2019 (11) TMI 1634 - HC - Indian Laws

Charitable Trust wins tax exemption case, Court upholds charitable activities

Govel Trust Versus The Commissioner, The Assistant Commissioner, Coimbatore, The Commissioner, Salem, The Assistant Commissioner, Salem

The Court ruled in favor of the petitioner, a Charitable Trust, in a challenge against the refusal to grant exemption from property tax. The Court ... Exemption from Property Tax - charitable trust - HELD THAT:- In view of the orders passed by this Court in respect of the hospitals run by the very same petitioner-Trust, at different places in Tamil Nadu, it is evident that the petitioner is entitled to get the very same benefit in respect of their hospitals being run at Coimbatore as well as Salem. The respondents are not justified in refusing to grant such relief to the petitioner simply by stating that the petitioner-Trust are rendering free services only to 65% and by collecting fee from the other people. The petitioner has already explained in detail as to how the nominal fee collected from the other people are being used to cover the expenses of medicines and implements as well as for building more and more hospitals. The respondents are not in a position to explain and establish before this Court as to why the hospitals run by the very same petitioner-Trust covered in these writ petitions are to be treated differently to deny the benefit - writ petitions are allowed and the impugned orders are set aside. If any property tax is collected from the petitioner by the respondent-Corporation, the same shall be refunded to the petitioner, within a period of eight weeks from the date of receipt of a copy of this order - decided in favor of petitioner. Issues:Challenge against refusal to grant exemption from property tax to a charitable Trust.Analysis:The petitioner is a Charitable Trust established in 1977 with various charitable objects, including running hospitals and providing medical care to the needy. The Trust operates hospitals across Tamil Nadu, treating patients either for free or at nominal charges. The Trust's income is reinvested for the development of more hospitals and healthcare facilities. The petitioner claimed exemption from property tax under relevant Acts due to its non-profit nature and charitable services.The respondent contended that the hospitals run by the Trust are profit-oriented and do not qualify for exemption from property tax as they collect charges from patients. The respondent argued that only hospitals providing entirely free services are eligible for tax exemption under the law.The petitioner's counsel cited previous orders granting tax exemption to the Trust's hospitals in other locations, emphasizing the charitable nature of the Trust's activities. The counsel highlighted Section 123(e) of the Coimbatore City Municipal Corporation Act, which provides exemptions for buildings and lands of charitable hospitals.After hearing both parties and reviewing the case details, the Court acknowledged the Trust's charitable objectives and previous favorable judgments in similar cases. The Court noted that the Trust's activities aligned with the criteria for tax exemption under the law. The Court found the respondent's objections unjustified, especially given the statutory provisions granting exemptions to charitable institutions. Consequently, the Court ruled in favor of the petitioner, setting aside the impugned orders and directing the refund of any collected property tax within a specified timeframe.In conclusion, the Court allowed both writ petitions, emphasizing the Trust's charitable nature and entitlement to tax exemptions under relevant legislation. The Court's decision was based on the Trust's established history of providing essential healthcare services and reinvesting its income for further charitable initiatives.