Income Tax Appellate Tribunal - Jaipur
Assistant Commissioner Of Income Tax vs Jaipur Stock Exchange on 30 June, 2006
Equivalent citations: (2007)108TTJ(JP)393
ORDER
B.P. Jain, A.M.
1. The Department has filed two appeals against two different orders of the learned CIT(A), dt. 14th July, 2003 for the asst. yrs. 1995-96 and 2000-01, respectively.
The assessee has filed two cross-objections against these appeals. Since the issues in the appeals of the Department and the cross-objections of the assessee are correlated with each other, therefore, they are being decided by a consolidated order as under for the sake of convenience.
ITA No. 696/Jp/2003-1995-962. In ground No. 1, the Department is aggrieved that the learned CIT(A) has erred in holding the assessee company as a charitable institution as per Section 2(15) of the IT Act, 1961 and directing the AO to treat the same accordingly.
In ground No. 2, the Department is aggrieved that the learned CIT(A) has erred in holding that assessee company is eligible for grant of exemption under Section 11 of the IT Act and directing the AO to allow the benefit of accumulation of income to the extent of 25 per cent of such income.
3. We have heard the parties. Briefly stated, the facts of the case are that the assessee has claimed exemption under Section 11(2) and under Section 11(1)(a) and has declared taxable income at nil. In response to the objection of the AO to allow exemption as claimed by the assessee, the assessee's reply was that the main objects of the company are generally for the promotion and protection of the interest of those acting as brokers, dealers and jobbers in stocks, shares and like securities, and to protect the interest of general public as a whole in the matter of stocks, shares, securities. The income and property of the exchange would be applied solely towards the promotion of the objects of the company. The income or surplus leftover with the company on winding up or dissolution was not to be distributed among his members. The assessee also stated that the objects as set out in memorandum and articles of association (MOA) of Jaipur Stock Exchange Ltd. (JSEL) are charitable in nature as the stock exchange is providing general public utility. The assessee also mentioned that the question whether the objects of the company are charitable or not was duly examined by CIT who had granted the registration under Section 12A. Accordingly, it was claimed that the exchange is entitled for exemption under Section 11.
4. The AO after examining the reply of the assessee was of the view that registration under Section 12 A alone does not give entitlement to the assessee for exemption under Section 11. The AO rejected the explanation of the assessee mainly for the reason that the assessee was allowed exemption under Section 11 for the very first year of the commencement of the activities of the assessee for the asst. yr. 1988-89 by the Tribunal but the same was pending for adjudication before the Hon'ble Rajasthan High Court under Section 256(2) of the Act. The assessee for the said year has surrendered under KVSS. The assessee was free to apply property of the trust exclusively for the objects in B-13. The membership of the assessee company is an asset because of dealing with stock shares and like securities which shows the intention of the assessee to earn profit. The intention of the membership is not for common charitable trust purpose but for trade and profit. The assessee company provides trading facilities to individual members and for this it charges fees in the form of admission fees and annual subscription. The business of dealing in stocks and shares and like securities is conducted by members as well as their authorized agents for earning profit. The AO has raised few more objections while rejecting the claim of the assessee and has cited many judicial pronouncements in this regard before arriving at the conclusion which appear at p. 8 of his order as under:
Moreover during assessment proceedings of asst. yr. 1996-97, it was found that the accumulations out of the surplus of the company to the extent of 25 per cent under Section 11(1)(a) were not as per modes specified in Sections 11(5) and 13(1)(d) and this situation is similar in current year also.
In view of the above facts of the case, the assessee's contention of claiming under Section 11 is wrong and it is not accepted. Accordingly, the exemption under Section 11 as claimed by the assessee is disallowed and surplus income over expenditure is to be taxed under the head 'Income from other sources'.
5. Before the learned CIT(A), the learned Counsel for the assessee made the explanation for each and every observation of the AO which appears at pp. 3 to 7 of learned CIT(A)'s order as under:
S.No. Observation of AO Explanation of Assessee
(i) The assessee does not fulfil the The assessee has not made any
conditions mentioned in Section investment or deposit which
11(5) that is deposit of money is in contravention of the
and funds in specified modes. provisions of Section 11(5)
of IT Act as is evident from
the published balance sheet
of the assessee. The learned
AO has not pointed out any
specific instance. Even in
asst. yr. 1996-97, there has
been no such violation of
Section 11(5) as per order
of CIT(A). On the contrary,
exemption under Section 11
stands duly allowed by CIT(A)
in asst. yr. 1996-97.
(ii) That reference under Section The Tribunal, Jaipur Bench,
256(2) of IT Act is pending Jaipur, vide its order dt.
adjudication before Hon'ble 28th Feb., 1995 has already
Rajasthan High Court for asst. held that the object of the
yr. 1988-89 which has arisen assessee is of general
out of ITA No. 1387/Jp/1994. public utility and assessee
is entitled to exemption
under Section 11. This dec-
ision of Tribunal still
holds good unless and until
the same is not reversed
by the Hon'ble High Court
and therefore pendency of
reference before Hon'ble
High Court cannot govern
the claim of exemption
under Section 11 to the
assessee. The decision of
Tribunal is a binding pre-
cedent and the ratio given
in the decision has to be
followed by the learned AO
in view of the following
decisions :
Agrawal Warehousing & Lea-
sing Ltd. v. CIT (2002)
177 CTR (MP) 15 : (2002)
257 ITR 235 (MP).
Bank of Baroda v. EC. Shri-
vastava (2002) 175 CTR (Bom)
663 : (2002) 256 ITR 385 (Bom)
(iii) That the proceedings for Hon'ble Rajasthan High Court
assessments reopened under has not yet decided the writs
Section 148 for asst. yrs. filed by the assessee and
1989-90 and 1990-91 are therefore reopening of these
stayed by the Hon'ble High cases will have no effect on
Court. grant of exemption under
Section 11.
(iv) That in the office note for The petition under KVSS was
asst. yr. 1988-89, the AO for settlement of disputed
had noted that the claim tax only, but in no way the
under Section 11 stood sur- assessee had surrendered its
rendered by the assessee claim under Section 11. On
under KVSS for asst. yr. the contrary, exemption un-
1988-89. der Section 11 was duly co-
nsidered and granted by Tri-
bunal, Jaipur Bench, vide
order dt. 28th Feb., 1995.
