9911796707
TMI Blog2020 (3) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... information as called for. 3. During the course of assessment proceedings, the assessee vide letter dated 18/02/2015 submitted on 26/02/2015 has filed revised working of taxable income as per mutuality concept. In Fixed Income Money Market and Derivatives Association of India, the above letter the assessee has stated that assessee has offered to income tax on pro-rata basis contributions received from non-members for participating in various programmes and others conducted by the assessee was exempt from income tax, however due to amendment in section 2(15), the definition of word charitable purpose was modified with effect from A.Y. 2009-10. The object of the assessee company is education and therefore the income of the assessee company in respect of amount received from non members is exempt from income tax, however to avoid litigation, the assessee has voluntarily offered to income tax the contributions received from non members for participating in training programmes and other programmes. Accordingly, assessee offered income of Rs. 14,99,277/-. On verification of the ROI statement, it noticed by AO that assessee is not claiming depreciation on software installed for develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arket participants u/s 29(2) of the Government Securities Act, 2006, It is a regulatory activity undertaken by the Appellant Company. In order to ensure that nobody is losing or unduly gaining due to genuine mistakes, the RBI instructed the appellant company to set up Dispute Resolution Mechanism to resolve trade disputes amongst the market players. Certificate of Deposits Is a Money market instrument used for raising short term (upto one year) deposits by the banks. In the interest of Money market and its orderly development, FIMMDA issues operational guidelines for Certificate of Deposits. Commercial Papers are issued through Issuing & Paying Agents. Their roles and responsibilities- are defined by FIMMDA. The issuers and the investors are guided by the publication made by FIMMDA, NCDs are Issued by corporates for raising funds and the investors are generally banks and insurance companies, NCDs are issued through Debenture Trustees. Their roles and responsibilities are defined by FIMMDA, The Issuers and the investors are guided by the publication made by FIMMDA. This activity is done in the interest of development of the securities market. The problems faced by the market partici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,50,000/- and the fees received from 23 users from December 2011 amounted to Rs. 11,07,979. Trade Reporting platforms were not for the purpose of earning income from the non-member users. F-Trac platform was started in 2011 and w.e.f April 2014 this platform was transferred to CCIL and Stock exchanges and appellant company was just reimbursed the capital cost Incurred by the Company for developing the software. In fact, against the total capital expenditure of Rs. 34,74,4507-incurred, the Company received Rs. 21,67,234/-; therefore, Company suffered a loss. v. Appellant further contended that providing training and developmental support is one of the objects of establishing FIMMDA. Training is given on topics related to securities market It is given to all the interested public Including FIMMDA members for a fee. Fees are charged to cover the cost of lecturer, food, hiring of laptops, etc. There is no profit motive in offering this service and/or deciding the fees. Sometimes there will be surplus. During the year ended 31st March 2012, the direct expenses and income were as under; Training and seminar direct expenses: Rs. 24,98,144/- Fees received from participants : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fixed income, money and derivatives markets in the country is an object of general public utility. From the above it will be seen that all the activities are as per the objects given in the memorandum of association which are in the nature of object of general public utility and hence charitable in nature and no activity of the appellant company is in the nature of trade, commerce business. The definition of charity, which entails giving and receiving nothing in return Is outdated. Charity is driven by altruism and desire to serve others, though element of self-preservation may be present. For charity, benevolence should be omnipresent and demonstrable but it is not equivalent to self-sacrifice and abnegation. On the contrary, a business activity is one which is undertaken with profit motive and on sound or recognized business principles. 7. After considering the submissions of the assessee, Ld. CIT(A) rejected the contentions of the assessee with the following observations:- I. The appellant submitted that Reserve Bank of India bestows responsibility on it to function as quasi regulator and hence its object being charitable it is exempt u/s. 11. In this regard it is mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this activity and hence proviso to section 2(15) is applicable, v. Further it is noted that appellant has received accreditation fees of Rs. 6 lakhs against which expenditure of Rs. 788/- only has been booked. Appellant is also carrying out training and seminar on which expenditure of Rs. 24,98,144/- was made during the year, Against this fees of Rs. 28,46,096/- was received from participants which makes it a profit making activity. The appellant has made profit even out of this activity and hence proviso of section 2(15) is applicable. Hon'ble ITAT Cochin while deciding a similar issue In case of State Forum of Bankers Club 56 taxmann.com 172 held that where assessee-trust was rendering service to banks by organizing lectures and seminars for benefit of bank employees, same was not charitable activity and assessee was not entitled for recognition under section 2(15). vi. In view of above facts it is held that proviso to section 2(15) squarely applied to the appellant since it is rendering services in the nature of business for a fee. As per the proviso to section 2(15) if a charitable organization carrying out objects of advancement of general public utility is involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax (Appeals) ought to have held as such. 1 : 3 The Appellant submits that the Assessing Officer be directed to grant exemption u/s. 11 of the Act and to re-compute its total income accordingly. 2 :0 Re.: Applicability of the proviso to section 2(15) of the Act: 2 : 1 The Commissioner of Income-tax (Appeals) has erred in holding that the proviso to section 2(15) of the Act was applicable in the case of the Appellant. 2 : 2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the proviso to section 2(15) of the Act is not applicable in its case and the Commissioner of Income-tax (Appeals) ought to have held as such. 3 : 0 Re.: Without prejudice, deduction of all expenses debited to the Profit & Loss Account be granted while computing income under the principle of mutuality in the ratio of receipts from members vis-a-vis non-members 3 : 1 The Assessing Officer has erred in not considering all the expenses debited to the Profit & Loss account while assessing the Appellant's income. 3 : 2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee is engaged in carrying on activities as per its object clause of 'MOA' registered under Companies Act and the duty entrusted by RBI on prescribing uniform market practices. In the interest of maintaining integrity and orderly conditions 'G-sec' market and assessee was given the task of developing code of conduct for the users of NDS-OM platform. In order to bring uniform application, the roles and responsibilities as defined by FIMMDA. In order to bring uniformity, assessee has developed F-Trac platform, accordingly it was carrying on training and development activities and usage of such software programmes for a fee. Since the goal of the assessee is to bring uniformity in market in carrying out trading in the market and it involves in activities which is available to its members as well as non members. We notice that assessee was declaring income based on the mutuality concept, based on the reasons best known to the assessee or by professional advice. However, in our considered view, when the assessee was providing services to its members as well as non members, it can never be categorized under mutuality concept. The mutuality concept can be applied only when a mutua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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