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Municipal Corporation of Delhi Vs. the Children Book Trust - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtDelhi High Court
Decided On
Case NumberLetter Patent Appeal No. 102 of 1974
Judge
Reported in18(1980)DLT332; 1980RLR750
ActsDelhi Municipal Corporation Act, 1957 - Sections 115(4)
AppellantMunicipal Corporation of Delhi
RespondentThe Children Book Trust
Advocates: Arun Kumar,; Sanjeev Aggarwal and; Uma Jain, Advs
Excerpt:
.....to claim proportionate part of exemption form the total rental value assessed for the whole portion occupied by the press. according to section 115(5) if any trade or business is carried on in a portion of a building used for charitable purposes then the said portion of the building will not be deemed to be exclusively used for charitable purpose. it is not possible to bifurcate the premises in which the press is situated into one portion in which charitable activity is carried out and the other portion where trade is carried out. as long as commercial printing is carried out by the respondent the portion occupied by the press cannot be exempt from tax. it is admitted by the respondent that the surplus capacity of the press has been used for commercial purposes. in this view of..........activity of a commercial press. the single judge came to the conclusion that in respect of the portion occupied by the press the respondent was entitled to partial exemption. it was observed that the press is publishing educational books etc. and doing printing for its connected activities. the single judge held that 'had the trust installed separate presses in two distinct portions one where printing was exclusively done for printing book for children, etc., and the other portion for job work printing there is no doubt that the trust could have been entitled to claim exemption for that portion where press was printing books for children etc. no doubt the press has not been divided into separate distinct portions, as indeed, it could not be because it is not possible to set apart any.....
Judgment:

B.N. Kirpal, J.

(1) In this Letters Patent Appeal the Municipal Corporation of Delhi is challenging the correctness of the judgment of the single Judge of this Court who had partly allowed the writ petition filed by the respondent and had held that, part of the property belonging to the respondent was exempt from leavy of general tax.

(2) Property known as Nehru House, 4 Bahadur Shah Zafar Marg. New Delhi is owned by the respondent Trust. The said Trust is a society registered under the Societies Registration Act, 1860. It is a non-profit making body and does not pay any dividend or bonus to its members. The objects for which the Trust was established. amongst others, are as follows:

'1.To undertake the work of printers, publishers, engrave books and prints sellers, book binders and art journalists in any of their branches ;

2.To hold or take part in competitions of any description authorised by law which, may be calculated to promote the education art, and culture of the people of India and increase the usefulness of the Trust or to advertise or promote the sale of any publication issued by it or in which it is interested to give prizes in connection with such competitions, or otherwise consisting of cash. Scholarships or other terminable payments or gifts in kinds or any other description of reward to hold children's art and other exhibitions and to establish museums; and

3.To educate the train teachers, authors and artists in the preparation for publication of children's literature or journals.'

(3) The aforesaid building is partially in the occupation of the respondent and is partly let out to various tenants. The premises which are in the occupation of the respondent and the manner in which they are used is described as under :

'(I)The basement is occupied by the press belonging to the Trust and is 11217 sq. ft. in extent and the monthly rental value of this has been assessed at Rs. 14,021.25.

(II)The ground floor rear portion consists of 6183 sq. ft. This consists of 4183 sft. occupied by the offset and camera section of the press. The total monthly rental has been fixed at Rs. 7,320 for the area occupied by the administrative section and Rs. 3,462.50 occupied by the offset section respectively.

(III)On the first floor the area of 17702 sq. ft. is occupied by the Dolls Museum, Library, Administrative offices and the Sicc and the monthly rental is fixed at 30,095.70. The Division of the area for all these activities is as follows:

Dolls Museum 10568 sq. ft. Liberary 3136 sq. ft. Administrative Offices 3136 sq. ft. Sicc 830 sq. ft. Total 17702 sq. ft.

(IV)On the second floor 1473 sq. ft. has been assessed at the monthly rental value of Rs. 2946. This was occupied by the Trust as its Guest Flat and was meant for occupancy of persons who came to assist the project of the Trust. This portion has, however, been let out on rent with effect from 1-9-73 but as the impugned order covers the period for the earlier assessment period, the letting out on rent would not effect this portion for the period in question.

(V)On the 3rd floor there is a space of 3000. sq. it. which has been assessed on monthly rental value of Rs. 5,550 which is occupied by the Trust for Art Class. No fees is charged in the Art Class and the Art Class imparts training to artists for illustrations and to write for children's books. When the training is not imparted the space lies vacant. There is no rent or profit making activity in this space.'

