{"id":76429,"date":"1986-11-11T00:00:00","date_gmt":"1986-11-10T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/municipal-corporation-of-vs-hyderabad-race-club-on-11-november-1986"},"modified":"2018-07-26T02:01:34","modified_gmt":"2018-07-25T20:31:34","slug":"municipal-corporation-of-vs-hyderabad-race-club-on-11-november-1986","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/municipal-corporation-of-vs-hyderabad-race-club-on-11-november-1986","title":{"rendered":"Municipal Corporation Of &#8230; vs Hyderabad Race Club on 11 November, 1986"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Municipal Corporation Of &#8230; vs Hyderabad Race Club on 11 November, 1986<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1987 AIR   92, \t\t  1987 SCR  (1) 195<\/div>\n<div class=\"doc_author\">Author: M Thakkar<\/div>\n<div class=\"doc_bench\">Bench: Thakkar, M.P. (J)<\/div>\n<pre>           PETITIONER:\nMUNICIPAL CORPORATION OF HYDERABAD\n\n\tVs.\n\nRESPONDENT:\nHYDERABAD RACE CLUB\n\nDATE OF JUDGMENT11\/11\/1986\n\nBENCH:\nTHAKKAR, M.P. (J)\nBENCH:\nTHAKKAR, M.P. (J)\nRAY, B.C. (J)\n\nCITATION:\n 1987 AIR   92\t\t  1987 SCR  (1) 195\n 1986 SCC  (4) 696\t  JT 1986   815\n 1986 SCALE  (2)771\n\n\nACT:\n    Hyderabad Municipal Corporation Act 1955--Section 202(1)\n(b)--'Charitable purpose'--Meaning of--User of premises\t for\nRace  Course Club--Whether exemption to general\t tax  avail-\nable.\n\n\n\nHEADNOTE:\n    The appellant--Corporation sought to assess the land and\nbuildings of the respondent club to genera1 tax under s. 202\nof  the Hyderabad Municipal Corporation Act, 1955.  The\t re-\nspondent claimed exemption on the ground that occupation and\nuser  of the property for running horse races  and  training\nthe  horses  etc.  constituted occupation and  user  of\t the\nproperty for a 'charitable purpose' within the meaning of s.\n202(1)(b), which was refused. The respondent approached\t the\nHigh Court and succeeded.\nPartly allowing the appeal by the Corporation,\n    HELD:  1.  For determining whether\texemption  under  s.\n202(1) (b) of the Hyderabad Municipal Corporation Act, 1955,\nwas  available, the test to apply is to seek answer  to\t the\nquestion:  to what use is the property put or for what\tpur-\npose  is  the  property pat and to  ascertain  whether\tsuch\noccupation or user is for 'charitable purpose'. [197F]\n    2.\tThe  expression 'charitable' in the  context  of  s.\n202(1)(b) means a benevolent activity calculated to  benefit\nthe poor or, the deprived. Horse racing is surely not such a\nbenevolent activity, however charitable a view is taken.  It\nmust be the very activity which is carried on  the  property\nwhich  must  be charitable and not the\tapplication  of\t the\nincome of such activity. [197H- 198A]\n    3. The High Court has completely failed to realize\tthat\nthe  'occupation'  of the land and buildings or\t the  'user'\nmust  be for 'charitable purpose' and that it is  altogether\nirrelevant as to the manner in which the income of the\tclub\nis  utilised.  Section 202(1)(b) makes no reference  to\t the\nquestion as regards the employment of the income of the club\nor  the purpose for which the income is so employed.  Exemp-\ntion is granted\n196\nonly  in respect of buildings which are 'solely' and  exclu-\nsively used for charitable purpose. [198B]\n    4. In the instant case, the user of the premises for the\nRace Course Club will not constitute occupation or user\t for\na  'charitable purpose' within the meaning of  s.  202(1)(b)\nand of Race Course Club will not be entitled to claim exemp-\ntion from levy of the general tax. [198F]\n    5.\tThe High Court has rightly taken a view\t adverse  to\nthe  appellant as regards the levy for the  assessment\tyear\n1966-67,  on  an appreciation  of evidence and there  is  no\nwarrant to disturb the said finding. There is also no reason\nto  interfere with the valuation of the property as made  by\nthe  Small  Causes Court and confirmed by  the\tHigh  Court.\n[198G-H]\n    6. The order passed by the High Court in so far as it is\nheld  that the property is exempt from levy of\tgeneral\t tax\nunder  s.  202(1)(b) is set aside. The\tappellant  would  be\nentitled to levy general tax from 1967-68 onwards in accord-\nance with law. [199B]\n\n\n\nJUDGMENT:\n<\/pre>\n<p>    CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 395\t and<br \/>\n1346 (N) of 1973<br \/>\n    From  the  Judgment and Order dated\t 13.12.1971  of\t the<br \/>\nAndhra\tPradesh\t High Court in A.A.O. No. 279 and  2  16  of<br \/>\n1970.\n<\/p>\n<p>    Vepa  P.  