TaxTMI 
TaxTMI 
2001 (10) TMI 1172
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....opment Programme (UNDP), The Rockefeller Foundation of U.S.A, The United States Agency for International Development, The Indian Council of Medical Research, The Family Planning Foundation, The Council of Scientific and Industrial Research (CSIR) and UNESCO, etc. 3. During the years 1984-85, 1985-86 and 1986-87, the appellant received contributions as per the following details:- 1. Government of India, Department of Science and Technology. 2,58,60,000 2,84,60,000 3,15,17,000 2. I.D.R.C. Canada. 4,64,385 1,74,514 7,65,000 3. I.C.M.R. 20,30,440 34,04,880 28,36,660 4. Family Planning Foundation. ---- 1,00,000 ----- 5. U.N.D.P. ---- US$ 10,00,000 (For 3 years) ----- 6. Rockefeller Foundation. ---- ----- US$ 35,000 7. USAID ---- US$ 10,00,000 US$ 25,000 8. C.S.I.R. 11,850 39,230 61,920 9. UNESCO ----- 35,780 ----- 4. The appellant has been provided with fifteen acres of land, free of cost and without any consideration on long term lease in Jawharlal Nehru University Campus to enable the appellant to construct necessary buildings and infrastructure ....
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....o Article 285(1) of the Constitution, emphasised that the appellant was liable to pay property tax. It was pointed out that appellant being an autonomous body, having been registered under the Societies Registration Act, 21 of 1860, its property had to be treated like other properties within the limits of MCD which are subject to property tax in accordance with the provisions of the DMC Act. Having said that, it asked the appellant to comply with the notice dated 5th September, 1985. The appellant vide its letter dated 23rd December, 1985 again expressed its inability to give details sought by the respondent vide notice dated 5th September, 1985 on the ground that the construction work was still in progress. Besides, it was stated that being engaged in vital research project of national importance it would be exempted from payment of property tax. 5. There was further exchange of correspondence between the aforesaid parties. Special reference, however, needs to be made to the letter of the MCD dated 5th February, 1986 and the response of the appellant thereto dated 17th March, 1986. In its letter of 5th February, 1986, the respondent again drew the attention of the appellant to ....
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.... by the respondent. The notice also specified the options available to the respondent to recover the dues from the appellant. By yet another letter dated 29th October, 1986, the Additional Tax Recovery Collector MCD asked the respondent to pay the aforesaid demand of Rs. 15,08,936.10 to avert the emergence of an ugly situation. Again by a letter dated November, 10, 1986 the respondent asked the appellant to discharge its liability. Stirred by the threatened action, the appellant in order to buttress its claim for exemption from levy and payment of property tax furnished the requisite information/material to the respondent by means of its letter dated December 11, 1986. This letter reads thus:- NATIONAL INSTITUTE OF IMMUNOLOGY SHAHEED JIT SINGH MAR, NEW DELHI B. Bose Manager (Administration) D.O. No. 19/1/84-NIL Dated 11.12.1986 Dear Shri Swami, Kindly refer to your D.O. letter No. TAX/HQ/CRP/86/1465 dated 26.11.86 regarding payment of property taxes in respect of buildings of the NIL at Shahid Jeet Singh Marg, New Delhi. The information required by you in para 2 thereof is sent herewith. 1. The copies of the ba....
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.... in proposing to amend the assessment list for the year 1988-89 by amending the rateable value of the properties for the purpose of achieving the objectives of the society. The appellant filed a separate writ petition being Civil Writ Petition NO. 3820/96 challenging the notice dated September 7, 1996 and the accompanying bills by virtue of which the demand of property tax was raised in respect of residential and non-residential buildings for the period ending March 1997. Both the writ petitions were dismissed by separate orders of the learned single judges of this Court. While C.W.P. No. 791/97 was dismissed on April 27, 1989, C.W.P. No. 3820/96 was dismissed on October 7, 1996. In C.W.P. No. 3820/96 the learned Single Judge took the view that the appellant not having preferred any appeal against the bills, the writ petition was not competent. In C.W.P. No. 791/97 the learned single Jude while dismissing the petition held that the appellant does not qualify for exemption under Section 115(4) of the DMC Act for the following reasons:- (1) The appellant is not a voluntary organisation as its governing body consists of ex-officio officers of the Government of India. ....
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....or portions of lands and buildings exclusively occupied and used for public worship or by a society or body for a charitable purpose; Provided that such society or body is supported wholly or in part by voluntary contributions, applies its profits, if any, or other income in promoting its object and does not pay any dividend or bonus to its members. Explanation. - "Charitable purpose" includes relief of the poor, education and medical relief but does not include a purpose which relates exclusively to religious teaching; (b) lands and buildings vested in the Corporation, in respect of which the said tax, if levied, would under the provisions of this Act be leviable primarily on the Corporation; (c) agricultural lands and buildings (other than dwelling houses). xx xx xx " 10. A bare reading of the aforesaid provision including explanation to (a) above shows that property tax will not be levied on a premises provided the following requirements are satisfied:- (1) Lands and buildings or portions thereof are exclusively occupied and used for public worship or by a society or body for a charitable purpose; (2) The society ....
