as to the utilisation of the donations, it could have sought further information from the appellant, and in case the appellant was unable to show that the funds were being utilised for charitable purposes, then a grouse could be made, but without asking the appellant to furnish evidence to show that the funds are being used for charitable purposes, no adverse conclusion could be drawn by the respondent. It also appears from the balance sheet filed by the appellant that 95% of the funds are being received from the Government for medical research. Therefore, when the bulk of the funds are being received and used by the appellant for charitable purposes, it cannot be said that just because a minuscule proportion of the funds to the extent of 5% only are being received from the donors for specific research, it would alter the purpose for which the society is functioning. At least there is no dispute that bulk of funds are being provided by the Government of India to support the appellant for fulfillment of its objectives for which it has been established. Even if a society which is occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society or body is supported wholly or in part by voluntary contributions and applies its profits and other income in promoting its objects and does not pay any dividend or bonus to its members. (2) Whether the society satisfies the test? 19. The objects of the appellant are entirely charitable. It carries on work of medical research and education in allied field. It is sustained, maintained and nurtured by voluntary grants-in-aid of the Government and donations. The Institute is not distributing any profits or dividends or bonus to its members. 20. Thus, we are of the view that the appellant satisfies the requirements of Section 115(4) of the DMC Act for being exempted from payment of property tax in respect of the premises which are being exclusively used and occupied for charitable purpose of research and education in the allied field. 21. It was urged by the learned counsel for the respondent that since the appellant has not approached the appellate authority against the action of the assessing authority and had straightway invoked the writ jurisdiction of this court, we should in our discretion dismiss the instant appeal. We have considered the submission of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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