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TMI Blog2001 (8) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... s and dispensaries. It is useful to extract the said provision which reads as hereunder: "(e) Charitable hospitals and dispensaries but not including residential quarters attached thereto". 3. The first petitioner, in this petition is a Society - Society of Jesus, Mary and Joseph (hereinafter referred to as "the Society") registered under the Karnataka Societies Registration Act. The second petitioner- St. Philomena's Hospital (hereinafter referred to as "the hospital") is established and run by the Society at premises Nos. 1 and 4, Campbel Road, Division No. 62, Bangalore. It is the case of the petitioners that the Society was initially registered on 12th March, 1934 in Guntur, under the provisions of the Societies Registration Act, 1860; and subsequently, the same was registered under the provisions of the Karnataka Societies Registration Act, 1960. Among the several objectives of the Society, which, according to the petitioners, is charitable in nature, the two of the objectives on which emphasis is made by them are, (a) promotion and advance of medical, educational, scientific, technical, social and other charitable works; and (b) to run and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said notice, the petitioners had filed their objections before the fourth respondent, inter alia, contending that since the building in question is used as a charitable hospital, the said building is exempted from payment of property tax under Section 110(e) of the Act; and in spite of the said objections, the third respondent, by means of his order dated 5th March, 1993, a copy of which has been produced as Annexure-J to the writ petition, confirmed the proposal made with regard to the annual rental value; and thereafter, a demand notice dated 15th March, 1993, a copy of which has been produced as Annexure-K to the writ petition, was issued. The materials on record shows that aggrieved by the said order, the petitioners had filed Writ Petition No. 9077 of 1993 before this Court praying to quash the notice Annexure-K dated 15th March, 1993. However, the said writ petition was disposed of by this Court on 12th October, 1998 on the ground that the petitioners were required to file an appeal before the second respondent-Standing Committee in terms of Rule 18 of the Taxation Rules of the Corporation. The second respondent-Standing Committee, by means of its order dated 18th Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because some charges are collected from the affluent patients who are admitted to Special Ward, is not a ground to deny exemption available to the petitioners in respect of the premises in question in terms of Section 110(e) of the Act. It is his submission that the entire income earned or received by the petitioners is being utilised to maintain the hospital and for the treatment given to all the patients and more particularly, the poor patients in the hospital. He also submitted that free treatment is being given to all sections of the society who are poor and unable to bear medical expenses and is not limited to any particular caste or religious faith. It is his further submission that the hospital is managing the register of patients who are given free treatment; and accounts has been maintained properly and audited every year; and it clearly shows that there has not been any surplus income. In this connection, he referred to me the objections filed by the petitioners before the second respondent pursuant to notice Annexure-G and also the averments made in paragraphs 15 and 16 of the writ petition. It is his submission that the hospital is being run on 'no profit no loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medical expenses. It is his submission that the collection of the charges should be only nominal and only from affluent patients. It is his submission that the second petitioner-hospital is making selection of patients even in the matter of free treatment given to some of the patients. He submitted that if a hospital/dispensary makes a choice of patients even for free treatment on the ground of religion and caste or any other extraneous reasons, such a hospital will not be entitled for the benefit of exemption from payment of property tax under Section 110(e) of the Act. Further, relying upon the decision of the Supreme Court in the case of Mediwell Hospital and Health Care Private Limited v. Union of India and Ors., he submitted that a hospital must, in advance, notify every month as to who are entitled for free treatment both as out-patients and as in-patients, and the same having not been done by the petitioners all these years, the petitioners cannot claim any exemption from payment of property tax. It is his submission that the materials on record would clearly show that free treatment stated to have been given by the petitioners to the so-called poor patients is limited only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he advance of any other object of general public utility". From the meaning given to 'charitable', 'charity' and 'charitable purpose' in various well-known dictionaries and the Income Tax Act, what is clear is that the benevolent purpose or the benefit that is extended, must be to relieve the poor, sick or the needy. Therefore, it appears to my mind that 'charitable' means anything done gratuitously, any assistance given, help rendered to relieve the hardship of the poor, sick, needy and the deserving; and it is only such an act that can be considered as a charitable act. Now, in the context of understanding what is meant by charitable hospital and dispensary, to my mind it appears, that a charitable hospital and dispensary means a hospital/dispensary which is established and being run and where treatment is given and diagnosis of ailments of patients are made and where an effort is made to treat ailments of patients who are poor, needy and who are not in a position to meet the expenses required for their treatment on account of financial difficulties and constraints. The treatment so given, the