TMI Blog2000 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and balance-sheet for the assessment years 1989-90 and 1990-91. The benefit of section 11 was denied by the Assessing Officer. The matter was carried in appeal. The appellate authority confirmed the order of the Assessing Officer. Being aggrieved, the matter was carried in appeal to the Tribunal. The Tribunal came to the conclusion that the objects were of charitable nature ; that the assessee satisfied the definition of the words "charitable purpose" under section 2(15) of the Act ; that there was no breach under section 13(2)(a). Hence, this appeal is by the Department. On the first point, the only contention advanced on behalf of the Revenue was that there was no restriction nor obligation created to spend the money exclusively and essentially on charity. That, this point has not been considered by the Tribunal. In this connection, reliance was placed by the Department on the judgment of the Supreme Court in the case of Delhi Stock Exchange Association Ltd. v. CIT [1997] 225 ITR 235, as also the judgment of the Patna High Court in the case of Bihar State Forest Development Corporation v. CIT (1997] 224 ITR 757. In the memo of appeal, it is alleged by the appellant that the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84. At this stage, it may be mentioned that under section 8 of the Customs Act, the Collector of Customs is empowered to approve a proper place in any customs port or customs airport, for loading and unloading of goods or for any class of goods. Similarly, under section 45 of the Customs Act, all imported goods unloaded in the customs area remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped. Such person, having the custody of imported goods in a customs area, is required to maintain a record of such goods and shall not permit such goods to be removed from the customs except in accordance with the permission of the proper officer. Accordingly, on November 22, 1984, the Collector issued a notification under section 8 of the Customs Act, approving the premises of the MMTC situate at Diamond Plaza Building near Opera House as a customs area for the purposes of storage and clearance of diamonds, gems, etc. On the same day, another notification was issued under section 45(1) of the Customs Act approving the MMTC as the custodian of the imported cargo of the said goods until th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increased during the relevant period and how the country has benefitted by earning foreign exchange and, therefore, we are of the view that running of the assessee-bourse was an object of general public utility. A separate income and expenditure account has been maintained by the assessee. In this account, service charges, demurrage charges, subscription and other miscellaneous income have been credited and the expenses have been debited. The net amount is transferred to the consolidated income and expenditure account of the diamond bourse. With regard to the expenses, it may be mentioned that before the diamonds are transhipped to Sahar International Airport in North Bombay, the diamonds are examined by the customs officials, who are stationed in the premises of the assessee. A detailed procedure has also been laid down for assessment of the goods by the customs authorities. A detailed procedure is also laid down for taking delivery of the imported diamonds. For this purpose, a storage facility is also provided in the stock bourse. As stated hereinabove, the very nature of the above activity requires diamonds which are put in small wrappers to be kept in a safe place, Therefore, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribers are desirous of being formed into a company not for profit. That the said memorandum clearly indicated that the assessee did not exist for the purposes of profit. That under the memorandum of association, it has been laid down that the income shall be applied solely for the promotion of its objects and no portion of the income shall be paid directly or indirectly by way of dividend, bonus or profit to the members of the assessee. That no remuneration or other benefits shall be given to any of the members whether they are officers or servants except with the prior approval of the Central Government. Accordingly, the Tribunal concluded that there was a restriction on the manner of spending the income accruing to the assessee. In the case of Delhi Stock Exchange [1997] 225 ITR 235 (SC), it was found on the facts that till December, 1973, there was no prohibition on the assessee regarding distribution of profits as interests or dividends. That in December, 1973, the articles of association were amended to prohibit the distribution of profits. In the circumstances, the Supreme Court confirming the judgment of the High Court held that at the relevant period there was no obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee. Now coming to the second point mentioned hereinabove, it may be mentioned that the bourse at Diamond Plaza was initially located in an area admeasuring 5,400 sq. ft. including customs area. By 1988, 400 parcels of diamonds were examined every day by six customs officers and the back-up staff. Hence, shortage of accommodation was soon felt and, therefore, it was felt that an area of 12,000 sq. ft. on a single floor would be ideal. A building was coming up near Nana Chowk (also close to Opera House) called Diamond Village. It was, therefore, decided to explore the possibility of getting the requisite area in the said building. Accordingly, on February 11, 1988, the managing committee resolved to acquire additional space, and a sub-committee of four persons was formed to select alternate accommodation of 12,000 sq. ft. On April 27, 1988, the Vice President of the assessee informed Shri Bharat Shah (a member of the assessee) to negotiate on behalf of the assessee with the builders of Diamond Village. It was agreed that the assessee would provide Rs. 70 lakhs to Bharat Shah as deposit to purchase the premises in the Diamond Village. This was in view of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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