(v) Comparative position with reference to other stock exchange in India
(a) Calcutta Stock Exchange is The learned AO did not provide
not being granted deduction a copy of the assessment order
under Section 11 in asst. yr. or appellate order in which
1998-99 by the AO and the claim under Section 11 was
matter is under appeal before rejected. The learned AO has
the respected Tribunal Bench stated that the matter is
at Calcutta. pending in appeal before Tri-
bunal Bench at Calcutta and
therefore decisions of lower
authorites if any are not
binding on the assessee.
(b) The Delhi Stock Exchange had There was no prohibition to dec-
been denied this benefit for lare dividend or profit to mem-
a few years and that view was bers and therefore the assessee
confirmed by the Delhi High was not entitled to exemption.
Court in Delhi Stock Exchange Kindly refer Delhi Stock Exc-
Association Ltd. v. CIT (1980) hange Association Ltd. v. CIT
126 ITR 532 (Del). (1997) 139 CTR (SC) 455 : (1997)
225 ITR 235 (SC).
Afterwards. Delhi Stock Exchange
had amended its memorandum and
articles of association prohi-
biting distribution of profit
by way of interest and dividend
and therefore Delhi High Court
held that it was entitled to
exemption under Section 11--
CIT v. Delhi Stock Exchange
Association Ltd. (2001) 165
CTR (Del) 207 : (2001) 248 ITR
258 (Del).
(c) Madras Stock Exchange In fact, exemption under Sec-
tion 11 was duly granted to
Madras Stock Exchange as repo-
rted in CIT v. Madras Stock
Exchange (1981) 130 ITR 184
(SC).
(d) Ahmedabad Stock Exchange Exemption under Section 11 was
granted by Tribunal, Ahmedabad
Bench, as reported in Stock
Exchange Ahmedabad v. Asstt.
CIT (2000) 68 TTJ (Ahd) 596 :
(2000) 74 ITD 1 (Ahd). The
pendency of the matter before
High Court does not affect the
grant of exemption.
(e) Bombay Stock Exchange The learned AO has not provi-
ded a copy of the decision,
refusing to grant benefit und-
er Section 11 and therefore
this case cannot be relied
unless judgment is provided
for rebuttal.
In the case of CIT v. Madras Stock Exchange (1981) 130 ITR 184 (SC), the Hon'be Supreme Court in its decision affirmed the decision of Madras High Court granting the exemption and the observations of the apex Court were as under:
Held, that profit making was not the predominant object of the activity carried on by the Andhra Chamber of Commerce but its predominant object was to promote trade and commerce which was an object of general public utility and the High Court was right in taking the view that the object of Andhra Chamber of Commerce fell within the last category of charitable purpose given in Section 2(15) of IT Act, 1961 and its income was exempt from tax under Section 11(1). The Supreme Court also dismissed the petitions for special leave to appeal filed by the Department against the judgment of the Madras High Court reported in CIT v. Madras Stock Exchange Ltd. 1977 CTR (Mad) 1 : (1976) 105 ITR 546 (Mad) in relation to the other assessees viz., the South Indian Chamber of Commerce, the South India Film Chamber of Commerce, and the Madras Stock Exchange.
(vi) Object of general public utility:
The learned AO has stated that the objects of the assesses company are neither of a religious nature nor of a charitable nature for the following reasons:
(a) The objects of the company are The Jaipur Tribunal in assessee's mainly to do the business of case in Jaipur Stock Exchange various kinds as is clear from Ltd. v. ITO (1995) 53 TTJ (Jp) the various objects stated to 667 : (1995) 54 ITD 589 (Jp) be incidental or ancillary to has held as under: the attainment of the two main objects A-l and A-2. These Even though assessee trust had ancillary objects noted in B-14 discretionary powers to estab- to 21, 32, 33, 38 and 42 are lish institutions, funds or given in Annex. A to the order trusts for exclusive benefit to show that the assessee is of its members, etc., yet sin- involved in carrying on of bus- ce it did not create an obli- iness of various kinds. gation upon the assessee it could not be regarded as an object ancillary or inciden- tal to attainment of main ob- ject of assessee and was sep- arable from primary or main objects without causing any harm to attainment of such primary or dominant objects, which were of charitable nat- ure. Further, assessee did not exercise such discretio- nary powers during previous year, therefore, assessee was entitled to exemption under Section 11. In assessee's case income has been applied solely for the aims and objects of the inst- itution and activities resul- ting in such income are esse- ntial activities of the inst- itution and therefore asse- ssee will be entitled to exe- mption under Section 11 Dy. CIT v. Ch. Aishi Ram Batra Charitable Trust (2001) 72 TTJ (Asr) 202 : (1999) 70 ITD 487 (Asr). If the prim- ary objects are charitable, exemption cannot be denied if a subsidiary object is found to be non-charitable. Yogiraj Charitable Trust v. CIT 1976 CTR (SC) 211 : (1976) 103 ITR 777 (SC), Addl. CIT v. Etawah District Exhibition & Cattle Fair Association (1980) 19 CTR (All) 337 : (1981) 131 ITR 461 (All). (b) As per decision of the Hon'ble The decision of Umaid Charita- Rajasthan High Court in the ble Trust (supra) supports the case of Umaid Charitable Trust case of the assessee. The dec- v. CIT (1980) 16 CTR (Raj) 58 laration merely confers power : (1980) 125 ITR 55 (Raj), it to carry on such activities is held by the jurisdictional which support the promotion of High Court that a business the objects of the institution. undertaking can be held to be Amendment made in Section 2(15) for charitable purpose but the w.e.f. 1st April, 1984 omitted object of the trust must not be the words "not involving the carrying on of any activity the carrying on of any acti- for profit. In the light of the vity for profit. above decision of the jurisdi- ctional High Court, the declar- The Tribunal, Jaipur Bench, ation given in the memorandum has already considered the and articles of association at implication of the declaration below para C is very signi- given in the memorandum and ficant. articles of association at below Para C and gave its finding that the Jaipur Stock Exchange is eligible for exe- mption under Section 11. (c) Paras (iii), (iv) and (v) on p. This part of the order has 6 of the assessment order. been extensively discussed in the order of the Tribunal for asst. yr. 1988-89. In fact, there is no utilization or application of the income for the benefit of specified per- sons. The members of stock ex- change or their close relati- ves or office bearers of the management of the exchange did not derive any benefit so as to deprive it from exemption under Section 11. Clause Nos. B-14 to 21, 32, 33, 38 and 42 of the memorandum of association do not confer any power or permit use of income/ surplus for non-charitable purposes. Clause B-13 of the memorandum has not been implemented so as to confer any benefit to memb- ers of the exchange or their relatives and therefore, Tri- bunal, Jaipur