Charitable institution tax exemption turns on proper scrutiny of 90% income-use condition and supporting records.

Exemption from urban land tax under the Tamil Nadu Urban Land Tax Act depended on the applicable Government Orders, including the condition that a charitable institution spend at least 90% of its net income on its objects during the relevant block period. The petitioner-trust produced materials on its charitable activities, income-tax registration, income-tax exemption, and compliance with that utilisation condition. The rejection was found to be mechanical because it relied only on an asserted shortfall in spending without proper scrutiny of the records or fair consideration of the claim. The rejection was set aside and the matter was remitted for fresh consideration on merits after hearing the petitioner and examining the documents.

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Issues: Whether the petitioner-trust was entitled to exemption from urban land tax under Section 29(K) of the Tamil Nadu Urban Land Tax Act on the basis of its charitable objects, its income-tax registration and exemption, and the materials showing compliance with the 90% income-utilisation condition in the Government Order.

Analysis: Exemption under the State enactment had to be considered under the governing Government Orders and their conditions, including the requirement that charitable institutions spend at least 90% of their net income on their objects over the relevant block period. The petitioner had placed materials to show its charitable activities, income-tax registration, exemption under the Income-tax Act, and compliance with the prescribed condition. The rejection order proceeded only on the ground that 90% of the income had not been spent, without proper scrutiny of the records or meaningful consideration of the petitioner's case. Such a mechanical disposal was not consistent with the duty of the tax authority to examine the exemption claim fairly and on the available material.

Conclusion: The rejection of exemption was unsustainable and was set aside, and the matter was directed to be reconsidered afresh on merits after hearing the petitioner and examining the documents.

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