Charitable hospital property tax exemption requires holistic scrutiny of purpose, functioning and income use, not a rigid free-treatment percentage test.

Property tax exemption under Section 101(e) of the Chennai City Municipal Corporation Act, 1919 depends on whether the building is used as a charitable hospital or dispensary, assessed on the institution's objects, functioning, income application and overall charitable character. A rigid percentage-based test is not prescribed, so limited free treatment by itself cannot determine entitlement. The hospital here had been allotted land subject to charitable conditions, and the record showed no Government action for breach of those conditions. The Corporation's rejection, based mainly on the 15% free-treatment figure without a holistic enquiry, was unsustainable, and the matter had to be reconsidered afresh by the competent authority.

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Issues: Whether the petitioner hospital was entitled to exemption from property tax under Section 101(e) of the Chennai City Municipal Corporation Act, 1919, and whether the impugned rejection of exemption was sustainable.

Analysis: The exemption provision covers buildings and lands used as charitable hospitals and dispensaries. The hospital had been established pursuant to Government allotment subject to charitable conditions, and the record did not show any action by the Government for breach of those conditions. The Corporation's rejection rested mainly on the fact that only 15% of patients received free treatment, without a holistic examination of the hospital's objects, charitable activities, manner of functioning, or the relevance of the materials produced. The statutory scheme did not prescribe a rigid percentage test, and the claim for exemption required a broader assessment of the nature and purpose of the institution and the application of its income.

Conclusion: The impugned order could not be sustained. The matter was required to be reconsidered afresh by the competent authority after proper enquiry and application of mind.

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