Bench, after de- aling with these clauses gra- nted the exemption under Sec- tion 11 in asst. yr. 1988-89. (vii) Case of Delhi Stock Exchange In this decision, there was no Association Ltd. (supra) prohibition to distribute the profit by way of dividend and hence exemption was not gran- ted whereas in the case of Ja- ipur Stock Exchange Ltd., th- ere has been complete prohibi- tion to pay any amount by way of dividend, bonus or profit to any of the members. On the contrary income has been appl- ied solely towards the promo- tion of the objects of general public utility. (viii) Case of Yogiraj Charitable This case has been duly consi- Trust v. CIT (supra) dered by Tribunal, Jaipur Bench, while granting exempt- ion under Section 11 in asst. yr. 1988-89. (ix) Right to invest money of exch- Jaipur Stock Exchange has not ange in securities other than made any investment in contr- modes specified in Section avention of the provisions of 11(5) Section 11(5) of IT Act. (x) Case of Lok Shikshan Trust v. It has been stated in several CIT 1975 CTR (SC) 281 : (1975) decisions that the running of 101 ITR 234 (SC) the stock exchange is an obj- ect of general public utility and therefore even if there is no concept of charity, stock exchange will be eligible for exemption under Section 11 r/w Section 2(15) of IT Act. CIT v. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC). In this connection, we also place rel- iance on the following decisi- ons : CIT v. Madras Stock Exchange Ltd. 1977 CTR (Mad) 1 : (1976) 105 ITR 546 (Mad) CIT v. Andhra Chamber of Comm- erce (1981) 130 ITR 184 (SC) CIT v. Bangalore Stock Exchange Ltd. (1979) 8 CTR (Kar) 47 : (1978) 115 ITR 493 (Kar) CIT v. Delhi Stock Exchange Association Ltd. (supra) Cxi) The membership of the assessee Jaipur Stock Exchange Ltd. has company or exchange is an ass- been incorporated as a company et because of dealing with st- limited by guarantee to protect ock, shares and securities. and regulate the public dealing The intention of the membership in shares, etc., and to facil- is not for common charitable itate a clearing house for the purpose but for trade and pro- transactions of members, which fit and thus the object is not has been an object of general of general public utility. public utility. Membership ri- ght is a personal privilege and it does not affect the assessee's claim of exemption under Section 11. (xii) The assessee company owns a JSEL Securities Ltd. came into 100 per cent subsidiary com- legal existence only on 20th pany bearing the name, JSEL April, 2000 and in no way it Securities Ltd. Which helps affects exemption under Sec- brokers in trading and thus tion 11 in the year under re- objective of the assessee is ference. The individual tra- of making profit and provis- dings of the brokers do not ions of Section 13 apply. attract provisions of Sect- ion 13 nor it results in any profit-making activity of JSEL. (xiii) Case of Addl. CIT v. Ahmed- The facts in this case are abad Mill Owners Associati- distinguishable and therefore on (1977) 106 ITR 725 (Guj) this case is not applicable. In this case, the main obje- cts were both charitable and non-charitable, which affe- cted the exemption. (xiv) Surplus of the company to the It is not necessary to have extent of 25 per cent under it invested in specified as- Section 11(1)(a) was not inv- sets. 25 per cent of gross ested in the modes specified income under Section 11(1)(a) inss. 11(5) and 13(1)(d). can either be applied to the objects or it can been accum- ulated free of all conditions as held by the apex Court in the case of S.R.M.M. CT.M. Timpani Trust v. CIT (1998) 145 CTR (SC) 176 : (1998) 230 ITR 636 (SC).
6. The learned CIT(A) observed that the assessee (sic-AO) has failed to point out any specific condition or instance that the assessee has applied its income to the benefit of close relatives or the assessee does not fulfil the conditions as mentioned in Section 11(5) of the Act. The objects of the assessee had been discussed by the Tribunal, Jaipur Bench, for the asst. yr. 1988-89 in Jaipur Stock Exchange Ltd. v. ITO (1995) 53 TTJ (Jp) 667 : (1995) 54 ITD 589 (Jp) in assessee's own case where it has been mentioned by the Tribunal that though the assessee had discretionary powers but the same were not exercised to harm the primary or dominant objects and the assessee has been considered as a charitable institution for that year. Also, for the asst. yr. 1996-97, the learned CIT(A), Raj.-I, has held the assessee as a charitable institution which is working for the advancement of public utility as per Section 2(15) of the Act. Further, in ground No. 3 before the learned CIT(A), the AO has herself contradicted her own statement mentioning that the assessee did not have any business income. The learned CIT(A) after perusing the memorandum of association found that primary object is to facilitate, assist, regulate and control the transactions of business of the stock exchange and to establish and provide for and manage clearing house for the transactions of the members. It is clarified further by learned Authorised Representative that the Jaipur Stock Exchange in itself is not empowered to do business in stock, shares, etc. The conclusions of the learned CIT(A) are as per paras 4.3 and 5 of his order as under:
4.3 In support of the objectives of general public utility, the learned Authorised Representative has relied upon the recent decision of Hon'ble Supreme Court in the case of Director of FT (Exemption) v. Bharat Diamond Bourse (2003) 179 CTR (SC) 225 : (2003) 259 ITR 280 (SC) and Hon'ble Rajasthan High Court decision in the case of CIT v. Jodhpur Chartered Accountants' Society which very well cover the appellant's objectives as general public utility. It is further noticed that there is no deviation of facts from asst. yr. 1996-97 and the main objectives of the Jaipur Stock Exchange Ltd. remain the same. I therefore, do not see any reason to approve the findings of the AO. The action of the AO is not found justified in view of the facts and circumstances discussed. Jaipur Stock Exchange Ltd. is therefore, held as a charitable institution as per Section 2(15) of the IT Act, 1961. The AO is therefore, directed to act accordingly.
5. The next ground of appeal relates to assessee's surplus income over expenditure at Rs. 1,46,03,267 as income under the head income from other sources. The AO has not given any working in the assessment order on this amount as how this figure is arrived for charging of tax as income from other sources. The learned Authorised Representative has mentioned that the income under the head other sources can be classified only when income is not falling under any of the other heads. Since the assessee is eligible for grant of exemption under Section 11 of the IT Act as discussed in this order, the AO 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 IT Act which requires that all the funds should be invested under the forms or modes specified in Sub-section (5) of Section 11 of the IT Act.
