Sanjay Kishan Kaul, J.
1. The writ petitioner raises the question of applicability of the relevant clause of Delhi Municipal Corporation (Determination of Rateable Value) Bye-Law, 1994 (hereinafter referred to as the Bye-laws).
2. The respondent is the owner of property being utilised as a pre-primary school in R K Puram-II, New Delhi for which the rateable value was fixed by the assessment order dated February, 1999 wef 1.4.95. The respondent had sought exemption under section 115(4) of the DMC Act, 1957 (hereinafter referred to as the Act) in respect of the property in question but the said exemption was declined by the assessing authority on the ground that building could not be stated to be used only for charitable purpose. The assessing authority further held that the market value of the land has to be taken into consideration. The respondent aggrieved by the said order preferred in appeal before the appellate court and the appeal was partly allowed by the order dated 24.1.2000. The appellate authority held that since the school was generating surplus income the same implied that the amount collected from the students was more than the required expenditure and that imparting education per se did not amount to charitable purpose, the respondent was not entitled to exemption under section 115 of the Act. Thus the rejection of the exemption application of the respondent was upheld. However, in so far as the question of the land value was concerned, it was held that the aggregate cost of the land paid had to be taken and not the market value of the land as taken by the assessing authority. It was thus held that the determination had to be as per clause 2(b)(1)(iv) and not by 2(1)(b)(iii) of the Bye-laws.
It would be relevant to produce the said Bye-laws:-
2. Definitions.-(1) In these bye laws-
(b) 'Cost of premises' means -
(iii) where the premises are used or to be used for non-residential purposes, and are not covered by clauses (i) and (ii) above, the cost the premises shall be the aggregate of the market price of land comprised in the premises on the date f the commencement of the construction and the cost of construction of the premises and the cost of additions and improvements in the premises whether made by the owner or occupier.
(iv) in any other case, aggregate of the cost paid for the last, cost of construction of the building or part thereof and the cost of additions and improvements whether made by the owner or by the occupier.
(5) Premises exclusively used and occupied for charitable purposes, within the meaning of clause (1) of sub-section (4) of section 115 of the Act, shall not be deemed to be used for non-residential purposes.
3. Learned counsel for the petitioner contended that the property in question should be deemed to be used for non-residential purposes and clause iii of Bye-law 2(1)(b) would be applicable and thus rateable value has to be fixed as per the market price. It was contended that since the respondent society was held not to be carrying on activity for charitable purposes within the meaning of section 115(4)(a) of the Act, the explanation 5 to clause (b) of Bye-law 2(1) would have no application. The plea raised in the counter affidavit that imparting of education is itself a test for charitable purpose was disputed by reference to the provisions of section 115(4)(a) of the Act to contend that it could be a charitable purpose only if the society or body supported by voluntary contributions applied its profits, if any, or other income in promoting its object and did not pay and dividend or bonus to its members. It would be relevant to extract the relevant provision of the Act which is as under:-
115. Premises in respect of which property taxes are to be levied:-
(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 building or portions of lands and buildings exclusively occupied and used for public worship or by a society or body for a charitable purpose.
Explanation.- "Charitable purpose" includes relief of the poor, education and medical relief but does not include a purpose which relates exclusively to religious teaching:
4. Learned counsel for the respondent, on the other hand, contended that it is not the market price but the actual cost of acquisition by the respondent as paid to the L&DO which has to be taken into account for determination of the rateable value and the relevant clause applicable would be clause 2(1)(b)(iv) of the Bye- Laws. It was contended that the school was neither being used as residential nr as non-residential and would thus fall in the said sub-clause which was apparent from explanation 5 to the said clause since the premises exclusively used and occupied for charitable purposes was not be deemed to be used for non-residential purposes. This was also based on the finding which was urged that the building was used only for providing education though it may not fall within the parameters of section 115(4)(a) of the Act to qualify for exemption.
5. Learned counsel for the respondent has relied upon the judgment of the Supreme Court in V Parukutty Mannadissiar and Anr. v. State of Kerala and Ors. to contend that the test for
determination of 'charitable purpose' can be satisfied by proof of any three conditions namely relief of poor, education or medical relief. It was also held that the explanation defining charitable purposes is inclusive and exhaustive. It was contended that this has to be read with the meaning of the word 'education' which connotes the process the process of systematic instruction, training and developing knowledge, skill, mind and character of the student as held in Sole Trust Lok Shiksha Trust v. CIT .