diagnosis so made, the facilities so extended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d if they are charged for the services rendered with a view to organise funds required to such a hospital, such a hospital will not lose the characteristic of a charitable hospital/dispensary. I am unable to accede to the contention of Sri Haranahalli that it is only such of those hospitals and dispensaries which totally give free medical aid and which do not collect any charges from patients either in-patient or out-patient, which can be treated as charitable hospitals and dispensaries and are entitled for exemption under Section 110(e) of the Act. It is necessary to point out that in a society like ours, where the country is still a developing country and where large sections of people are poor and not free from hunger and disease, the State alone, out of its revenue, cannot provide free medical aid to all those poor persons who are in need of it. Therefore, presumably, keeping that in view and with a view to encourage charitable attitude among the philanthropists, a provision like Section 110(e) of the Act has been made providing for exemption from payment of property tax in respect of a building and land used as charitable hospital/dispensary. There cannot be any doubt that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 202(1)(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 Section 202(1)(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 Section 202(1)(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". (emphasis supplied) In the case of Southwell v. Governors of Royal Holloway College, Egham, Grantham, J., while considering the question that the buildings belonging to and used by the Royal Holloway Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " as used in Schedule 'B'. But I think there can be no doubt that the language of the Schedule contemplates institutions whose primary object is the maintenance or education of those who cannot in the one case afford to maintain themselves, or in the other to pay for their own education institutions, in other words, eleemosynary in character. A "hospital" certainly is primarily intended to receive patients who do not pay for their treatment. "A house provided for the reception or relief of poor persons" is a poorhouse, and nothing else. And the words "charity school" must, in my opinion, be interpreted, having regard to the preceding and succeeding words, as "school primarily intended for the supply of gratuitous education". If that condition is fulfilled, then the exemption will be available, even though the pupils who are educated contribute towards the expense of education; just as a "hospital" remains a hospital entitled to exemption although in a particular year it may receive fees to a large amount from paying patients. But, in the case of Holloway College there does not appear to have even been an intention to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing newspapers and Notice Board of the hospital and office of the Corporation and other public places. In this connection, it is useful to refer to the decision of the Supreme Court in the case of Mediwell Hospital and Health Care Private Limited, supra, relied upon by Sri Haranahalli. In the said case, while considering the question whether a Diagnostic Center/Charitable Hospital is exempted from payment of customs duty, the Supreme Court, at paragraph 8 of the judgment, referred to the conditions imposed in the notification issued by the Government of India. In my view, similar guidelines also could be adopted by hospitals which seek exemption under Section 110(e) of the Act. The relevant portion of the observation made by the Supreme Court, reads as follows: ".. . . The notification in question also provided certain conditions to be satisfied by the hospitals in question which intend to import the equipment before claiming the exemption under the notification. The said conditions are enumerated in the table to the notification which is extracted hereinbelow: '(1) All such hospitals as may be certified by the said Ministry of Health and Family Welfare to be run or su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole subject that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Es. 500A p.m. would be able to receive free treatment in the institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realisation of the customs duty from them. 14. It is needless to reiterate that all the persons including the appellant who had the benefit of importing the hospital equipment with exemption of customs duty under the notification should notify in the local newspaper every month the total number or patients they have treated and the 40% of them are the indigent persons below stipulated income of Rs. 500/- per month with full particulars and address thereof which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... City of Bangalore Municipal Corporation Act, 1949, exemptions were granted in respect of premises Nos. 1 and 4, Campbel Road, where the hospital and dispensary of the second petitioner is located; and some grant was also given by the Corporation. In this background, I am of the view that when Section 110(e) of the Act provides that a building and land of a charitable hospital or dispensary are exempted from payment of tax, the Assessing Authority has a duty to consider whether the second petitioner is a charitable hospital and dispensary which is entitled for exemption under Section 110(e) of the Act. Merely because applications are not filed by the petitioners in advance seeking exemption, in my view, in the facts and circumstances of this case, is not a ground to reject the claim of the petitioners for exemption, if on merits, the petitioners are so entitled for such an exemption. It may be that in the backdrop of the facts, that the exemption was earlier granted under the City of Bangalore Municipal Corporation Act, 1949, the petitioner did not claim exemption in advance. However, when the objections were filed pursuant to notice Annexure-G, the Appellate Authority, while passin ..... 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