7. The learned Departmental Representative in the present case relied upon the order of the AO and the learned Counsel for the assessee relied upon the order of the learned CIT(A). The learned Counsel for the assessee had argued that the declaration made by the assessee under KVSS was only with a view to settle the arrears of demand and it had nothing to do with any surrender of the claim of exemption under Section 11 of IT Act. The tax demand was created vide assessment order dt. 20th March, 1997 passed to give effect to the order of Hon'ble Tribunal in ITA No. 1387/Jp/1994, dt.28th Feb., 1995 (supra). Since the assessee could not fulfil the requirements under Section 11(2) of IT Act, i.e. to give timely notice of accumulation of income before the time allowed to file return of income under Section 139(1) of IT Act in terms of Rule 17 of IT Rules, the AO had computed the income under Section 11 of IT Act and thus declaration under KVSS in no way affected the claim of exemption under Section 11. The learned Counsel for the assessee therefore, argued that the assessee has been held as a charitable institution as per Section 2(15) of the Act by the Tribunal, Jaipur Bench, for the asst. yr. 1988-89. The special attention was invited to paras 12A to 21 of Tribunal order in assessee's own case for the asst. yr. 1988-89 and thereafter there is no change in the objects of the assessee. The relevant para Nos. 12A to 21 of Tribunal order in assessee's own case (supra), relevant pp. 600 to 603 are reproduced as under:
12A. Section 2(15) defines 'charitable purpose' as under:
'Charitable purpose' includes relief to the poor, education, medical relief and the advancement of any other object of general public utility.
Section 2(15), it may be noted, gives an inclusive, definition of the term 'charitable purpose' 'relief to the poor', 'education' and 'medical relief are, on the face of it, objects of charitable nature and tend to confer benefit upon the public in general. But, there may be another objects of general public utility and such objects may also be of charitable nature. The term 'general public' does not mean whole of mankind or even all persons living in a particular place or area. It may be a particular section of public as distinguished from specified individuals. But, such section of society must be sufficiently defined and identifiable by some common quality or a public or impersonal nature. An object which is beneficial to such section of public would be an object of general public utility.
13. A close reading of Clauses 1 and 2 of para A of the MOA tells that the main objects of the assessee exchange were not only to advance further to promote the interest of the brokers, dealers and jobbers in stocks, shares and like securities but also to facilitate, assist, regulate and control the transaction of business on the stock exchange and to establish and provide for and manage clearing house for the transaction of the members. The main objects aim at maintaining high standards to commercial honour and integrity, providing honourable practices, discouraging and suppressing malpractices, settling disputes amongst brokers, dealers and jobbers, deciding all questions of usage, custom or courtesy in conducting the business of brokers, dealers and jobbers. The activities of the brokers, dealers and jobbers in stocks, shares and like securities were to lead to the advancement or promotion of trade, commerce and industry resulting in economic prosperity ensured for the benefit of entire community. Such prosperity would be shared not only by the brokers, dealers or jobbers or some other persons who are actively engaged in trade, commence and industry but also by those who stand to gain from the growth and progress of the national economy. It is thus seen that the main or primary objects to be attained by the exchange are to promote commerce, trade and industry leading to the economics prosperity of the people at large and such objects fall within the purview of the expression 'object of general public utility.'
14. Para B details a number of other objects to be attained by the assessee exchange. A few of such objects may undoubtedly be read as giving some discretionary powers to the exchange to do certain acts calculated to benefit its members or employees or ex-members. For example, Clause 13 of para B permits the assessee exchange to establish and support or aid in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit members or employees or ex-members of the exchange or ex-employees of the exchange or the dependants or connections of such persons and to grant pension and allowances and to make payment towards insurance. Clause 14 empowers the assessee exchange to undertake and execute any trusts, the undertakings of which seems to it desirable. Establishment of a trust calculated to benefit the members or employees or ex-members or ex-employees may seem desirable to the assessee exchange which would amount to advancement, furtherance or promotion of the interest of the members or employees or ex-members or ex-employees of the assessee exchange only. There would then be no common quality of a public or impersonal nature uniting the potential beneficiaries into a class.
15. Clause 39 of para B permits the assessee exchange to make payment or disbursement out of its funds or other movable property for any of the purposes which purposes may also include that mentioned in Clause 13(supra). Then Clause 41 authorizes it to apply any surplus funds available with the assessee exchange in promoting its objects which objects may also include the object mentioned in Clause 13. Above all, Clause 42, in general, confers powers upon the assessee exchange 'to do all such other things as are incidental or conducive to the attainment of the above objects. The words 'above objects' used in this clause may well include the objects mentioned in Clause 13.
16. It may be seen that the object mentioned in Clause 13 of para B of MOA is calculated to benefit the members and employees or ex-members or ex-employees of the assessee exchange only and that benefit is not of public or impersonal nature as such benefit is not to be shared by other potential beneficiaries. That being so, there would be no common quality of a public or impersonal nature uniting the potential beneficiaries into a class. Clause 13 thus runs in a direction which is opposite to that of 'charitable purpose' and goes beyond the scope of 'object of general public utility' used in the language of Section 2(15). This clause and other clauses which, directly or indirectly, help or may help the assessee to attain the object of Clause 13 are repugnant to the very spirit of 'charity' and are detrimental to and destructive of the primary or main objects, which undoubtedly confer the character of a charitable institution upon the assessee exchange.
17. In the case of Yogiraj Chanty Trust v. CIT , their Lordships of the Supreme Court held that if one of the objects of the trust deed is not of a religious or charitable nature and the trust deed confers full discretion on the trustees to spend the trust funds for an object other than of a religious or charitable nature, the exemption from tax is not available to the assessee. But, their Lordships further observed that if the primary or dominant purpose of a trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust from being a valid charity. Reiterating the same proposition of law in the case of Addl. CIT v. Swat Art Silk Cloth Mfrs. Association , their Lordships explained that where the main or primary objects are distributive, each and every one of the objects must be objects are distributive, each and every one of the objects must be charitable in order that the trust or institution may be upheld as a charity.
