Holding

Premises used exclusively as the administrative office of a charitable organization are covered by the exemption provided under Section 115(4) of the Delhi Municipal Corporation Act, 1957.

Summary

The Christian Children Fund Inc., a charitable organization, applied for exemption from property tax on its Delhi branch office premises under Section 115(4) of the Delhi Municipal Corporation Act, 1957. The municipal corporation rejected the exemption, holding that the premises were used for office purposes and not for charitable activities. The High Court affirmed this view and dismissed the writ petition. On appeal, the Supreme Court held that an administrative office is an essential part of a charitable organization’s activities and, if exclusively occupied for that purpose, qualifies for exemption under the Act. The Court rejected the narrow interpretation of "charitable purpose" by the municipal authorities and the High Court. Consequently, the appeal was allowed and the High Court’s order set aside.

Issues considered

What is the proper interpretation of "premises exclusively occupied and used for charitable purpose" under Section 115(4) of the Delhi Municipal Corporation Act, 1957?
Do premises used as an administrative office of a charitable organization qualify for tax exemption under the said provision?

Legislation cited

Delhi Municipal Corporation Act, 1957s. 115(4)

Subjects

property tax exemptioncharitable purposeadministrative officeDelhi Municipal Corporation ActSection 115(4)interpretation of statutecharitable organization

Judgment

CHRISTIAN CHILDREN FUND INC. A
v.
MUNICIPAL CORPORATION OF DELHI AND ORS.

MAY 12, 1994

[KULDIP SINGH AND P.B. SA WANT, J.1.J B

Delhi A1u11ic1jJa/ C(nporation Act, 1957-Section l 15(4}-!11tc1pre1atio11
of-Propeny Tax-Ere111ptio11 jf·o1n-In respect of preniiscs of Organisation
established e.:i:clusirc(r for chalitable pu1pose-Includes Ad1ninistrative Office
of such organisation. C
The appellant-organisation established with the object of promotiug
the welfare of orphans and the needy children sought exemption from
Property Tax, under Section 115(4) of the Delhi Municipal Corporation
Act, 1957, in respect of its Delhi Branch Office on the ground tliat the
premises in question were being exclusively used and occupied for D
charitable purpose. The respondent-Corporation refused exemption on the
ground that since the premises in question were used for office purposes
the same could not be said to be the premises exclusively occupied and
used for charitable purpose. The appellant filed a writ petition in the High
Court which dismissed the same and affirmed the view that as the building E
in question was being used for office exemption from Property Tax was not
permissible.
J Against the decision of the High Court an appeal was preferred in
this Court.
F
Allowing the appeal and setting aside the order of the High Court,
this Court

HELD : I. Both the municipal authorities and the High Court have
committed an obvious error of interpreting the provisions of Section G
115(4) narrowly and unrealistically. The interpretation placed by them on
the said provisions has, therefore, to be rejected. [1021·E, 1022-B]

2. Every organisation established for a charitable purpose requires
.., . -r
some premises to run its administration. Without an administrative office,
it is not possible for an organisation to run and manage its charitable H
1017
1018 SUPREME COURT REPORTS [1994] 3 S.C.R.

A activities. The extent of the premises required to run the administrative
office would depend upon the nature and size of its activities. Hence the ·~

premises required by an organisation for its administrative office are an
essential and an integral part of its charitable activities. Sometimes the
administrative office of such organisations may be located where the
charitab1e activity or activities are carried on and sometimes it is located
B
away from such place depending upon the availability of the premises and
convenience. So long as the premises in which the administrative office of
the charitable organisation is carried on are exclusively used and occupied
by its office, the premises would be covered by the exemption provided '
under Section 115(4). To hold otherwise, viz. that it is only the premises
c where actual charitable activity is carried on alone is qualified for the
exemption is irrational. The respondent-Corporation is directed to con-
sider the-appellant's application accordingly. [1021-F-H; 1022-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2624 of
1984.
D
From the Judgment and Order dated 23.5.84 of the Delhi High Court
'--.
in C.W. No. 1351 of 1984.

R.K. Jain, G.K. Arora and R. Agnihotri for the Appellant.

E Ms. Binn Tamta for the Respondents.

The Judgment of the Court was delivered by

SAWANT, J. The appellant-organisation has been established with
the object of promoting the welfare of the orphans and the needy children
F throughout the world. It is founded with the help of voluntary contributions
collected from all over the world. It has branches in many countries. The
appellant also funds other organisations with similar charitable objectives '
such as orphanages, educational institutions and other institutions meant
for the handicapped children irrespective of religion, caste, creed and sect.
In this country also there are many charitable institutions for child welfare
G
which are in receipt of funds from the appellant. The Delhi branch of the
appellant is situated in its own premises on the 5th floor of the building
known as 11 Padma Palace 11 1 86, Nehru Place, New Delhi.

2. Under Section 115(4) of the Delhi Municipal Corporation Act,
H 1957 (the 'Act') the premises occupied and used exclusively by an organisa- .... -
CHRISTIAN CHILDREN FUND INC. v. M C.D. [SAWANT,J.] 1019

tion for a charitable purpose are exempted from property tax• The relevant A
provisions of Section 115(4) are as follow:

"(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 oflands and buildings exclusive- B
ly 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 prorrhJting its objects and does not pay any dividend or
c
bonus to its members.