6. Learned counsel for the respondent also referred to the judgment of the Supreme Court in Municipal Corporation of Delhi v. Children Book Trust where the question of exemption under section 115(4) of the Act was dealt with and the circumstances under which such exemption has to be granted were enunciated. Learned counsel contended that the Supreme Court has held that education per se is a charitable purpose and, therefore, if the school charges fee the same would be irrelevant so long as the society satisfies the triple criteria of voluntary contribution, obligation of income to promote its objects and non-payment of dividents to its members. In case profit and income is devoted to charitable purpose and not distributed amongst its members it would be charity.
7. Learned counsel thus contended that in view of the aforesaid observations even if the school raised funds by collecting fee and is surplus by the end of the year it is not engaged in trade of business unless it distributes its surplus amongst its members as dividends or bonus and that such a society will be running its school for charitable purpose. Such a society may not be entitled to exemption from general tax for the reason that its income is not wholly or in part from voluntary contributions but it would still be running the school for charitable purpose. Learned counsel contended that there is no finding that the respondent society was distributing surplus income amongst its members. Thus in such a case the school building is not to be deemed to be used for non-residential purpose and is covered in the category of 'in any other case' in clause 2(1)(b)(iv). It is thus contended that the costs paid for the land would have to be taken into consideration for purpose of determination of rateable value.
8. Learned counsel for the respondent contended that if the interpretation of the bye-laws as contended by the petitioner was to be accepted the same would make clause 2(1)(b)(iv) suplerfluous since where the property is being used for charitable purpose and is exempt from payment of general tax under section 115(4) of the Act there would be no need to make any provision in the bye-laws for determination of rateable value of such property under the said sub-clause. The said sub-clause would come into play only in case an assessed is not entitled to exemption but at the same time is engaged in charitable work.
9. I have considered the submissions advanced by learned counsel for the parties. I am in agreement with the submissions of learned counsel for the respondent that relevant clause of the bye-laws applicable to the case of the respondent would be section 2(1)(b)(iv) and not 2(1)(b)(iii).
10. The Supreme in Municipal Corporation of Delhi v. Children Books Trust's case (supra) held that in order for education to qualify as a charitable purpose an element of trade and business can be present in running a school on commercial lines and merely because of that it does not mean that it may not be entitled to exemption under section 115(4) of the Act.
11. The Supreme Court was further of the view that if it is shown that for its support the society has to depend on voluntary contributions either wholly or in part then it would be entitled to exemption i the relevant year. The matter has to be considered with reference to each year. The reasonable way deviced by the Supreme Court is that a period of 5 years can be taken into consideration to find out whether the society or body depends on the voluntary contributions. It was also held that trade or business could be present in section 115(4) of the Act but if the profit of income was devoted to charitable purpose and not distributed amongst its members, it was charity.
12. In the present case it has not been made out that there is distribution of profits amongst its members. That being the position it cannot be said that there is no charitable purpose though it may not qualify for exemption under section 115(4). Thus a society like the petitioner society may not be entitled to the exemption but may still be running a school for charitable purpose.
13. This aspect has also to be considered in view of the forceful submission advanced on behalf of the respondent as to the object and interpretation of clause 2(1)(b)(iv) read with explanation 5. There can be no doubt that in case exemption of payment of general tax is granted 115(4) of the Act, there would be no issue of liability to pay tax. There may, however, be cases where such an exemption is not granted and the property is subject to tax but yet there is an element of charity and in such a case the property is used neither for residential use nor for non-residential purposes. It is such cases which are sought to be covered by clause 2(1)(b)(iv) in defining 'any other case'.
14.In view of the aforesaid I find no infirmity with the finding of the appellate authority that premises exclusively used and occupied for charitable purpose cannot be said to be used for non-residential purpose and would thus be covered by section 2(1)(b)(iv) even though it will not be entitled to exemption under section 115(4) of the Act.
15. In such a situation it is the aggregate cost paid for land which has to be taken into consideration and not the market clause of the land as was sought to be taken by the assessing authority which was set aside by the impugned order of the appellate authority
16. In view of the aforesaid facts and circumstances I find no infirmity in the impugned order in terms whereof the matter has been remanded back for redetermination of the rateable value as per the observation made by the appellate authority.
Writ petition is dismissed leaving the parties to bear their own costs.