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TMI Blog2019 (11) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... considered various details submitted during the course of assessment. Hence, the order passed by the AO is neither erroneous nor prejudicial to the interest of revenue i.e. involving any error or it is deviating from law. (as defined in Black s Law Dictionary). Since, the AO has acted in accordance with law and passed the assessment order, the same cannot be considered as erroneous and prejudicial to revenue, simply because AO has not elaborated various things in the body of the assessment order. Hence, we quash the revision order passed by PCIT and allow the appeal of the assessee on this issue - Appeal of the assessee is allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... egal and bad in law and the order of the Id. PCIT - 2 be quashed." 3. Brief facts are that the assessee filed its return of income on 27.11.2015 declaring total income of ₹ 24,48,63,440/-. Subsequently, it revised its return of income declaring the same income on 19.01.2016. The assessment u/s 143(3) of the Act was completed on 29.12.2017 assessing the total income at ₹ 31,05,79,241/- by making disallowance of ₹ 5,45,68,743/- on account of disallowance u/s 14A and an amount of ₹ 1,1 1,47,058/- on account of depreciation of assets (in the form of server). Subsequently, the PCIT, on examination of records, noted that the assessment order dated 29.12.2017, passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue due to the reasons stated here under: - "a) ₹ 25,78,84,501/- had been reduced while computing taxable income as 'contribution towards settlement guarantee fund'. b) ₹ 6.75 Crore had been debited to P&L a/c as contribution towards investors service fund." 4. We noted from the facts of the case that in the Show Cause notice issued u/s 263 of the Act, the PCIT have raised the following issues due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in securities; to promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities. BSE has been providing infrastructure facilities for trading in securities. All the Directors of BSE are Independent and Non-Executive. 6. BSE in response to the notices issued u/s. 143(2) and 142(1) of the Act, from time to time had uploaded online all the details on the Income Tax Portal as called for by the AO. After looking into each and every aspect of the income and expenses of BSE, assessment was completed. Details of notices issued and replied filed by BSE are filed in the assessee Paper Book. From these details, it can be seen that all the details as required by AO were uploaded online on the Income Tax Portal during the course of the assessment proceedings. It is proved beyond doubt that the AO had made a detailed and complete enquiry about each and every aspect of income and Expenditure of BSE and thereafter the AO completed the assessment in accordance with law. 7. As regards to the merits of the case are concerned, the Ld Counsel pointed out that the observation in para 4(a) of Show Cause Notice with respect to the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack exchange shall be subject to the following: 1. The MRC shall be fixed for a month. 2. By 15th of every month CC shall review and determine the MAC for the next month based on results of the daily stress test of the preceding month. 3. For every day of the preceding month uncovered loss numbers shall be estimated by the various stress tests for credit risk conducted by the CC for the segment and highest of such numbers shall be taken as worst case loss number for the day. 4. Average of all the daily worst case loss numbers determined in (3) above. 5. The MAC for next month shall be higher of the average arrived in at step 4 above and the segment MAC as per the previous review. Contribution to Core SGF: At any point of time, the contributions of various contributors to Core SGF of any segment shall be as follows: a. Clearing corporation shall contribute at least 50% of the MAC from its own funds which shall be considered as part of its Networth. b. Stock Exchange shall contribute at least 25% of the MAC (can be adjusted against transfer of profit by Stock Exchange as per Regulation 33 of SECC Regulations). c. The clearing corporation has the option to collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td has not gained any advantage of enduring nature or any capital asset is acquired as a result of contribution made mandatorily. The expenditure is incurred wholly & exclusively for the purpose of business of BSE. It is submitted that, if the said amount is not allowed in this A. Y. then the same amount will be taxed twice; i.e. one when the amount contributed is disallowed and second when the said amount in whole or in part is shored with BSE Limited in subsequent assessment year when it is shared. In view of the above facts and in law, the said sum of 25,78,84,501/- contributed during the year is an allowable expenditure under Sec 37 (1) of the Income Tax Act, 1961 and has been claimed accordingly. A confirmation from the Indian Clearing Corporation Ltd. is attached as Annexure 22.2 (presently refer annexure 3). It may be noted that, in subsequent year i.e. F. Y. 2015-16 the said amount of ₹ 25,78,84,501/- contributed by BSE Limited to the Care SGF has been debited in the profit & loss A/c under the head "Prior period item" and accordingly disallowed in the computation of income for FY 2015-16 Copy of computation is attached as Annexure 22.3 (presently refer anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investor service fund and has also charged on a pro- rata basis other relevant expenses. It may be noted that this contribution to Investor Services Account is regulatory requirement and compulsory for stock exchange business operation since the issue of SEBI circular no Ref. SE/10118 dated October 12, 1992. The details of contribution of Investor Service Fund are as under: Particulars Amount (₹) Annual Listing fees for the year 61,80,35,509 29% of the above (as per SEBI requirement) 12,36,07,102 Expenditure incurred towards investor service activities (Charged to respective nature of expenses) 5,60,92,345 Charged to contribution to investor service fund 6,75,14,757 Total 12,36,07,102 These details were once again re-uploaded online by BSE on the Income Tax Portal on 20.12.2018 (refer Annexure 5). 10. In addition to the above, another notice u/s. 142(1) of the Act dated 9.12.2017 was issued asking to "Please furnish the details of contribution to SCSI / contribution to investor service fund/ contribution to investor protection fund with supporting" (refer point no. 5 of Annexure 6). In response, BSE vide letter dated 15.12.2017 (re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. We are of the view that contingency means a future event or circumstances which is possible but cannot be predicted with certainty. In the present case the liability to pay/ contribute is certain and accrued as per the Circular of SEBI. The said amount is transferred to CSGF and has not remained with BSE; therefore, it cannot be said to be in a nature of contingency reserve. Secondly, the contribution cannot also be termed as deposit. Oxford dictionary defines deposit as "place (something) somewhere for safekeeping". In the present case the amount is transferred to CSGF of Indian Clearing Corporation Limited (ICCL) and has not been kept for safekeeping. The amount transferred will be utilized by ICCL as per the guidelines provided by SEBI from time to time. Therefore, the contribution is revenue in nature and not an asset or deposit. ICCL has also confirmed vide letter dated 7.12.2017 (refer Annexure 3) that BSE has contributed a sum of ₹ 25,78,84,501/- to CSGF and no amount has been shared with BSE as on 31.03.2015. BSE has no right over the amount already contributed to CSGF. We are of the view that the assessee is able to prove beyond doubt that the contributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 14. On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter-and if there was no change it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be a!!owed, and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12' 14. We also noted that the PCIT in para 4.2 of Show Cause Notice noted that the facts and circumstances of the case for A.Y. 2015-16 being same as A.Y. 2016-17, allowing the claim of contribution to the two funds as business expenditure makes the assessment order for A.Y. 2015-16 erroneous. In this connection, Ld Counsel submitted that during the assessment proceedings for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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