Sarthy, B. Parthasarthi and G.N. Rao  for\t the<br \/>\nAppellant.\n<\/p>\n<p>V.S.  Desai, Naunit Lal and Kailash Vasdev for the  Respond-<br \/>\nent.\n<\/p>\n<p>The Judgment of the Court was delivered by<br \/>\n    THAKKAR,  J.  Believe it or not,  the  most\t incongruous<br \/>\narguments  can sometimes find a suiter. Were it not so,\t the<br \/>\nHigh  Court of Andhra Pradesh could not have taken the\tview<br \/>\nthat  occupation  or  user of lands and\t buildings  for\t the<br \/>\npurpose of running horse races, and for training the  horses<br \/>\netc.  constitutes occupation or user of the property  for  a<br \/>\n&#8216;charitable&#8217; purpose.\n<\/p>\n<p>    The\t High Court has taken the said view,  an  impossible<br \/>\nview  in our opinion, in the context of the  exemption\tfrom<br \/>\nlevy  of  municipal taxes claimed by the  Race\tCourse\tClub<br \/>\n(respondent herein) in respect of 127 acres, 14 goonthas and<br \/>\n95 sq. yards of land alongwith structures<br \/>\n<span class=\"hidden_text\">197<\/span><br \/>\nstanding thereon, which were sought to be assessed to gener-<br \/>\nal tax under Section 202 of the Hyderabad Municipal Corpora-<br \/>\ntion  Act (Act in short). The respondent  boldly  contended,<br \/>\nand strangely enough succeeded in convincing the High Court,<br \/>\nthat  Section 202(1)(b) of the Act was attracted as  occupa-<br \/>\ntion  and user of the property for running horse  races\t and<br \/>\ntraining  of horses etc. constituted occupation and user  of<br \/>\nthe  property for a &#8216;charitable purpose&#8217; within the  meaning<br \/>\nof the said provision.\n<\/p>\n<p>Now, Section 202(1)(b) of the Act is in these terms:\n<\/p>\n<blockquote><p>\t\t    &#8220;202(1) The general tax shall be  levied<br \/>\n\t      in  respect of all buildings and lands in\t the<br \/>\n\t      city except&#8211;\n<\/p><\/blockquote>\n<blockquote><p>\t      (a) xxxx\n<\/p><\/blockquote>\n<blockquote><p>\t      (b)  buildings and lands or  portions  thereof<br \/>\n\t      solely occupied and used for public worship or<br \/>\n\t      for a charitable or educational purpose;\n<\/p><\/blockquote>\n<blockquote><p>\t      (c) xxxx\n<\/p><\/blockquote>\n<blockquote><p>\t      (d) xxxx&#8221;<\/p><\/blockquote>\n<p>    The\t High Court launched upon an exercise  to  ascertain<br \/>\nwhether the income of the Race Club was used for a  charita-<br \/>\nble purpose. And on perceiving that some of the purposes for<br \/>\nwhich the income was to be employed were charitable purposes<br \/>\nconcluded  that\t the exemption under Section  202(1)(b)\t was<br \/>\navailable.  The\t test to apply is to seek an answer  to\t the<br \/>\nquestion:  to what use is the property put or for what\tpur-<br \/>\npose  is  the property put. And to  ascertain  whether\tsuch<br \/>\noccupation  or\tuser is for a &#8216;charitable&#8217; purpose.  In\t the<br \/>\npresent\t case  the occupation and user is to  conduct  horse<br \/>\nraces  and  to\ttrain horses for racing. Unless\t it  can  be<br \/>\nposited\t that  conducting  of horse races  is  a  charitable<br \/>\npurpose,  it  cannot be concluded that the  exemption  envi-<br \/>\nsioned\tby Section 202(1)(b) is attracted. And even  if\t one<br \/>\nwere  to  take\tthe most &#8216;charitable&#8217; view  as\tregards\t the<br \/>\nmeaning and content of the expression &#8216;charitable&#8217;  conduct-<br \/>\ning  of\t horse\traces or training of horses  for  the  races<br \/>\ncannot\tbe said to be a charitable activity. The  expression<br \/>\ncharitable  in\tthe  context of Section\t 202(1)(b)  means  a<br \/>\nbenevolent  activity calculated to benefit the poor  or\t the<br \/>\ndeprived.  Surely  horse  racing is not\t such  a  benevolent<br \/>\nactivity,  however charitable a view one takes. It has\talso<br \/>\nto be emphasized that it must be the very activity which  is<br \/>\ncarried on on<br \/>\n<span class=\"hidden_text\">198<\/span><br \/>\nthe  property which must be charitable and not the  applica-<br \/>\ntion of the income of such activity.\n<\/p>\n<p>    What the High Court has completely failed to realize  is<br \/>\nthat  the  &#8216;occupation&#8217;\t of the land and  buildings  or\t the<br \/>\n&#8216;user&#8217;\tof the land and buildings must be for a\t &#8216;charitable<br \/>\npurpose&#8217;  and  that it is altogether irrelevant\t as  to\t the<br \/>\nmanner in which the income of the club is utilised.  