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TMI Blog2024 (6) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... a well- regulated market for dealing in securities, to promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities. 3. The return of income of BSE for A.Y. 2016-17 was filed on 26.11.2016 declaring total income at Rs..Nil. The return of income was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. In response to the notices issued u/s. 143(2) and 142(1) of the Act, BSE had uploaded online all the details on the Income-tax Portal as called for by the Assessing Officer. Assessing Officer after looking into each and every aspect of the income and expenses of BSE, completed the assessment on 30.12.2018. In the said assessment order, the Assessing Officer disallowed the claim of the assessee for deduction on account of contribution made to Core Settlement Guarantee Fund of Rs..68,84,23,341/-. The assessee has preferred an appeal against the said assessment order which is pending before the CIT(A). 4. Thereafter, the impugned order was passed by Ld. PCIT u/s. 263 of the Act, with the observation that 'the Assessing Officer erred in not examining the taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired into. This issue has bearing on assessment of taxable income. Failure of the assessing officer to examine the same and non- enquiries by the assessing officer in this aspect has rendered the assessment as erroneous in so far as it is prejudicial to the interest of revenue within the meaning of Section 263 of the Act. 4. In view of the aforesaid reasons, it is proposed to revise the assessment order dt. 30.12.2018 under section 263 of the Income-tax Act, 1961, being erroneous in so far as it is prejudicial to the interest of revenue." 5. Further, Ld. PCIT has made a detailed discussion on the merits of the issue of taxability of interest income and is of the view that the amount of Rs..2.79 cr. being interest earned on the contribution made by the assessee towards Core Settlement Guarantee Fund is the income of the assessee. The Ld. PCIT has held that the assessment order is erroneous and prejudicial to the interests of the revenue. 6. Aggrieved assessee is in appeal before us by raising following grounds of appeal. "(i) The issue has already been examined by the Assessing Officer in the course of the proceedings u/s. 143(3) of the Act and he has taken a possible view in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2.79 cr. is very much a possible view. In fact, in light of the submissions made hereinbelow, it can be said that the view taken by the Assessing Officer is the only view. Therefore, the assessment order is not erroneous or prejudicial to the revenue. We place reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Max India Ltd. (295 ITR 282) wherein it has been held that if the Assessing Officer has taken one view with which the Commissioner do not agree, it cannot be treated as an erroneous order prejudicial to the revenue, unless the view taken by the Assessing Officer is unsustainable in law. We further submit that in the assessee's own case for A.Y. 2015-16, wherein identical submissions were made before the Assessing Officer and the Commissioner attempted to revise the assessment order in respect of the issue of contribution made to Core Settlement Guarantee Fund, the Hon'ble Tribunal has held that the Assessing Officer has taken a possible view and, hence, the assessment cannot be revised. The above referred order of the Hon'ble Tribunal for A.Y. 2015-16 in ITA No. 1790/Mum/2019 dated 04.10.2019 has been placed on record. 15) Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of calculating further contribution to be made by the assessee to the Core Settlement Guarantee Fund. However, this does not mean that the interest income accrues or belongs to the assessee. 20) From the above mentioned contentions, it is discernible that the investment income of Rs. 2.79 crores accrued on contributions made by BSE to Core SGF till March 31, 2016, on pro-rata basis was attributed in proportion to its cash contribution and was to be considered for calculation of contribution to Core SGF as per SEBI Circular and to that extent BSE need not contribute more. 21) Also, the amount transferred by BSE and income accrued on investment by Core SGF has to be utilized by ICCL as per the guidelines provided by SEBI from time to time. The same is confirmed by ICCL vide their letter date 16.03.2021 (PBP 108). In the said letter, it has also been confirmed by ICCL that the investment income of Rs. 2.79 cr., over which the assessee does not have any right, title or interest, has been considered by them while filing their return of income. It may be noted that BSE has no right/title or interest either over the amount already contributed to Core SGF or on investment inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be taxable in the hands of Core Settlement Guarantee Fund. It is an elementary that income cannot belong to two persons and, hence, investment income cannot be taxed in the hands of the assessee. 24) The above view taken by the Hon'ble Tribunal in the case of the assessee has been followed by the Hon'ble Tribunal in the case of National Stock Exchange of India Limited v. DCIT for A.Ys. 2016-17 and 2017-18 in ITA Nos. 730 and 731/Mum/2023 dated 26.10.2023. 25) It is submitted that the facts of the case under consideration is on a much better footing than the facts of the case before the Hon'ble Tribunal in assessee's own case for A.Y. 2015-16 and in the case of National Stock Exchange of India Ltd. In the above referred two cases, the issue involved was allowability of contribution made to Fund as a deduction. The Hon'ble Benches of the Tribunal had held that such contribution is permanent outgo and, hence, to be allowed as a deduction in the hands of stock exchange. As against that in the present case, the issue involved regarding the taxability of interest income earned by the Fund on the amount of contribution made by the assessee to the Fund. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 263, Ld PCIT directs the Assessing Officer to include the above exempt income also while making the disallowance of contribution to the Core SGF. Therefore, Ld PCIT has treated the assessment itself as erroneous. On careful consideration of the above facts on record, we observe that the assessee is only a contributor to the funds and it is under control of ICCL. The above funds can be considered as part of assessee's operation. The income accrued out of funds in the control of ICCL is chargeable to tax in their hands and ICCL has already submitted a letter indicating that this income was duly declared by them as their income and they have claimed that as exempt. That being so, the Ld PCIT has not brought on record how the share of income earned by the ICCL are chargeable to tax in the hands of the assessee. In the reassessment proceedings u/s 263 both the conditions has to be fulfilled before invoking the revision proceedings. He has held that the assessment order is erroneous but not brought on record how it is prejudicial to the interest of revenue. In our view, the income earned out of Core SGF held by ICCL is exempt u/s 10(23EE) of the Act in the hands of the ICCL and once ..... X X X X Extracts X X X X X X X X Extracts X X X X
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