(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).
