TMI Blog2013 (10) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... fit 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. - I.T.A. No. 7436/Mum/2011 - - - Dated:- 20-9-2013 - Shri B. R. Mittal, JM And Shri Sanjay Arora, AM,J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ahmedabad Rana Caste Association vs. CIT [1971] 82 ITR 704 (SC), copy of which is placed at pages 60-63 of the assessee's paper-book (PB). In fact, continuing further, he would submit that such investor protection Funds set up by the Bombay and the Calcutta Stock Exchanges have already been granted registration as 'charitable funds' under the Act by the Department, and much prior to the creation of such Fund/s by the other recognized stock exchanges on being mandated by SEBI, the regulatory body overseeing the management of the security transactions and capital markets, including allied legislation, in India. As such, the stand of the Department in the instant case is both untenable in law, and even otherwise inconsistent and, thus, incomprehensible. 2.2 The ld. DR, on the other hand, would submit that the assessee's objects, with reference to which it claims to be set up for charitable purpose/s, falls under the last category of such purposes, inclusively defined u/s. 2(15) of the Act, i.e., advancement of any other object of general public utility. A proviso to the provision stands inserted by Finance Act, 2008 w.e.f. 01.04.2009, so as to exclude the same from the ambit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members thereof, stand already excluded from the ambit of the 'total income' under the Act u/s.10(23EA). Further, that the income of the stock exchanges is subject to tax, and which would also, therefore, include the cess or fee levied by way of consumer protection fund to the companies listed thereat. As such, the plea of the application of the proviso to section 2(15) to such contributions, so as to exclude the assessee's activity from the purview of charitable purpose, may not be of any import inasmuch as such funding of the assessee-trust is already provided for by law, according it tax-exempt status u/s.10(23EA). To that, he would reply by stating that in that case there ought to be no need for the assessee to apply for registration u/s.12AA as a public charitable trust; its principal source of funding, i.e., by way of contributions afore-said, being already exempt from tax u/s.10(23EA). The assessee, by doing so, seeks to enlarge the scope of the exemption from tax as accorded to it by law, i.e., by extending it to income from other activities, viz., trade income and the interest on the parking of its surplus funds. On the Bench requiring him to specify the said activity or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the activities thereof. The issue in Rajasthan Housing Board (supra) was of withdrawal of registration u/s. 12AA(3), so that after reproducing the relevant parts of the provision, i.e., 12AA(1) 12AA(3), the Tribunal in Maharashtra Housing Area Development Authority (supra) opined as follows (para 701, pg. 204): "Thus, it is only upon being satisfied about the objects of the applicant, as well as about the genuineness of its activities that the Commissioner is obliged to register a trust/institution as charitable, by an order in writing, being also required to do so where not so satisfied. Clearly, the satisfaction qua the 'objects' is only with regard to their being for a charitable (or religious) purpose/s. It cannot but be otherwise; the registration being only toward the applicant being a public charitable (or religious) trust or institution under the Act. This, in fact, is the edifice or the terra firma on which the provision rests. As such, even though the registration certificate or the communication in its respect may not, or is not required to, contain an explicit finding or mention as to the satisfaction with regard to the objects of the trust or ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (1) ........ (2) ........ (23EA) and income by way of contributions received from recognized stock exchanges and the members thereof, of such Investor Protection Fund set up by recognized stock exchanges in India, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf: Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a recognized stock exchange, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax; Our first observation in this regard is that once it is decided that the assessee's principal object is for the advancement of an object of any general public utility, under which clause the assessee's claim to being for a charitable purpose in terms of section 2(15) lies, it would not be material if the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cases and, in any case, with sufficient dispatch, i.e., as may be warranted in the exigencies of the situation. In fact, the investor's complaint is to be finally settled on the basis of the decision by the Investors Service Committee of the settler-company, i.e., ISEL. Further, the Deed makes it abundantly clear that the Fund monies shall be toward settling the claims of the investors and not to compensate the individual members of the stock exchange who have defaulted or otherwise incurred losses. We, therefore, have no doubt in our own mind that the object is one for advancement of general public utility; the fund having been set up only in pursuance to and comply with the advisory/s issued by the SEBI to the recognized stock exchanges from time to time. The only issue that, therefore, survives is with regard to the business model or the funding of the applicant fund. This is not for the reason that the contributions to the fund by the member stock exchange are exempt u/s. 10(23A), as the ld. DR would point to us. As explained, the same, to our mind, is irrelevant; it is for the assessee to see as to which course of action is more beneficial or desirable to it. Besides, exem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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