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TMI Blog2013 (10) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and securities. The assessee-trust was formed in pursuance of the Securities and Exchange Board of India (SEBI) guidelines/regulations for investor protection, with the sole aim of creating a Fund which could provide compensation to the investors in case of loss on account of default by any member of a participating, recognized Stock Exchange. The same is a public charitable cause, falling within the scope of the term 'charitable purpose' as defined u/s. 2(15), vide the last limb thereof, i.e., the advancement of any other object of general public utility. The ambit of the same is well-settled per a number of decisions by no less than the hon'ble apex court; it clarifying per its recent decision in CIT vs. Gujarat Maritime Board [2007] 295 ITR 561(SC) the said term to be of the widest connotation. There is, as such, no denying the fact that the object of the Trust qualifies to be a charitable purpose under the Act. The Revenue has, however, denied the benefit of registration 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. It is not necessary that the objects of a trust or fund, to q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, instead of receiving such contributions directly from the beneficiaries, the members of the participating stock exchanges, does so indirectly, the ostensible source being the stock exchange/s, even as admittedly it is only the members of the respective stock exchanges who have a stake in its resources, and which are further raised from the companies listed thereat by way of a fee or cess. The indirect manner of receiving such fees or consideration would not, however, impact the applicability of the law, as amended, which clearly provides for the exclusion from the ambit of a charitable purpose activities falling within the last limb of section 2(15) where a cess or fees or consideration qua the same is charged. Therefore, Gujarat Maritime Board, the respondent-company in the case of CIT vs. Gujarat Maritime Board (supra), would also be not liable to be considered as a charitable institution under the amended law, which applies in the instant case. The matter stands abundantly explained by the CBDT vide its Circular No. 11/2008 dated 19.12.2008, placing a copy of the same on record. This would also serve to distinguish the assessee's case from that of the funds established or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose. However, the registration could not be denied on that basis. For this, he would refer to, among others, the decision by the tribunal in the case of Rajasthan Housing Board vs. CIT [2012] 51 SOT 383 (JP), adverting to and reading from the relevant part thereof (PB pages 99-102). Its stands amply clarified that the Assessing Officer (AO) is empowered to examine the allowability of exemption u/s.11 where the Revenue considers the object/s as not charitable. The same would not have a bearing as regards the granting of registration u/s.12AA of the Act is concerned. In the instant case, in fact, the proviso to s. 2(15) has no application, and the assessee's activities squarely fall within the ambit of a charitable purpose, so that considered either way, registration thereto could not be denied. 3. We have heard the parties, and perused the material on record. 3.1 The first aspect that needs to be clarified in the instant case is that it is a case of refusal to grant registration u/s.12AA(1), and not of withdrawal of registration already granted, i.e., u/s.12AA(3) of the Act. In this regard it would be pertinent to reproduce the relevant part of the order by the tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DIT (Exemption) toward the assessee's objects being not charitable, we shall consider the same in seriatim, as under: (a) that the appellant fund is for the benefit of the specific persons who invest in a particular market, and not for the general public. As explained by the apex court in the case of Ahmedabad Rana Caste Association (supra), an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose it is not necessary that the object leads to the benefit the whole mankind or all persons in a particular country or even state, and it would be sufficient if the intention is to benefit a section of the community, sufficiently defined and identifiable by some common quality of a public or impersonal nature. What is to be seen is the intention to benefit a section of the public as distinguished from a specified individual or group. As such, we find no merit in the said objection by the ld. DIT (E). (b) that the contribution which the participating member stock exchange is required to make to the appellant-fund is toward defined services, so that the same, as well as the interest earned thereon, would be liable to being tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share or right in the amount contributed by them or their members. So however, to the extent it is by way of performance linked, or even a uniform charge on the companies listed on the stock exchange/s, as, say, a percentage of their revenue, in our view, the same could be an arrangement to indemnify their members by charging them a particular amount, even though termed as a 'contribution'. The said Members may well seek insurance in respect of the losses liable to be sustained in the course of and in pursuance to their trade, with the insurance company creating such a fund, and for which it may charge an insurance premia. On the other hand, if the contributions is not linked to any service, made voluntarily by the recognized stock exchange, with it retaining no lien or right on the said contribution, no charge as to the same being hit by the proviso to s. 2(15) would hold and, consequently, the Revenue's objection would not be valid. We have perused the trust deed forming part of the application for registration under Form 10A. The trust is formed to serve the cause of the investing public at large. Though the investor concerns are sought to be adequately met through the bye la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, a comprehensive and holistic reading of the trust deed would allay all such misgiving/s or inference/s, and, in our clear view there is no scope for taking any such view. Firstly, as a condition for an eligible claim, the relevant member of the stock exchange is to be declared as a 'defaulter' following the prescribed procedure. Two, the corpus of the fund is to be built through, inter alia, share of listing fees, interest on 1% listing deposit, paid and kept by the issuer companies with the respective stock exchanges. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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