18. In the case of CIT v. Bangalore Stock Exchange Ltd. , the Kamataka High Court propounded another important principle which is relevant to our purpose. Explaining the meaning and scope of the expression 'profit-making activity' their Lordships observed as under:
(4) If and when the affairs of the assessee took the shape of a profit-making concern, the Department would have ample powers and opportunity to deny the exemption to the assessee. The mere possibility of the happening of such an event should not deter the Court from holding that the income of the assessee was not liable to tax on the basis of the existing facts. As long as the activities in which the assessee was engaged were not activities for profit and the income derived by it from them were being applied for charitable purposes, the assessee was entitled to claim the exemption under Section 11 notwithstanding the fact that its memorandum made reference to some objects which might not be of charitable nature. Even if the assessee carried on any business which was not of charitable nature, only the income derived from that source would not get the protection of Section 11.
19. On reading Clause 13 of para B of the MOA, we are convinced that the said clause does not embody an object which may be regarded as ancillary or incidental to be primary or dominant object of the assessee exchange. The said clause confers unchecked and uncontrolled powers on the assessee to carry out an object which is to benefit its members, employees or ex-members or ex-employees solely. Several other clauses of para B may be put into action to assist the assessee in the attainment of the objects enshrined in Clause 13. There is no restrictive clause in the MOA or articles of association which may control the discretion of the assessee to spend its funds and/or income for the attainment of the objects mentioned in Clause 13. In view of the presence of Clause 13 and other such clauses as may be attracted for the attainment of the objects of Clause 13, exemption under Section 11 should not be available to the assessee exchange in view of Supreme Court decision in Yogiraj Charity's case (supra). But, at the same time, we find that the primary or dominant purpose of the assessee is of the nature of 'general public utility'. Other clauses in para B are ancillary or incidental to the attainment of the primary or dominant purposes. Such primary or dominant purposes and those ancillary or incidental to them are separable from those in Clause 13 and other such clauses which may be called in aid that clause without causing damage to or hindrance in the attainment of the main objects. Moreover, the establishment of an association, institution, fund or trust for.the exclusive benefit of the members or employees or ex-members or ex-employees or their dependants and connections is a possible event that may or may not happen in future. Such an event is not stated to have happened in the year under consideration, which is stated to be the first year of the functioning of the assessee exchange. The assessee exchange is not under any obligation to establish such institution, fund or trust for the benefit of the members or employees or ex-members or ex-employees or their dependants and connections. Therefore, the mere possibility of the happening of such an event should not deter us from holding that the income of the assessee is not liable to tax, if the existing facts do not attract that liability. So long as there is no case of utilization of the funds/income of the assessee exchange for the attainment of, directly or indirectly, the object mentioned in Clause 13 of para B and so long as the assessee exchange pursues the objects which are beneficial to the general public as distinguished from the class or community consisting of its members or employees or ex-members or ex-employees or their dependants and connections, it would be entitled to exemption under Sections 11, 12 of the Act.
20. On comparison of Clause 16 of para III of the MOA of Delhi Stock Exchange Association Ltd. with that of Clause B-13 of the present assessee, the learned CIT(A) has held that it is not entitled to exemption under Section 11 of the Act. In that case the assessee had distributed suitcases to the shareholders despite there being a letter from Ministry of Finance prohibiting the giving of presents of the value of Rs. 200 to the members as such presents amounted to the distribution of dividends. It was on such facts that the assessee in that case was not found entitled to the benefit of Section 11. No such or similar facts exist in the present case. Herein, there is no evidence that the assessee has in any manner, proceeded to attain the object of Clause B-13 for the benefit of its members or employees or ex-members or ex-employees or their dependants and connections. The case of Delhi Stock Exchange Association Ltd. (supra) is thus distinguishable on facts from those of the present case.
21. To sum up, we hold that since Clause B-13, which confers discretionary powers but create obligation upon the assessee to establish institution, funds or trusts for the exclusive benefit of its members or ex-employees or their dependants and connections and which cannot be regarded as an object ancillary or incidental to the attainment of the main object of the assessee exchange is separable from the primary or main objects pursued or to be pursued by the assessee without causing any harm or prejudice to the attainment of such primary or dominant objects and since the assessee is not found to have exercised its discretion under Clause B-13 in the year under consideration, benefit of exemption under Section 11 would be available to it provided other conditions as laid down in Sections 11, 12 and 12A are found to have been fulfilled.
8. The learned Counsel for the assessee further argued that for the asst. yr. 1996-97, the learned CIT(A) vide order dt. 12th Nov., 1999 has held the assessee as a charitable institution and the Revenue is not in appeal against the said order. Therefore, the assessee has been considered as a charitable institution throughout except for the impugned years i.e. asst. yrs. 1995-96 and 2000-01.
9. The AO had mainly relied upon the decisions of Delhi Stock Exchange, Madras Stock Exchange and Ahmedabad Stock Exchange (all supra) by various Courts where the said stock exchanges were denied the exemption under Section 11 of the Act. As regards Delhi Stock Exchange, it was denied exemption by Hon'ble Delhi High Court, Delhi Stock Exchange Association Ltd. v. CIT (1980) 126 ITR 532 (Del), in the circumstances when there was no prohibition to declare dividend or profit to members and therefore, the assessee was not entitled to the exemption and this view of Delhi High Court was affirmed by the Hon'ble apex Court in Delhi Stock Exchange Association Ltd. v. CIT (1997) 139 CTR (SC) 455 : (1997) 225 ITR 235 (SC). The said exemption was denied in the said case for the asst. yrs. 1966-67 to 1969-70. Delhi Stock Exchange afterwards made the amendment in memorandum and articles of association for prohibiting the distribution of profit by way of interest and dividend in December, 1973 and Delhi Stock Exchange was granted exemption for whole of the previous year relevant to asst. yr. 1974-75 under Section 11 of the Act. The headnotes of relevant judgment in the case of CIT and Ors. v. Delhi Stock Exchange Association Ltd. (2001) 165 CTR (Del) 207 : (2001) 248 ITR 258 (Del) are as under for more clarification:
The assessee was a public limited company formed with the object of promoting and regulating the business of shares, stocks and securities. Since its incorporation, it was engaged in the business of a stock exchange. For the asst. yr. 1974-75, for which the relevant accounting period ended on 31st March, 1974, the assessee claimed exemption under Section 11 in respect of the income derived from enlistment fees and renewal fees received from the members of the stock exchange during the relevant previous year. The claim for exemption was disallowed by the AO on the ground that in the earlier years the Tribunal had held that the assessee was not entitled to exemption because there was no prohibition in the articles of association of the company against distributions of its profit by way of dividend or interest to the members. On appeal, the AAC noticed that in the year under consideration, there was a marked difference on the facts, as the assessee had amended its memorandum and articles of association at an extraordinary general body meeting held in December, 1973, whereby a clause prohibiting distribution of profits by way of interest or dividend in cash or in kind to the members, so long as the Central Government prohibited such distribution, was incorporated in Article 103 of the articles of association. The Appellate CIT felt that in view of the amendment, the decision of the Tribunal in respect of the earlier years would not stand in the way of granting exemption to the assessee under Section 11. On further appeal, the Revenue contended that the exemption was admissible only for a part of the year and for the whole of the year under consideration. The Tribunal held that the amendment having taken place in the relevant accounting period i.e. commencing from 1st April, 1973, and ending on 31st March, 1974, the amendment covered the whole of the financial year 1973-74 and therefore, the income for the whole of the assessment year was entitled to exemption under Section 11. On a reference:
Held, that after the amendment had been carried out in December, 1973, the decisions of the Tribunal in respect of the earlier assessment years could not be applied in respect of the present assessment year. The income of the assessee for the whole of the previous year relevant to the asst. yr. 1974-75 was entitled to exemption under Section 11.