(4) According to the provisions of section 115(4) of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as 'the Act'), general tax is livable on all lands and buildings in Delhi. Clauses (a) to (c) of sub-section (4) of section 115 sets out the exceptions to the levy of the said tax. In the present appeal we are concerned with the provisions of Section 115(4) (a) read with sub-sections (5) and (6). The relevant portion of the section is as under :

'115(4).Save as otherwise provided in this Act, the general tax shall be levied in respect of all lands and buildings in Delhi except -

(A)Lands and buildings 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 objects and does not pay any dividend or bonus to its members.

(5)Lands and buildings or portions thereof shall not be deemed to be exclusively occupied and used for public worship or for a charitable purpose within the meaning of clause (a) of sub-section (4), if any trade or business is carried on in such lands and buildings or por- tions thereof or if in respect of such lands and buildings or portions thereof any rent is derived.

(6)Where any portion, of any land or building is exempt from the general tax by reason of its being exclusively occupied and used for public worship or for a charitable purpose such portion shall be demed to be a separate property for the purpose of municipal taxation.'

(5) There is no dispute regarding the portion of the property which is in the occupation of tenants. It is admitted that tax in respect of the said portion is payable by the respondent. The dispute which arises is as to whether the other portion which is in the occupation of the respondent is entitled to exemption under section 115(4)(a) of the Act or not.

(6) Prior to 1970 there was no dispute regarding the levy of tax between the parties. From the year 1964-65 only a part of the property was being subjected to the general tax. For the said year i.e. 1964-65 the value of the property which was subjected to tax was Rs. 8,51,480 while the portion of the property which was exempted was valued at Rs. 5,96,870. The said division was made on the basis that the property which had been let out was not entitled to exemption. The exemption was only in respect of the property in the occupation of the respondent for printing press. Doll museum, library and administrative staff office.

(7) It was for the first time in 1970 that the respondent received a notice from the appellant whereby it was proposed that the rateable value of the buildingi should be revised. On 1st February, 1973 the Deputy Assessor and Collector passed the impugned order whereby he enhanced and revised the rateable value of the property to Rs. 16,29,750. It was held that the respondent had not proved its charitable character and it was further held that the use of the property did not go to prove that the property was being used for charitable purposes and it was exempted from the tax.

(8) The respondent challenged the said order by filing a writ petition under Article 226 of the Constitution of India being Civil Writ No. 318 of f974.

(9) The aforesaid writ petition was partly allowed by judgment dated 9th August. 1974 by a single Judge of this Court (Rajindar Sachar, J.). The single Judge held that the respondent was entitled to claim total exemption from payment of tax under section 115(4) of the Act in respect of all the portions occupied by it except what was in the occupation of the Press (namely the basement) and an area of 2000 sq. ft. on the ground floor rear portion. Even for this portion the single Judge held that the Trust was entitled to claim exemption in the proportion of the income accruing to it from the publication of the children books etc.

(10) In coming to the aforesaid conclusion the single Judge held that the respondent was using the premises for charitable purposes. With respect to the portion in the occupation of the Press, both in the basement and in the ground floor, it was found that total exemption was not available to the respondent. It was admitted that apart from printing children's books the surplus capacity of the press was being utilised by doing printing job work from which it had substantial income.

(11) The conclusions arrived at by the single Judge are being challenged in appeal by the Municipal Corporation of Delhi. It is contended on behalf of the appellant that on a correct construction of section 115(4) the property could be exempt from tax only if it was used for charitable purpose. According to the appellant the charitable purpose in view of the Explanationn to section 115(4), inter atia, meant education relief. According to Mr. Arun Kumar the respondent was not providing any education relief and merely education is not regarded as charitable purpose.

(12) We are unable to accept the aforesaid contention on behalf of the appellant. According to section 115(4) general tax is livable in respect of all lands and buildings in Delhi. Clause (a) of sub-section (4) provides that lands and buildings or portions thereof exclusively occupied and used, inter alia, for charitable purposes shall be exempt from such tax. The proviso to the said clause further requires that the society or body who is claiming the exemption, should be supported wholly or in part by voluntary contributions ; it should apply its profits, if any, or other income in promoting its objects ; and should not pay dividend or bonus to its members. It will be seen that what is material is the exclusive use of the building or a portion thereof for a charitable purpose. If the building is not exclusively used for charitable purpose then notwithstanding the fact that the income of the society or body may be used for promoting its charitable objects such land or building would still besubject to the general tax. The definition of Charitable purpose as provided by the Explanationn is merely inclusive and not exclusive. Furthermore, the said Explanationn talks of relief of the poor and medical relief, but does not talk of educational relief. On a plain reading of the said Explanationn it is evident that the words 'charitable purpose' would include (1) relief of the poor, (2) education, and (3) medical relief.

