Anugraha Sadan Charitable Society, Koratty, Thrissur District v. The Tahsildar, Mukundapuram Taluk, Irinjalakuda; Government of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** ## **TUESDAY, THE 3RD DAY OF APRIL 2012/14TH CHAITHRA 1934** ## **WP(C).No. 37744 of 2007 (R)** **-------------------------------------** ## **PETITIONER(S):** **------------------------** **ANUGRAHA SADAN CHARITABLE SOCIETY KORATTY, TRICHUR DISTRICT REP.BY ITS PRESENT SISTER GENERAL SR.SILVY.** ## **BY ADVS.SRI.P.BABU KUMAR SRI.P.YADHU KUMAR** ## **RESPONDENT(S):** **-------------------------** ## **1. THE TAHSILDAR** ## **MUKUNDAPURAM TALUK, IRINJALAKUDA.** ## **2. GOVERNMENT OF KERALA,** **REP.BY DEPUTY SECRETARY TO THE GOVERNMENT REVENUE (SPECIAL CELL) DEPARTMENT, SECRETARIAT THIRUVANANTHAPURAM.** ## **BY GOVERNMENT PLEADER SMT.P.A.RAZIYA** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-04-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **tss** ## **W.P.(C) NO.37744/2007** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:-** **P1:- COPY OF THE MEMORANDUM OF ASSOCIATION OF THE CHARITABLE SOCIETY. P2:- COPY OF THE ASSESSMENT ORDER DTD. 4.12.2001 BY THE SIT RESPONDENT. P3:- COPY OF THE LIST OF INMATES BEFRE THE AUTHORITY. P4:- COPY OF THE ORDER DTD. 18.8.2004 BY THE GOVERNMENT.** **P5:- COPY OF THE ARGEMENT NOTES DTD. 18.7.2007 FILED BY THE PETITIONER.** **P6:- COPY OF THE CERTIFICATE DTD. 21.11.2003 BY THE INCOME TAX DEPARTMENT. P7:- COPY OF THE ORDER DTD. 4.10.2007 BY THE GOVERNMENT.** ## **RESPONDENT'S EXHIBITS:-** ## **NIL** **//TRUE COPY//** **P.A. TO JUDGE** **tss** ## **ANTONY DOMINIC,J** ## **---------------------------------------** ## **W.P.(C)No.37744 of 2007** ## **------------------------------------Dated this the 3[rd] day of April, 2012** ## **JUDGMENT** Petitioner is a charitable society. They have approached this Court seeking to quash Ext.P7 Government Order whereby their claim for exemption from building tax has been rejected. 2. Briefly stated the facts of the case are that the petitioner constructed a building for an old age home where admission is granted to inmates including destitutes. Ext.P3 shows that some of the inmates have made deposits ranging from Rs.1,50,000/- to Rs.6,000/- and that some of the inmates are making monthly payment of Rs.2,000/- each. There are also inmates who have not made any such deposit. 3. When proceedings for assessment under the Kerala Building Tax Act were initiated against the aforesaid building, the petitioner claimed the benefit of exemption as provided in 3(1)(b) of the Kerala Building Tax Act. However, by Ext.P2 order, the Tahsildar rejected the claim. This order was challenged before this Court in O.P.No.3890/2002. The original petition was disposed of directing that the claim raised by the petitioner shall **W.P.(C)No.37744 of 2007 2** be referred to the Government for decision as required under Section 3(2) of the Act. 4. Accordingly, the matter was referred and the Government passed Ext.P4 order rejecting the claim of the petitioner. Ext.P4 order was again challenged before this Court in Writ Petition No.30669/2004. That writ petition was disposed of by judgment dated 01.01.2007 directing that a fresh order be passed after hearing the petitioner. Accordingly, the Government called for a report from the Tahsildar which indicated that there are 25 inmates in the old age home of the petitioner, who have remitted Rs.15,000/- to one lakh and that the building has not used principally for charitable purposes. 5. Accordingly, the Government considered the matter and held as follows: ## “ _6_ . _Government have examined the matter in detail._ _A personal hearing conducted on 20.07.2007. The representative of the assessee and the Deputy Tahsildar attended the hearing. The assessee presented the argument notes with supporting documents. It is vehemently pleaded that the institution is functioning as a charitable one and the buildings are solely used for charitable purposes. It is admitted that they are receiving_ **W.P.(C)No.37744 of 2007 3** _contributions by way of deposits for meeting the expenses of the inmates and prayed to exempt the institution from payment of building tax considering it as coming under “Charitable”._ _7. On verification of the connected records and the report of the Tahsildar, it is evident that the building is housing on old age home after collecting money from the inmates as donation. No charitable activities are carried out in the said institution and hence the said building is not entitled to get exemption under Section 3(1)(b) of the Kerala Building Tax Act, 1975._ _8. In the above circumstances Government order that the building owned by Anugraha Sadan Charitable Society, Erayamkudy, Koratty, situated in Kallur Thekkummuri Vilalge in Survey No.770 having a total Plinth Area of 647.62M[2] is not eligible for building tax exemption under Section 3(1) (b) of the Kerala Building Tax Act. The request for building tax exemption is rejected.”_ It is challenging Ext.P7 order the writ petition is filed. 