10. Also, in the case of CIT v. Madias Stock Exchange Ltd. and Ors. (supra), the Hon'ble apex Court has held that objects of Madras Stock Exchange Ltd. are of charitable purpose under Section 2(15) of the Act and income was exempt under Section 11(1) of the Act. For better appreciation, the judgment of Hon'ble apex Court in the case of CIT v. Madias Stock Exchange Ltd. and Ors. (supra) is reproduced hereunder:
This appeal by special leave is covered by the judgment of this Court in CIT v. Andhra Chamber of Commerce (1965) 55 ITR 722 (Cal), Addl. CIT v. Surat Cloth Manufacturers Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC). It is clear from the judgment in Andhra Chamber of Commerce (supra), that the objects of the Andhra Chamber of Commerce fell within the last head of charitable purpose denoted by the words 'advancement of any other object of general public utility' and were therefore charitable within the meaning of Section 2(15) of the IT Act, 1961, unless it could be shown that they involved the carrying on of any activity for profit. The words 'not involving the carrying on of any activity for profit' came up for consideration before this Court in Surat Art Silk Cloth Manufacturers Association (supra), and there it was held by the majority of the Judges that it was only where the predominant object and the purpose of the activity carried on was to earn profit, that the object could be said to involve the carrying on of an activity for profit but if the predominant object was to subserve the charitable purposes then the inhibition of these last 9 words would not be attracted. It is clear from the facts set out in the judgment of the High Court that profit-making was not the predominant object of the activity carried on by the Andhra Chamber of Commerce but the predominant object was to promote trade and commerce which was an object of general public utility. The High Court was, therefore, right in taking the view that the objects of the Andhra Chamber of Commerce fell within the last category of charitable purpose given in Section 2(15) of the Act and its income was exempt from tax under Section 11(1) of the Act.
The appeal is accordingly dismissed with no order as to costs.
Similarly, in the case of Stock Exchange of Ahmedabad v. Asstt. CIT (2000) 68 TTJ (Ahd) 596 : (2000) 74 ITD 1 (Ahd), the said exchange has been held as a charitable institution and entitled to exemption under Section 11 of the Act.
11. First of all, the assessee had been claiming exemption under Section 11 of the Act since asst. yr. 1988-89 and it has been granted exemption since then and has been treated as charitable institution under Section 2(15) of the Act except the impugned year before us i.e. asst. yrs. 1995-96 and 2000-01. The Jaipur Tribunal in assessee's own case for the asst. yr. 1988-89 has held the assessee as a charitable institution under Section 2(15) of the Act and has allowed the exemption under Section 11 of the Act. The assessee had made the surrender under KVSS with a view to settle the arrear of demand which has nothing to do with the surrender of claim of exemption under Section 11 of the Act. The assessee in the said year could not fulfil the requirements under Section 11(2) of the Act i.e. of giving primary notice of accumulation of income before the time allowed to file the return under Section 139(1) of the Act. Such surrender by the assessee does not reverse the decision of the Tribunal or the claim of the assessee for exemption under Section 11 of the Act or under Section 2(15) of the Act.
12. In asst. yr. 1996-97, the assessee has been considered as a charitable institution under Section 2(15) of the Act and has been granted exemption under Section 11 of the Act by the learned CIT(A) vide order dt. 12th Nov., 1999 and the Revenue is not in appeal before the Tribunal. As regards whether the assessee is a charitable institution under Section 2(15) of the Act and it can be given exemption under Section 11 of the Act, it has attained finality since asst. yr. 1988-89 as per the facts on record except in the impugned years before us. There is no change in the objects and facts of the case as argued by the learned Counsel for the assessee since asst. yr. 1988-89 as discussed above. The AO in the present case has failed to point out any specific instance that the assessee has not complied with the conditions mentioned in Section 11(5) of the Act. The AO has herself contradicted her own statement mentioning that the assessee does not have business income (para 4.2 of learned CIT(A)'s order). Therefore, following the decision of the Tribunal in assessee's own case in the asst. yr. 1988-89 (supra) and consistency thereafter, we are of the view that the assessee is a charitable institution under Section 2 Sub-section (15) of the Act and is eligible to exemption under Section 11 of the Act. The main decisions relied upon by the AO were in respect of Delhi Stock Exchange, Madias Stock Exchange, and Ahmedabad Stock Exchange (all supra). All the said cases relied upon by the AO have been discussed in the paras hereinbefore wherein the said stock exchanges have been held to be a charitable institution under Section 2(15) of the Act and have been allowed exemption under Section 11 of the Act. Therefore, in the circumstances of the present case, following decision in assessee's own case and decisions of various stock exchanges referred to in this para, we hold the assessee as a charitable institution under Section 2(15) of the Act and assessee is eligible for grant of exemption under Section 11 of the Act and the assessee is allowed the benefit of accumulation of income. Thus, ground Nos. 1 and 2 of the Revenue are dismissed.
13. In ground No. 3, the Department is aggrieved that the learned CIT(A) has erred in not upholding the disallowance of depreciation made in view of the fact that main source of income was by way of receipts of annual subscription and member admission fees chargeable as income from other sources.