(13) The next contention of Mr. Arun Kumar was that the respondent was not supported mainly by voluntary contributions and was as such not entitled to the exemption. This contention of the appellant is answered by the proviso to the said sub-section which clearly provides that the society may be supported 'wholly or in part by voluntary contributions. Because of the use of the words 'in part' in the proviso the society would be entitled to claim exemption, provided other conditions are satisfied, if it, is able to show that it has received even a small amount of voluntary contribution.

(14) Mr. Arun Kumar has not been able to show that the conclusion of the single Judge that except for the printing press the other portions of the property were being used for imparting education and were thus charitable, was incorrect. In our opinion the single Judge was right in coming to the conclusion that the running of the library. dolls museum, Shanker's International Children Competition, etc. were all such activities which would come within the ambit of the word 'education'. It is not necessary to refer to the various decisions cited by the single Judge in coming to the aforesaid conclusion. Suffice it is to say that 'education' cannot be understood in the limited sense of teaching being given by holding classes or by delivery of lectures. The acquisition of information or knowledge, from whatever source and in any manner has to be regarded as education. The Library. Dolls Museum and holding of exhibitions help in providing an (opportunity to acquire information and knowledge. Premises used for such purposes would be regarded as being used for education and thus for charitable purposes.

(15) With regard to the premises in which the Press as well as the offset and camera section of the press are located, the position,is however different. It is admitted 'by the respondent that the said press, apart from printing children's books, also prints other material on job work basis. Mrs. Jain has not been able to tell us as to what particular type of printing job work is entertained. It is apparent that part of the activity of the press is like any other activity of a commercial press. The single Judge came to the conclusion that in respect of the portion occupied by the press the respondent was entitled to partial exemption. It was observed that the press is publishing educational books etc. and doing printing for its connected activities. The single Judge held that 'Had the Trust installed separate presses in two distinct portions one where printing was exclusively done for printing book for children, etc., and the other portion for job work printing there is no doubt that the Trust could have been entitled to claim exemption for that portion where press was printing books for children etc. No doubt the press has not been divided into separate distinct portions, as indeed, it could not be because it is not possible to set apart any particular machine or process only for the purpose of printing children's books etc. and the other for doing job work. That would be neither practicable nor desirable from either economic or efficiency point of view. But I see no reason why the petitioner Trust should not be entitled to claim proportionate part of exemption from the total rental value of Rs. 17,483.75 assessed for the whole portion occupied by the Press.'

ITappears, however, that the learned single Judge over-looked the provisions of sub-section (5) of section 115. According to sub-section 5 if any trade or business is carried on in a portion of a building used for charitable purpose then the said portion of the building will not be deemed to be exclusively used for charitable purpose. To put it differently, subjection (5) requires that no trade or business should be carried on at all in that portion of the building in respect of which exemption is sought. Admittedly the printing press is used both for charitable and trade purposes. It is not possible to bifurcate the premises in which the press is situate into that portion in which charitable activity is carried out and the other portion where trade is carried out. As long as commercial printing is done by the respondent which cannot be regarded as charitable, the portion occupied by the press cannot be exempt from tax. It will be seen that printing of educational books or material is a charitable purpose. If the job work which is undertaken, even for profit, was only of educational material the respondent may possibly be entitled to the benefit of section 115(4)(a). In the present case, however, there is no material on record to show that the job work which, is undertaken is only of educational material. It was for the respondent to place on record necessary material in order to show that it was entitled to be exempt from the levy of tax. Mrs. Jain on behalf of the respondent fairly conceded that it is not possible to state that the respondent is printing only educational material on job work basis. It is admitted by the respondent that the surplus capacity of the press has been used for commercial purposes. In this view of the matter, because of the mandatory provisions of sub-section (5) of section 115, no part of the premises in the occupation of the press in the basement and the area of 2000 sq. ft. on the ground floor rear portion, for which the monthly rental value has been fixed at Rs. 17,483.75 could be exempt from tax. The judgment of the learned single Judge in this respect cannot be sustained.

(16) The appeal is partly allowed to the extent mentioned above. Parties to bear their own costs.


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