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....ogical research in immunology, vaccine development and related areas; (j) To collaborate with foreign research institutions and laboratories and other international organisations in fields relevant to the objectives of the Institute; (k) To public and disseminate information relating to results of research; (l) To institute professorships, other faculty positions, fellowships, research cadre positions and scholarships etc., for Realizing the objectives of the Institute; (m) To establish affiliation with recognised universities and institutions of higher learning for the purpose of enabling research scholars to register for post-graduate degrees; (n) To receive grants-in-aid in cash or in other forms from the Government of India, State Government, Charitable Institutions/Trusts, individuals and industry within the country; (o) To receive, with the prior approval of the Central Government, monetary assistance from foreign sources including international organisations for training programmes, scientific research and other activities; (p) To acquire by gift, purchase, exchange, lease, hire or otherwise howsoever any propert....
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....India may from time to time impose. No portion of the income and property of the Society shall be paid or transferred, directly or indirectly by way of dividends, bonus, or otherwise howsoever by way of profit, to the persons who at any time are to have been members of the Society or to any of them or to any persons claiming through them or any of them provided that nothing herein contained shall prevent the payment in good faith of remuneration of any member thereof or other person in return for any service rendered to the Society." 14. In view of the aforesaid para, the respondent rightly did not dispute the fact that the appellant was not paying any profits, dividends or bonus to any member of the society or any person claiming through them. Even the learned Single Judge in CWP 791/87 has found that the appellant is not transferring any profits, dividends or bonus to any of the members of the society. It has also not been urged and claimed by the respondent before us that the profits, if any, to the appellant do not feed the charity and are being diverted to non-charitable purposes. 15. The real controversy between the parties appears to be on the question whether or not f....
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....hat the grants-in-aid which are paid to the appellant by the Government of India are voluntary in nature and they can be stopped at any point of time by the latter. It is not the case of the respondent that the appellant strikes fear in the mind of the donor for securing the grants. It is also not the case of the respondent that the appellant coerces or pressurises the Government to pay the grants to it. The appellant is not in a position to command the Government to pay the grants-in-aid to it. It may be noted that the Government of India, Ministry of Science and Technology, Depart of Science and Technology, has issued guide-lines for implementing research projects. According to para 13 of the guide-lines, the Department of Science and Technology reserves the right to terminate the grant at any stage if it is convinced that the grant has not been properly utilised or appropriate progress is not being made. This shows that the grant cannot be claimed as a matter of right by any research institute funded by the Government. The grant can be stopped at any stage. It is not compulsive in nature. The Supreme Court in Commissioner of Income-tax, Bombay City-IV v. Gem & Jewellery Export P....
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....d in the campus of the Jawaharlal Nehru University for any commercial purpose and the same are meant for this scientists working with the appellant and the rents are being recovered from their salaries as per Government rules and credited to the Government grants. It is not disputed that after the receipt of this letter the respondent reviewed the matter though ultimately it maintained its earlier view. It is also not disputed that after the appellant had sent the information, no further information was sought from it by the respondent before taking a view which was communicated to the appellant by its letter dated February 18, 1987. In case the respondent had any doubt as to the utilisation of the donations, it could have sought further information from the appellant, and in case the appellant was unable to show that the funds were being utilised for charitable purposes, then a grouse could be made, but without asking the appellant to furnish evidence to show that the funds are being used for charitable purposes, no adverse conclusion could be drawn by the respondent. It also appears from the balance sheet filed by the appellant that 95% of the funds are being received from the Go....
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....sed for charitable purposes within the meaning of Section 115(4) of the DMC Act. 18. In the light of the aforesaid discussion, we may now sum up the position as regards the test or the requirements to be satisfied for claiming exemption from levy of property tax under Section 115(4) of the Act and the question whether the society satisfies the requirements of the test. (1) The Test: Lands and Buildings which are exclusively occupied and utilised for charitable purposes by a society or body qualify for exemption from levy of the 'general tax' provided the society or body is supported wholly or in part by voluntary contributions and applies its profits and other income in promoting its objects and does not pay any dividend or bonus to its members. (2) Whether the society satisfies the test? 19. The objects of the appellant are entirely charitable. It carries on work of medical research and education in allied field. It is sustained, maintained and nurtured by voluntary grants-in-aid of the Government and donations. The Institute is not distributing any profits or dividends or bonus to its members. 20. Thus, we are of the view that the appellant sati....