14. We have heard the parties. Briefly stated, the facts in this ground are as per p. 9 of AO's order as under:
The assessee has claimed a depreciation of Rs. 8,86,567 in the income and expenditure account. The assessee vide note sheet entry dt. 24th March, 2003 was asked why this claim of depreciation should not be disallowed as it is not allowable because there is no business income. The claim of depreciation under Section 32 of IT Act is allowable only when there is business income.
The assessee vide reply dt. 26th March, 2003 stated that in assessee's case, the depreciation is allowable as expenditure, it being a charitable institution and quoted following cases:
1. CIT v. Seth Manilal Rachhoidas Vishram Bhawan Trust
2. CIT v. Society of the Sisters of St. Anne
3. CIT v. Rajpur Pallottint Society (1989) 80 CTR (MP) 127 : (1989) 180 ITR 579 (MP)
4. CIT v. Rao Bahadur Calavala Gunnan Chetty Chanties .
I have thoroughly gone through the reply of the assessee and the decisions in abovementioned cases. In all these four cases it is held that the amount of depreciation debited to the account of a charitable institution is to be deducted to arrive at the income available for the application for charitable and religious purposes.
The facts and circumstances of the case of the assessee (JSEL) are totally different and the decisions of abovementioned cases are not applicable in the present case. It is very clear that in abovementioned four cases, the assessees were charitable institutions, engaged in charitable and religious activities, which is not the case with the assessee in the present case. As discussed in foregoing paras, the assessee does not fulfil the conditions of a charitable institution and is not entitled to claim exemption under Section 11 of the IT Act, 1961. Hence, the depreciation claimed by assessee is not allowable as it can be allowed only on business income. The assessee is not having any business income but the income under the head income from other sources.
15. The learned CIT(A) vide p. 11 of his order allowed the depreciation by observing as under:
The appellant assessee has claimed depreciation amounting to Rs. 8,86,567 on various assets as appearing in Schedule 4 of the annual accounts which has been denied by the AO on the ground that the assessee has no business income and as such depreciation is not admissible. Since the appellant has not been found as a charitable institution by the AO, depreciation has been disallowed despite of the reliance placed on by the appellant assessee on the following cases:
1. CIT v. Seth Mani Lal Rachhoidas Vishiam Bhawan Trust
2. CIT v. Society of the Sisters of St. Anne
3. CIT v. Rajpur Pallottint Society (1989) 80 CTR (MP) 127 : (1989) 180 ITR 579 (MP)
4. CIT v. Rao Bahadur Calavala Gunnan Chetty Charities .
Since the appellant assessee has been held as charitable institution as per Section 2(15) of IT Act, 1961, respectfully following the decision of the above Hon'ble High Court, the AO is directed to allow depreciation as per Schedule 4 of annual accounts of the year under appeal after due verification.
16. The assessee has been held to be a charitable institution under Section 2(15) of the Act and has been allowed exemption under Section 11 of the Act, in the foregoing paras by us. In such circumstances whether the depreciation claimed by the assessee on fixed assets is allowable deduction to arrive at the income available for application to charitable purposes. The assessee has relied upon judgments of various High Courts and the headnotes of said judgments by the various High Courts are reproduced as under:
(1) CIT v. Society of the Sisters of St. Anne (1984) 39 CTR (Kar) 9 : (1984) 146 ITR 28 (Kar) If depreciation is not allowed as a necessary deduction for computing the income of a charitable institution, then there can be no way to preserve the corpus of the trust for deriving the income. Therefore, the amount of depreciation debited to the accounts of a charitable institutions is to be deducted to arrive at the income available for application to charitable and religious purposes.
(2) CIT v. Raipur Pallottine Society (1989) 80 CTR (MP) 127 : (1989) 180 ITR 579 (MP) Depreciation is the exhaustion of the effective life of a fixed asset owing to 'use' or obsolescence. It may be computed as that part of the cost of the asset which will not be recovered when the asset is finally put out of use. The object of providing for depreciation is to spread the expenditure incurred in acquiring the asset over its effective lifetime and the amount of provisions made in respect of an accounting period is intended to represent the proportion of such expenditure which has expired during that period. If depreciation is not allowed as a necessary deduction in computing the income of a charitable trust, then there would be no way to preserve the corpus of the trust. A charitable trust is therefore, entitled to depreciation in respect of the assets owned by it.
(3) CIT v. Seth Mani Lal Ranchhoddas Vishram Bhavan Trust The income from the properties held under trust has to be arrived at in the normal commercial manner without classification under various heads set out in Section 14 of the IT Act, 1961. The expression 'income' has to be understood in the popular or general sense and not in the sense in which the income is arrived at for the purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. The computation under the different categories or heads arises only for the purposes of ascertaining the total income for the purposes of charge. Those provisions cannot be introduced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chapter III. The amount of depreciation debited to the accounts of the charitable institutions has to be deducted to arrive at the income available for application to charitable and religious purposes.
17. In view of above decisions, the depreciation on fixed assets is an allowable deduction which is necessary to arrive at the income available for application to charitable purposes. Hence, depreciation on fixed assets in the present case is an allowable deduction. Therefore, the AO is directed to examine the claim of depreciation as per rules and allow the same to the assessee. Thus, ground No. 3 of the Revenue is dismissed. CO No. 106/Jp/2003--Assessee
18. In this CO, the assessee is aggrieved that the learned CIT(A) has erred in making an addition of admission fee of Rs. 14,000 which was in the nature of capital receipt. The learned CIT(A) also erred in confirming the addition.
19. We have heard the parties. Briefly stated, the facts in this ground of CO are as per p. 2 of AO's order as under:
It is seen that the assessee has received listing fees of Rs. 16,80,000 and admission fees of Rs. 14,000 during the year. Both these receipts have been upheld by the CIT(A), in his order for asst. yr. 1996-97 dt. 29th Nov., 1996 as revenue receipts and additions so made by the AO have been confirmed by the CIT(A). Looking at these facts, the assessee was asked why these receipts should not be treated as revenue receipts and be accordingly taxed. In reply dt. 24th Feb., 2003, the assessee claimed that these are capital receipts being collected by the stock exchange as per the provisions of articles of association of the company as approved by SEBI.
As on this point, Tribunal in its order dt. 28th Feb., 1995 (ITA No. 1387/Jp/1994 in asst. yr. 1988-89) has decided the issue in favour of Revenue and CIT(A) also confirmed the additions made by the AO in asst. yr. 1996-97 on these points, hence an addition of Rs. 14,000 for admission fees and Rs. 16,80,000 for listing fee is being made to the income of the assessee, taking them to be revenue receipts for the reasons discussed in assessment order under Section 143(3) in asst. yr. 1996-97 dt. 15th March, 1999.
