Frances Newton Hospital, Ferozepur City vs The State of Punjab and others

K. Kannan, J.—Even before the case was taken up, there was a plea for adjournment by the proxy counsel Mr. Parveen Goyal, Advocate, appearing for Mr. S.C. Patela, Advocate, for respondent No.2. The case is of the year, 1991 and the Division Bench, while admitting the case, directed it to be disposed of within 3 months. Two decades have since passed. I cannot allow the case to brook any further delay. I, therefore, proceed to dispose of the case on merits even in the absence of the arguing counsel for respondent No.2.

The petition challenges the property tax assessment sought to be levied by the Municipal Committee, 2nd respondent herein, on the hospital premises at Ferozepur City. The petitioner is a charitable institution and the income earned through the charities is fully exempt as seen from the proceedings of the Income Tax Officer dated 09.10.1985, where the Income Tax Officer has observed as under:

...Keeping in view all these submissions made by the assessee, firstly there is no element of profit, and the income, if any, of the Institution is exempt under the provisions of Section 10(22A) of the I.T. Act. Secondly, the Institution is covered by Section 2(15) of the I.T. Act.

Considering all these facts the income of the Institution is exempt. The case is accordingly declared N.A. ASSESSED:

Issue requisite document.

It is, therefore, beyond any doubt that the petitioner was a charitable institution and recognized as such by I.T. Department. The assessment made in respect of the property held by the petitioner was the subject of appeal to the Additional Deputy Commissioner, who dismissed the appeal on the ground that the charitable institution was itself not running the hospital, but had rented to a private institution to run the building as a hospital and since it was not run by the same charitable institution, the exemption from property tax cannot apply. It is this order of assessment and the order of the Appellate Authority that are in challenge in this writ petition.

The learned counsel for the petitioner points out that, at the time when the appeal was filed and when the writ petition was instituted, the petitioner had relied on the notification issued by the Government on 19.09.1963 that is reproduced hereunder:

All Mosques, Temples, Churches, Dharamsala, Gurdwaras, Charitable Hospitals, Dispensaries, Orphanages, Alms Houses, during water foundation, Muslim and Hindu Graveyard or Cremation grounds, Christian Cementary, Agriculture land and Registration Charitable Educational and Religious institutions.

Subsequently through another notification dated 03.12.1975 that lists exemptions as follows:

All Mosques, Temples, Churches, Dharamsala, Gurdwaras, schools, colleges, hospitals, dispensaries, orphanages, drinking water fountains, Municipal buildings and lands, grounds, Muslims and Hindus, grave yards, cemeteries, Immemberes, Govt. Nazul land under the Management of the Committee and agricultural land which are cultivated and any land revenue and properties attached to state and registered charitable educational and religious institutions.

The contention is that 1963 notification itself was sufficient to protect the petitioner, for assessment is on property and not against an individual and so long as the assessment is raised on the hospital, it was sufficient to be considered for exemption. It is irrelevant that the charitable institution had rented it away to yet another person. According to him even if such an argument were to be accepted as reasoned, the subsequent notification that removes the word "charitable" before the word "hospital" and merely includes "hospital" among other categories as entitled to exemption and hence would make possible the claim for such exemption, irrespective of the fact whether or not the charitable institution has rented the hospital to any private individual.

I accept this contention and hold that the amended notification dated 03.12.1975 makes irrelevant the consideration of whether the hospital is for charitable purpose or not. The assessment made on the premises is not tenable. The assessment is quashed and the writ petition is allowed.