Income Tax Appellate Tribunal - Jaipur
Jaipur Stock Exchange Ltd. vs Ito on 27 June, 2005
Equivalent citations: [2006]6SOT811(JP)
ORDER
B.P. Jain, AM.
This is an appeal filed by the assessee against the order of the Id. Commissioner (Appeals) dated 12-11-1999 for the assessment year 1996-97.
The ground No. 1 is relating to holding that the admission fees of Rs. 4.43 crores received from the members is revenue receipt as against the claim of the appellant that admission fees are capital in nature.
Ground No. 2 of the assessee is relating to holding that initial listing fees of Rs. 21.30 lakhs received by the Exchange is in the nature of revenue receipt as against the claim of the appellant that it is in the nature of capital receipt.
2. After hearing both the parties and on perusal of the material on record, it appears that the assessee has appended a note below the computation of total income that the admission fees amounting to Rs. 4,43,00,000 and initial listing fees of Rs. 21,30,000 received during the year has been treated as capital receipt and as such not included in the income in view of Hon'ble Bombay High Court decision in case of CIT v. W.I.A.A. Club Ltd. (1982) 136 ITR 569 (Bom). However, the assessee's plea has not been accepted by the department. In assessment year 1988-89 in the assessee's own case, the ITAT in appeal No. ITA No. 13 87/JP/94, dated 28-2-1995 has followed the Apex court judgment in the case of CIT v. Calcutta Stock Exchange Association Ltd. (1959) 36 ITR 222 (SC) has held that each of aforesaid sums of money accrued to the assessee on account of its performing the specific services for its member, or such of them was availed themselves of such services, and the said sums were, accordingly, assessable to income-tax under section 10(6) of the Income Tax Act, as profit and gains derived for carrying on business. Similarly the Hon'ble Supreme Court has recently given a judgment in the case of Delhi Stock Exchange Association Ltd. v. CIT (1997) 225 ITR 235 (SC) that the income of the Exchange is not exempt under section 11 read with section 2(15) of the Income Tax Act. Following the above ratio of the Hon'ble Supreme Court and also the ITAT, decision in the assessee's case for the assessment year 1988-89, the admission of Rs. 4,43,00,000 and initial listing fees of Rs. 21.30 lakhs were treated as revenue receipt by the assessing officer and confirmed by the Id. Commissioner (Appeals) in favour of revenue in light of decision of Hon'ble ITAT Bench in the assessee's own case (supra).
3. By considering the totality of the facts and circumstances of the case, we find that the same issue has already been decided in the assessee's own case for the assessment year 1998-99 vide ITA No. 1387/JP/94, dated 28-2-1995 at Jaipur Stock Exchange Ltd. v. Income Tax Officer (1995) 54 ITD 589 (Jp.), where the decisions of Hon'ble Supreme Court in the case of Calcutta Stock Exchange Association Ltd. (supra) and Delhi Stock Exchange Association Ltd.'s case (supra) were followed. Therefore, we decline to interfere with the order of the Id. Commissioner (Appeals) and the same is hereby sustained for the reasons mentioned in his order where he has rightly treated the admission fees and initial listing fees as revenue in nature. Thus, the Ground Nos. 1 and 2 of the assessee are dismissed.
Ground No. 3: The Id. Commissioner (Appeals) erred in holding that the benefit of accumulation of income to the extent of 25 per cent of such income under section II (1)(a) is subject to section 13(1)(d) of the Income Tax Act which requires that all the funds should be invested in the forms or modes specified in sub-clause (5) of section II of the Income Tax Act.
4. The brief facts of this ground are that the assessing officer in his computation has exempted Rs. 5,38,59,647 being amount transferred to building fund for which notice under section 11(2) was given in the Form No. 10A filed along with the return without discussing anything in the assessment order. The Id. Commissioner (Appeals) vide his order dated 12-11-1999 para at 3.5 has held as under:
"The assessing officer is directed to allow the benefit of accumulation of income to the extent of 25 per cent of such income under section 11 (1)(a) subject to section 13(1)(d) of the Income Tax Act which requires that all the funds should be invested in the forms or modes specified in sub-section (5) of section 11 of the Income Tax Act."
5. We heard the rival submissions and perused the materials available on record. The Id. AR argued that 25 per cent of income under section 11 (1)(a) is not required to be invested in the forms or modes specified in subsection 5 of section 11 of the Act. The Id. AR has relied upon various judgments. We are of the view that as per section 11(2) it is only 75 per cent of the income referred to section 11 (1)(a) or section 11 (1)(b) read with Explanation to that sub-section is not applied or is not deemed to have been applied to charitable or religious purposes in India during the previous year but is accumulated or set apart subject to the compliance of conditions as referred in section 11(2)(a) and section 11(2)(b) of the Act. In our opinion, therefore, there is no requirement under the Act for investment of accumulation of income in specified modes to the extent of 25 per cent of such income under section 11(1)(a) of the Act. This view finds support in the decision of S.R.M.M. C.T.M. Tiruppani Trust v. CIT (Inv.) (1998) 230 ITR 636 (SC) and the relevant para of this decision at page 642 reads as under:
"In the case of Addl. CIT v. ALN Rao Charitable Trust (1995) 216 ITR 697, this court considered the provisions of section 11 (1)(a) in the light of section 11(2) and held that section 11(2) does not in any manner restrict the operation of section 11(1). The accumulated income which is exempt under section 11(1)(a) need not be invested in Government securities. It is only in respect of any additional accumulated income beyond 25 per cent that if the assessee wants exemption of this additional accumulated income also, the assessee is required to invest the additional accumulated income in the manner laid down in section 11(2) after following the procedure laid down therein.
In the present case, the assessee is not claiming any benefit under section 11(2) as it cannot; because in respect of this assessment year, the assessee has not complied with the conditions laid down in section 11(2). The assessee, however, is entitled to claim the benefit of section 11(1)(a). In the present case, the assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing a building which is to be utilized as a hospital. This income, therefore, is entitled to an exemption under section 11(1). In addition, under section 11(1)(a), the assessee can accumulate 25 per cent of its total income pertaining to the relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in Government securities. The balance income of Rs. 1,64,210.03 constitutes less than 25 per cent of the income of the assessment year 1970-71. Therefore, the assessee is entitled to accumulate this income and claim exemption from income tax under section 11 (1)(a)."
6. In our view, the matter has to be decided by the Assessing Officer in light of the decisions of the Hon'ble Supreme Court in the case of S.RM.M. C.T.M. Tiruppani Trust (supra). Therefore, the matter is restored to the file of the assessing officer to compute the taxable income as per direction given above by providing reasonable opportunity to the assessee.
7. In the result, the appeal of the assessee is partly allowed for statistical purposes.