Explanation. - 11 Charitable purpose11 includes relief of the poor,
education and medical relief but does not include a purpose which
relates exclusively to religious teaching; 11 D
3. On 18th June, 1977, the appellant-organisation purchased the
present premises to locate its Centre of activities. On 13th March, 1979,
the respondent-Corporation.issued a notice under section 126 of the Act
proposing to fix the rateable value of the said premises for the purpose of
levying property tax. The appellant filed objections to the said notice before E
the Assessor and Collector on 26th April, 1979 and prayed for exemption
from the tax under the aforesaid provisions of Section 115(4) on the ground
that the premises in question were being exclusively used and occupied for
charitable purpose. On 6th June, 1983, the Corporation turned down the
request for exemption by a non-speaking order. On 13th December, 1983 F
the appellant prayed before the Assessor and Collector for reconsideration
of the decision and in particular, pointed out that other organisations in
identical circumstances were exempted under the said provisions. On 14th
March, 1984, the said request was again turned down on the ground that
the premises occupied by the appellant for office purposes could not be
said to be the premises exclusively occupied and used for charitable G
purpose. Against the said decision, on 27th March, 1984, the appellant
made a representation to the Commissioner of the Corporation requesting
for revision of the decision. The Commissioner did not give any hearing to
the appellant. On the contrary, the decision on the revisio.n application was
communicated by the Assessor and Collector by his letter of 1st May, 1984 H
!0211 SUP REM I'. COURT REPORTS

A as follo\vs:

"Dear Sirs,

Please refer to your letter No. BCD/1240/VG/ND/1401 dated
12.4.1984 addressed to Commissioner, Municipal Corporation of
B Delhi.

2. We should have liked to help your clients in the matter of grant
of exemption if the law should have permitted. Unfortunately, that
is not the case. We are, therefore, unahle to grant exemption to
the property of the Christian Children's Fund as the case is not
c covered under Section 115(4) of the DMC Act for grant of exemp-
tion.

Yours faithfully,

sd/
D

(M.P. Sharma)
Assessor & Collector"

E 4. The appe)lant, therefore, approached the High Court by filing a
writ petition under Article 226 of the Constitution and the High Court by
the impugned decision dismissed the writ petition. The decision of the High
Court contained in a short paragraph is· as follows :

F "This petition seeks an exemption from the operation of the
house-tax and general tax leviable on the property which it owns
at Nehru Place on the ground that the building is exempt as it is
used for a charitable body. We find that the Assessor & Collector
had informed the petitioner that the building was not exempt from
the general tax because the building was not being used for a
G charitable purpose. This information is contained in two letters
dated 6.10.1983 and 14.3.1984 issued by the Assistant Assessor and
Collector and Joint Assessor and Collector, M.C.D. The second
letter indicates that the cxem ption was being refused because the
building did not qualify und~r Section 154(sic) of the Act. We
H agree with this view. The Section requires that the land or building
CHRISTIAN CHILDREN FUND INC. v. M.C.D. [SA WANT. J.J lll21

or the portion of the land or bui!Jing \vhich is used for charitable A
purpose is exempt and no other. As the building is being used for
office purpose, the exemption could not be granted. The petition
is dismissed. 11

It is obvious from the reasons given both by the municipal authorities B
a_s well as by the High Court that the ground on which the request for
exemption has been rejected is that the building is not used for charitable
purpose because it is being used for office. We have quoted the relevant
provisions of Section 115(4) above. All that the provisions require is that,
for exemption, the lands and buildings or portions of lands and buildings
should be exclusively occupied and used for public worship or by a society c
or body for a charitable purpose and that the society or body is supported
wholly or in part by voluntary contributions and that it should apply its
profits, if any, or other income in promoting its objectives and that it should
not pay any dividend or bonus to its members. The explanation elucidates
what the "charitable purpose" means. It defines charitable purpose to D
include relief of the poor, education and medical relief but does not include
a purpose which relates exclusively to religious teaching. There is no
dispute that the appellant-organisation is a charitable organisation and that
the purpose for which the appellant-organisation is established and run is
a charitable one within the meaning of the said provision. However, the
only gronnd on which the appellant is denied the exemption is that the E
premises in question are being used by the appellant for its office, which
according to the municipal authorities and the High Court cannot be said
to be used for charitable purpose. We are afraid that both the municipal
authorities and the High Court have committed an obvious error of inter-
preting the provisions of Section 115(4) narrowly and unrealistically. Every F
organisation established for a charitable purpose requires some premises
to run its administration. Without an administrative office, it is not possible
for an organisation to run and manage its charitable activities. The extent
of the premises required to run the administrative office would depend
upon the nature and the size of its activities. Hence the premises required
by an ·organisation for its administrative office are an essential and an G
integral part of its charitable activities. Sometimes the administrative office
of such organisations may be located where the charitable activity or
activities are carried on and sometimes it is located away from such place
depending upon the availability of the premises and convenience. So long
as the premises in which the administrative office of the charitable or· H
1022 SUPREME COURT REPORTS [1994] 3 S.C.R.

A ganisation is carried on are exclusively used and occupied by its office, the
premises would be ones covered by the exemption provided under the said
provisions. To hold otherwise, viz., that it is only the premises where actual
charitable activity is carried on alone is qualified for the exemption is to
be irrational. The interpretation placed by the municipal authorities and
also unfortunately by the High Court on the said provisions has, therefore,
B to be rejected.
;
The appeal is, therefore, allowed and the decision of the High Court
is set aside. We direct the municipal authorities to consider the application
of the appellant in the light of what is held above. It will be open for the
C municipal authorities to satisfy themselves that the premises in question are
exclusively used and occupied for running the office for the charitable
activities of the appellant-organisation and that they are not used either
wholly or in part for any other purpose. If they come to the conclusion that
the use and occupation of the said premises is exclusively for the office of
the organisation from where its charitable activities are administered, the
D appellant's request for exemption cannot be rejected.

The appeal is allowed accordingly. In the circumstances of the case,
however, there will be no order as to costs.

T.N.A. Appeal allowed.

-