TMI Blog1966 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... y guarantee and registered under section 26 of the Hyderabad Companies Act (Act VI of 1320 F.), which corresponds to section 26 of the Indian Companies Act (Act VII of 1913). The assessment year with reference to which this question has been postulated is 1961-62, for which the accounting year is the financial year ending March 31, 1961. The company has been assessed to income-tax from 1952-53 onwards. In all the years up to 1960-61, it filed returns of income showing therein the income from interest on securities and it was accordingly assessed. In connection with its assessments for the years 1953-54, 1954-55, 1955-56 and 1956-57, it made a claim that its income was exempt under the provisions of section 4(3)(i) of the Act, which claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for an object of general public utility and, since it is held for charitable purposes, it is exempt under section 4(3)(i) of the Act. In appeal, the Tribunal examined the provisions of section 4(3)(i) as also the definition of " charitable purpose " as given in the Explanation at the end of the section and held that, in order to qualify for exemption, the assessee should satisfy the following conditions: "(i) The property should be held under trust or other legal obligation; (ii) it should be held for charitable purposes, i.e., for advancement of any object of general public utility; and (iii) the income should be applied or accumulated for application to such charitable purposes. " It was found that condition (i) was satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion that the services rendered by the stock exchange were primarily for the benefit of the exclusive set of members and that it was only indirectly that the public was benefited; such indirect benefit of the public would not satisfy the requirements of section 4(3)(i), which refers to " property held under trust or other legal obligation wholly for religious or charitable purposes ". We are unable to accept the view of the Tribunal or that of the Income-tax Officer that stock exchanges are only meant for the benefit of the brokers. This view, which, in our opinion, is too narrow, does not really appreciate the significance or purpose of such bodies. As Mr. W. T. C. King, the well-known author on economics, has said : " Without th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of dissolution or winding up, any property or assets which remain after satisfying all the debts and liabilities of the exchange, including the deposits of members, and after returning to the members the face value of their card fee, shall be devoted to any activity having the same or similar objects as an exchange or be distributed in charity as may be determined by the exchange and in the event of their failure to do so by the High Court of Judicature." There could be little doubt from what we have said above that the object of the stock exchange is not only to serve a general public utility but has also a charitable purpose. In a recent decision of the Supreme Court in Commisssoner of Income-tax v. Andhra Chamber of Commerce Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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