20. The learned CIT(A) vide para 7.1 at p. 11 of his order has confirmed the action of the AO as under:
I have examined this issue and noticed that the Hon'ble Tribunal, Jaipur Bench, Jaipur, vide its order dt. 28th May, 1995 in ITA No. 1387/Jp/1994 in asst. yr. 1988-89 held that the amount received by the assessee stock exchange by way of admission fee and/or entrance fee from its members which accrued to assessee on account of its performing specific services for members constituted revenue receipts falling under Section 28(iii) of IT Act, 1961 and not capital receipts as contended by assessee. These findings were delivered by the Hon'ble Tribunal, Jaipur, Bench, Jaipur, following the decision of Hon'ble Supreme Court in the case of Calcutta Stock Exchange Association Ltd. (1959) 36 ITR 222 (SC) wherein identical facts were involved. There is no dispute that the appellant received the listing fee on account of processing of data of the companies which are listed in the stock exchange to provide specific services to the member companies whose shares have been included in the quotation list in the stock exchange. In view of these facts and circumstances of the case, the receipts of listing fee of Rs. 16,80,000 and admission fee of Rs. 14,000 are treated as revenue receipts and not capital receipts as claimed by the appellant assessee. Therefore, the addition of Rs. 16,80,000 and Rs. 14,000 as made by the AO are confirmed.
21. After perusal of the facts and the decision cited by the learned Counsel for the assessee, we are of the view that the issue is squarely covered in assessee's own case by the decision of the Tribunal in asst. yr. 1988-89 (supra). We affirm the decision of the learned CIT(A) who has rightly confirmed the action of the AO. Thus, the CO of the assessee is dismissed.
ITA No. 697/Jp/2003--2000-0122. In ground No. 1, the Department is aggrieved that the learned CIT(A) has erred in holding the assessee company as a charitable institution as per Section 2(15) of the IT Act, 1961 and directing the AO to treat the same accordingly.
23. In ground No. 2, the Department is aggrieved that the learned CIT(A) has erred in holding that assessee company is eligible for grant of exemption under Section 11 of the IT Act and directing the AO to allow the benefit of accumulation of income to the extent of 25 per cent of such income.
24. We have heard the parties. Briefly stated, the facts of the case are that the assessee has claimed exemption under Section 11(2) and under Section 11(1)(a) and has declared taxable income at nil. In response to the objection of the AO to allow exemption as claimed by the assessee, the assessee's reply was that the main objects of the company are generally for the promotion and protection of the interests of those acting as brokers, dealers and jobbers in stocks, shares and like securities and to protect the interests of general public as a whole in the matter of stocks, shares, securities. The income and property of the exchange would be applied solely towards the promotion of the objects of the company. The income or surplus leftover with the company on winding up or dissolution was not to be distributed among his members. The assessee also stated that the objects as set out in MOA of JSEL are charitable in nature as the stock exchange is providing general public utility. The assessee also mentioned that the question whether the objections of the company is charitable or not was duly examined by CIT who had granted the registration under Section 12A. Accordingly, it was claimed that the exchange is entitled for exemption under Section 11.
25. The AO after examining the reply of the assessee rejected the claim of the assessee and arrived at conclusion which appears at p. 8 of his order as under:
Moreover, during assessment proceedings of asst. yr. 1996-97, it was found that the accumulations out of the surplus of the company to the extent of 25 per cent under Section 11(1)(a) were not as per modes specified in Sections 11(5) and 13(1)(d) and this situation is similar in current year also.
In view of the above facts of the case, the assessee's contention of claiming under Section 11 is wrong and it is not accepted. Accordingly, the exemption under Section 11 as claimed by the assessee is disallowed and surplus income over expenditure is to be taxed under the head 'Income from other sources.
26. The learned CIT(A) confirmed the action of the AO.
27. After perusal of the facts of the case, we find that the facts in the present case are similar to the facts in assessee's own case for the asst. yr. 1995-96. The issues in ground Nos. 1 and 2 of the Revenue have already been decided in assessee's own case for the asst. yr. 1995-96 in ITA No. 696/Jp/2003 of even date (supra). Following the decision in the said case, we hold the assessee for the asst. yr. 2000-01 as "charitable institution" under Section 2(15) of the Act and allow exemption under Section 11 of the Act and accordingly ground Nos. 1 and 2 of the Revenue are dismissed.
28. In ground No. 3, the Department is aggrieved that the learned CIT(A) has erred in not upholding the disallowance of depreciation made in view of the fact that main source of income was by way of receipts of annual subscription and member admission fees chargeable as income from other sources.
29. As regards ground No. 3, the assessee has claimed depreciation of Rs. 1,21,22,883 in the income and expenditure account, which has been rejected by the AO since the assessee is not a charitable institution. The learned CIT(A) reversed the decision of the AO and allowed the depreciation as per reasons mentioned at para 6 of his order.
30. After perusal of the facts of the case, we find that facts in the present case are similar to assessee's own case for the asst. yr. 1995-96 and in that year we have confirmed the order of learned CIT(A) vide ITA No. 696/Jp/2003 of even date (supra). Following the same, we confirm the order of learned CIT(A) in the present case and dismiss ground No. 3 of Revenue.
CO No. 107/Jp/2003--Assessee
31. In this CO, the assessee is aggrieved that the learned CIT(A) has erred in making an addition of admission fee of Rs. 2,50,000 which was in the nature of capital receipt. The learned CIT(A) also erred in confirming the addition.
32. We have heard the parties. Briefly stated, the facts of the case are that the assessee has claimed admission fee of Rs. 2,50,000 as capital receipt. The AO rejected the claim of the assessee vide p. 2 of his order which was confirmed by learned CIT(A) vide para 7.1 at pp. 11 and 12 of his order.
33. After perusal of the facts of the case, we find that facts in the present case are similar to assessee's own case for the asst. yr. 1995-96 and in that year we have confirmed the order of learned CIT(A) vide CO No. 106/Jp/2003 of even date (supra). Following the same, we confirm the order of learned CIT(A) in the present case and dismiss the CO of the assessee.
34. In the result, both the appeals of the Revenue are dismissed and both the COs of the assessee are dismissed.