FATHER THOMAS PANJIKKARAN Vs. CHALAKUDY MUNICIPALITY

JUDGEMENT

(1.) Petitioner is the Director of St. James Hospital Trust which is registered as a charitable trust under the India Trust Act with Register No.647/IV/88. Ext. P1 is the registered trust deed. The Tahsildar, Mukundapuram after verification issued Ext. P2 certificate testifying that the above Trust is a charitable and non profit making organisation working in the field of health on non sectarian basis without consideration of religion, caste or creed. Ext. P3 balance sheet and income and expenditure account shows that it is not working in profit. In fact, it shows excess expenditure over income. The capital funds shows that the capital was issued by donation of Rs.83,34,455/- and part of running expenses were also met by donations or loan obtained from the benefactors. The statement of accounts will reveal that the hospital was constructed with voluntary contributions from public and income generated was utilised for treatment to the poor and for making further construction and other developmental activities and was not diverted for any other purpose. No dividend or income distribution was made. Nature of the functioning of the hospital, as can be seen from the trust deed, is charitable. Income Tax authorities accepted it as a charitable institution and exempted the Trust from paying income tax as can be seen from Ext. P15. However, the petitioner was assessed to property tax by the Municipality. During the relevant time, lands and buildings or portions of lands and buildings exclusively occupied and used for charitable purpose by a society or a body was exempted.

(2.) S.101(1)(d) of the Kerala Municipalities Act as it existed during the relevant time reads as follows:

(3.) Charitable institutions when doing service may collect fees from certain people and often that will be used and balance will be used for doing charitable treatment to the poor or treatment to the poor at a reduced rate or for further developmental activities. Wording in the section also shows that merely because profit is earned, an institution will not cease to be a charitable institution; but, profits earned shall be used in promoting its objects and it should not be used for paying dividend or bonus. The accounts will show that the Trust is being run mainly by voluntary contributions and there is expenditure over income received by contributions and fee collected. Admittedly, no dividend or bonus is taken and no amount was taken as profit and whatever is collected is used for achieving the objects of the Trust. In this connection, we refer to the decision of a Division Bench of this Court in State of Kerala v. St. Gregorious Medical Mission ( 1992 (1) KLT 230 ) wherein it was held that merely because the amount is collected from the patients a charitable hospital cannot be deemed to be an institution making profit. Various decisions of the Supreme Court and the earlier decisions of this Court were considered by the Division Bench while rendering the above decision.