Property-tax exemption depends on actual educational use and charitable character, not automatic recognition under another tax law.

Property-tax exemption for a hospital used as part of a medical college must be decided on the building's actual use, including whether it functions as a teaching hospital and how income is applied. A charitable exemption claim likewise requires verification of financial deployment, receipts and whether funds are ploughed back into charitable activity; recognition under the Income-tax Act does not by itself establish municipal exemption. The rejection of exemption was set aside and the matter was remitted for a fresh speaking decision after proper inquiry into use and charitable character.

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Issues: (i) Whether the petitioner's hospital and associated buildings fall within the exemption for buildings used for educational purposes under Section 124(c) of the Puducherry Municipality Act, 1973; (ii) Whether the petitioner is entitled to exemption as a charitable institution under Section 124(e) of the Puducherry Municipality Act, 1973.

Issue (i): Whether the petitioner's hospital and associated buildings fall within the exemption for buildings used for educational purposes under Section 124(c) of the Puducherry Municipality Act, 1973.

Analysis: The exemption provision is to be read on its plain language, and buildings attached to an educational institution may qualify if they are in fact used for educational purposes. In the case of a medical college, the regulatory framework shows that a teaching hospital forms part of the composite scheme of medical education. Whether the hospital is truly used for educational purposes depends on the actual activities carried on, including whether it functions as a teaching hospital, whether it is run on commercial lines, and how the income is applied. The impugned order did not undertake that factual inquiry.

Conclusion: The issue was not finally determined against the petitioner, and the claim under Section 124(c) required fresh consideration.

Issue (ii): Whether the petitioner is entitled to exemption as a charitable institution under Section 124(e) of the Puducherry Municipality Act, 1973.

Analysis: A claim to charitable status requires detailed verification of the institution's financials, the deployment of funds, and whether receipts and income are ploughed back into charitable activity. Recognition under the Income-tax Act, 1961 does not by itself establish entitlement to municipal property tax exemption. The authority had not examined these aspects in the impugned order.

Conclusion: The issue was not finally determined against the petitioner, and the claim under Section 124(e) required fresh consideration.

Final Conclusion: The rejection of exemption was set aside and the matter was sent back for a fresh speaking decision after proper inquiry into the nature of use and charitable character of the institution.

Ratio Decidendi: A claim for property-tax exemption must be decided on the actual use of the buildings and the institution's real character, and a prior tax exemption under another enactment does not automatically establish entitlement to municipal exemption.

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