Charitable hospital property tax exemption upheld, while escaped assessment demand was limited by the statutory three-year period.

A charitable hospital was held entitled to property tax exemption under Section 123(e) because patient payments for treatment were not treated as rent and did not defeat the statutory benefit. Escaped property tax reassessment under Section 168 was confined to the three-year limitation period, so demands for earlier periods were time-barred. The assessment relating to the hospital was quashed, and the earlier portion of the tax demand was set aside, with liberty to seek exemption before the competent authorities.

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Issues: (i) whether the hospital run by the petitioner was entitled to exemption from property tax as a charitable hospital under Section 123(e) of the Coimbatore City Municipal Corporation Act; (ii) whether the reassessment and demand for escaped property tax were barred in respect of periods beyond three years under Section 168 of the Act.

Issue (i): whether the hospital run by the petitioner was entitled to exemption from property tax as a charitable hospital under Section 123(e) of the Coimbatore City Municipal Corporation Act.

Analysis: The exemption provision covered charitable hospitals and dispensaries. The payments received from patients for hospital services could not be equated with rent so as to deny the benefit of exemption. The hospital therefore fell within the statutory exemption applicable to charitable hospitals.

Conclusion: The issue was answered in favour of the assessee. The hospital was entitled to exemption under Section 123(e) of the Act.

Issue (ii): whether the reassessment and demand for escaped property tax were barred in respect of periods beyond three years under Section 168 of the Act.

Analysis: Section 168 empowered the Commissioner to make escaped assessments within three years from the date on which the assessee should have been assessed. The notices having been issued on 24.4.1992, recovery could be sustained only for the permissible three-year period, and demand for earlier periods was time-barred.

Conclusion: The issue was answered in favour of the assessee to the extent that the demand for the period earlier than the second half of 1989-90 was barred.

Final Conclusion: The assessment relating to the hospital was quashed, and the earlier portion of the other tax demands was set aside, while the petitioner was left at liberty to seek exemption before the competent authorities.

Ratio Decidendi: Payments received by a charitable hospital for treatment are not rent, and an escaped property-tax assessment can be sustained only within the statutory limitation period prescribed for reassessment.

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