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2013 (10) TMI 1134 - AT - Income TaxCharitable purpose u/s 2(15) - A trust for providing a common platform for trading in shares and securities - Revenue has denied the benefit of registration u/s 12A on the ground that the same does not cater to the members of the public at large, but only to the members of the public who invest in shares - Funding of Corpus fund is in dispute – Held that:- if the said funding by way of contribution by the stock exchanges is, in turn, recovered from the individual member brokers, the arrangement would in essence becomes one of insurance by the individual brokers of the stock exchange to meet their liabilities arising in the course of their trade. This is as, simply put, the loss to the investor arising on account of the default of the broker is only the broker's liability, and a trade liability at that. This then assumes the form of an underwriting arrangement, or an insurance scheme under the aegis of the stock exchange, which is only a trade association set up or formed for the benefit of its members. The only difference is that such a fund instead of being created by the settlor stock exchange within itself, is so done by way of a separate fund. The word 'consideration' in proviso to section 2(15) is, to our mind, wide enough to cover such indirect funding, if any. An individual member of a particular member stock exchange is not called upon to pay any direct charges to the applicant fund. In fact, a part of the auction money of the defaulting money is also, in terms of the SEBI circular (FITTC/FII/02/2002 dated 15.05.2002), made over to the corpus of the fund. Accordingly, the object of the applicant cannot be as a service in relation to any trade, etc. Further, even assuming so, the same does not involve any consideration inasmuch as no quid pro quo can be attributed to the mandatory contributions to the fund by the participating stock exchanges – Therefore, applicant fund is a public charitable fund, set up to advance an object of general public utility, and has been wrongly denied registration as one by the Revenue – Decided in favor of Assessee.
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