6. Thus, the only ground on which the first respondent has rejected the claim of the petitioner that there is no charitable activity carried on in the institution. According to the petitioner, although some of the inmates have made refundable deposits and the institution is realizing the interest earned on such **W.P.(C)No.37744 of 2007 4** deposits, the expenses necessary for maintaining the institution is much more than the interest earned and the monthly remittances that are made by some of the inmates. It is stated that the shortage is met from other sources and that the institution is run without any profit motive and for charitable purposes, providing relief to the poor. It is therefore, contended that the petitioner's building will qualify for exemption in terms of Section 3(1)(b) of the Act and therefore, Ext.P7 is illegal. 7. A counter affidavit has been filed by the second respondent. In the counter affidavit, while the second respondent accepts that the building in question is used as a shelter for old aged people, according to the second respondent, the old age home is conducted on a commercial basis, accepting deposits from inmates ranging from Rs.15,000/- to Rs.3 lakhs. Therefore, according to the second respondent no charitable activity is carried on in the institution to qualify for exemption as provided under section 3(1)(b) of the Act. 8. I heard counsel for the petitioner and also the learned Government Pleader appearing for respondents. **W.P.(C)No.37744 of 2007 5** 9. Section 3(1)(b) provides that nothing in the Kerala Building Tax Act, 1975 will apply to buildings used principally for religious, charitable or educational purposes or as factories or work shop. The explanation defines charitable purpose as including relief to the poor and free medical relief. Sub section (2) further provides that if any question arises as to whether a building falls under Section 3(1), it shall be referred to the Government for its decision. The claim of the petitioner is that they are using the building in question principally for charitable purposes such as relief of the poor. In the context of a hostel attached to an educational institution for payment of building tax, a Full Bench of this Court in **Unity Hospital (p) Ltd. v. State of Kerala (2011 (1) KLT 236)** held that charity as a concept essentially is service provided to the poor which excludes commercial motive of profit and that Section 3(1) (b) of the Act does not limit exemption to buildings where services are rendered free. On that basis, the Full Bench held that the charging of fee from students for providing accommodation in hostels does not stand in the way of educational institutions claiming exemption for the hostel buildings. **W.P.(C)No.37744 of 2007 6** ## 10. Insofar as this case is concerned, in Ext.P5, the representation made by the petitioner before the Government, regarding the deposits accepted by them, it was stated thus: “ _The interest earned out of deposits of the funds of the members are not at all sufficient for their maintenance. The institution had admitted before the Hon. High Court of Kerala as evidenced by the above judgment that they are accepting funds from some of the inmates which is ranging from Rs.1.5 lakhs to Rs.6,000/according to their paying capacity. On an average computation, according to the current rate of interest (9%) the amount paid by inmates of the rich family which is Rs.1.5 lakhs will fetch only Rs.13,500/- which is not at all sufficient for his maintenance and medical treatment. Again, if going to the funds provided by person coming from the poor family which is Rs.6,000/- it will fetch only Rs.540/- annually. This is not even sufficient for his dress alone. Hence, the Institution is not at all able to meet the entire expenses of the inmates as a whole by funds contributed by them. Accordingly, generous people as well as the congregation, which founded the institution, is subsidizing for the short fall. Copies of final accounts for the last two years are herewith submitted in order to establish the financial position. For 2004-05 there was only little surplus Rs.8,359/- and for 2005-06 there is deficit Rs.91,619/-.”_ **W.P.(C)No.37744 of 2007 7** There is no finding in Ext.P7 doubting the accuracy of the aforesaid claim of the petitioner. 11. Therefore, if the petitioner is an institution, which is run without any profit motive, the fact that it is accepting some deposit from some of the inmates, which is inadequate to maintain the institution itself, will not render the institution ineligible for the benefit of exemption, in terms of Section 3(1) (b) of the building tax Act. In that view of the matter, I am unable to uphold Ext.P7 Government Order. Therefore, I dispose of this writ petition directing that building of the petitioner situated in survey No.770 of Kallur Village in Mukundapuram Taluk where the petitioner has established its old age home will be entitled to the benefit of exemption in terms of 3(1) (b) of the Kerala Building Tax Act. Writ petition will stand allowed. ## ln