Section<br \/>\n202(1)(b) makes no reference to the question as regards\t the<br \/>\nemployment  of\tthe income of the club or  the\tpurpose\t for<br \/>\nwhich  the income is so employed. Exemption is granted\tonly<br \/>\nin  respect  of buildings which are &#8216;solely&#8217;  used,  meaning<br \/>\nthereby\t exclusively used, for charitable purpose.  For\t in-<br \/>\nstance,\t if  the premises are occupied for the\tpurposes  of<br \/>\nbenevolent activities such as the running of a free  dispen-<br \/>\nsary  or  :clinic or for running of a free  school  for\t the<br \/>\nchildren, such user of the building would constitute a\tuser<br \/>\nfor a charitable purpose and entitle the owner of the build-<br \/>\ning to claim exemption. It is impossible to subscribe to the<br \/>\nview that occupation or user for &#8216;any&#8217; purpose would consti-<br \/>\ntute a user for a charitable purpose provided the income  is<br \/>\nused for a charitable purpose. Clutching at the tail of this<br \/>\nreasoning, one would be induced to the conclusion that\tuser<br \/>\nof a building for running a common gaming house (or for\t any<br \/>\nimmoral or illegal purpose) would be user for a &#8216;charitable&#8217;<br \/>\npurpose\t provided the income of the common gaming  house  is<br \/>\nutilised for a charitable purpose. The argument deserves  no<br \/>\nfurther\t scrutiny and must be rejected outright. No  further<br \/>\nexercise need be undertaken in order to find out whether  or<br \/>\nnot  Section  202(1)(b)\t is attracted in the  facts  of\t the<br \/>\npresent matter. The judgment of the High Court in so far  as<br \/>\nthe  High  Court holds that Section 202(1)(b)  is  attracted<br \/>\nmust  therefore\t be reversed and set aside. We\tare  of\t the<br \/>\nopinion\t that the user of the premises for the\tRace  Course<br \/>\nClub will not constitute occupation or user for a charitable<br \/>\npurpose within the meaning of Section 202(1)(b) and the Race<br \/>\nCourse\tClub  will not be entitled to claim  exemption\tfrom<br \/>\nlevy of general tax.\n<\/p>\n<p>    Two other questions have been agitated by the  Appellant<br \/>\nMunicipal Corporation. First, whether the general tax  could<br \/>\nhave  been lawfully levied for the assessment year  1966-67.<br \/>\nThe  High  Court  has rightly taken a view  adverse  to\t the<br \/>\nappellant on an appreciation of evidence. We do not see\t any<br \/>\nfallacy in the reasoning of the High Court. We therefore  do<br \/>\nnot  propose  to disturb the finding recorded  by  the\tHigh<br \/>\nCourt in so far as this question is concerned. Secondly,  as<br \/>\nregards the valuation of the property. The learned Judge  of<br \/>\nthe  Small  Causes  Court has valued the  property  at\tRs.4<br \/>\nlakhs. The valuation made by the Small Causes Court has been<br \/>\nconfirmed by the High<br \/>\n<span class=\"hidden_text\">199<\/span><br \/>\nCourt.\tWe see no reason to interfere with the valuation  as<br \/>\nmade  by  the Small Causes Court and confirmed by  the\tHigh<br \/>\nCourt.\tAccordingly, in so far as these two points are\tcon-<br \/>\ncerned,\t the  decision rendered by the High  Court  must  be<br \/>\nconfirmed.\n<\/p>\n<p>    The\t appeals are therefore partly allowed to  the  afore<br \/>\nsaid extent. The order passed by the High Court in so far as<br \/>\nit is held that the property is exempt from levy of  general<br \/>\ntax  under  Section 202(1)(b) is&#8217; set aside.  The  appellant<br \/>\nwould  be entitled to levy general tax from 1967-68  onwards<br \/>\nin  accordance with law. The appeals are partly\t allowed  to<br \/>\nthis extent. There will be no order as to costs.\n<\/p>\n<pre>A.P.J.\t\t\t\t\t\t     Appeals\nallowed.\n<span class=\"hidden_text\">200<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Municipal Corporation Of &#8230; vs Hyderabad Race Club on 11 November, 1986 Equivalent citations: 1987 AIR 92, 1987 SCR (1) 195 Author: M Thakkar Bench: Thakkar, M.P. (J) PETITIONER: MUNICIPAL CORPORATION OF HYDERABAD Vs. RESPONDENT: HYDERABAD RACE CLUB DATE OF JUDGMENT11\/11\/1986 BENCH: THAKKAR, M.P. (J) BENCH: THAKKAR, M.P. (J) RAY, B.C. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-76429","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Municipal Corporation Of ... vs Hyderabad Race Club on 11 November, 1986 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/municipal-corporation-of-vs-hyderabad-race-club-on-11-november-1986\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Municipal Corporation Of ... vs Hyderabad Race Club on 11 November, 1986 - Free Judgements of Supreme Court &amp; 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