MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRECY DERIVATIVES SEGMENT TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 7922/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75332 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-11-2013
• Assessment Year: 2011-2012
• Appeal Filed On: 24-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: CHETAN A KARIA
• Keywords: Competent authority
• Section: 12A; 12AA; 6; 12

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . , . , ! ! ! ! '# '# '# '# BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO, AM , AM , AM , AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.7922/MUM/2011 7922/MUM/2011 7922/MUM/2011 7922/MUM/2011 ( $% $% $% $% & & & & / ASSESSMENT YEAR :2011-12) MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRENCY DERIVATIVES SEGMENT TRUST, EXCHANGE SQUARE, CTS NO. 255, SUREN ROAD, CHAKALA, ANDHERI(E) MUMBAI-400093 % % % % / VS. DIT (EXEMPTION) MUMBAI #' ! ./ ( ./ PAN/GIR NO. :AACTM5745J ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) $% $%$% $% ,- ,- ,- ,- . / . / . / . / /ASSESSEE BY : SHRI CHETAN A. KARIA # # # # . / . / . / . / / REVENUE BY : SHRI A. C. TEJPAL % % % % . .. . -! -! -! -! / DATE OF HEARING : 13 TH JANUARY 2014 01& 01& 01& 01& . .. .-! -! -! -! /DATE OF PRONOUNCEMENT: 22 ND JANUARY 2014 ' 2 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 23.8.2011 OF DIT(EXEMPTION) PASSED U/S 12AA OF THE INCOME TAX ACT WHEREBY THE REGISTRATION U/S 12A HAS BEEN REJECTED. 2. THE ASSESSEE TRUST IS FORMED BY MCX STOCK EXCHAN GE LTD. WHICH IS A RECOGNISED STOCK EXCHANGE U/S 4 OF THE SECURITIES C ONTRACT (REGULATION ACT 1956). WITH A VIEW TO PROTECT THE INTEREST OF INVES TOR REGARDING LEGITIMATE INVESTMENT CLAIMS THE GOVERNMENT OF INDIA VIDE NOTI FICATION NO. F 14/4/SE/85 DATED 22.8.1985 STIPULATED SETTING UP AN INVESTOR PROTECTION FUND BY ALL RECOGNISED STOCK EXCHANGE. IN PURSUANT TO THE SAID NOTIFICATION ITA NO.7922/M/2011 MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRENCY DERIVATIVES SEGMENT TRUST 2 OF THE GOVERNMENT OF INDIA, SEBI HAS ALSO CIRCULATE D COMPREHENSIVE GUIDELINES VIDE THE CIRCULAR DATED 28.10.2004 FOR S ETTING UP THE INVESTOR PROTECTION FUND BY THE STOCK EXCHANGE. THUS, MCX ST OCK EXCHANGE LTD. HAS SET UP INVESTOR PROTECTION FUND BEING THE ASSES SEE WITH THE OBJECT IN BRIEF AS UNDER: A) COMPENSATING INVESTORS, WHO SUFFER LOSS ON ACCOU NT OF ANY DEFAULTER MEMBER, THROUGH WHOM THEY TRADE AND/OR WH O HAD UNDERTAKEN TO SETTLE THEIR TRADE, IN ACCORDANCE WIT H THE CONDITION MENTIONED HEREINAFTER. B) TAKING APPROPRIATE MEASURES FOR INVESTOR EDUCATI ON AND TRAINING. C) PROMOTING AWARENESS AMONG INVESTORS AT LARGE. D) CONDUCTING RESEARCH OR FACILITATING AND FINANCIN G RESEARCH ON SUBJECT OF INVESTOR PROTECTION, COMPENSATION, EDUCA TION AND AWARENESS AND ALLIED SUBJECTS, EITHER BY ITSELF. 3. THE ASSESSEE HAD APPLIED FOR REGISTRATION U/S 12 A OF THE INCOME TAX ACT VIDE APPLICATION DATED 19.9.2011. THE DIT(EXEMP TION) HAS REJECTED THE APPLICATION VIDE IMPUGNED ORDER DATED 23.8.2011 AGAINST WHICH THE ASSESSEE HAS FILED THE PRESENT APPEAL. 4. BEFORE US THE LD. A.R OF THE ASSESSEE HAS SUBMIT TED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN CASE OF INTER-CONNECTED STOCK E XCHANGE INVESTORS PROTECTION FUND VS DIT(EXEMPTION) VIDE ORDER DATED 20.9.2013 IN ITA NO. 7436/M/2011. THE LD. A.R HAS POINTED OUT THAT THE O BJECTS AND FACTS AND CIRCUMSTANCES IN THE CASE OF THE ASSESSEE AS WELL A S IN THE CASE OF INTER- CONNECTED STOCK EXCHANGE INVESTORS PROTECTION FUND ARE IDENTICAL THEREFORE, THE ISSUE IS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH. ITA NO.7922/M/2011 MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRENCY DERIVATIVES SEGMENT TRUST 3 HE HAS FURTHER SUBMITTED THAT THE GROUNDS ON WHICH THE APPLICATION FOR REGISTRATION HAS BEEN REJECTED BY THE DIT(EXEMPTION ) ARE ALSO IDENTICAL AND THE SAME HAS BEEN DEALT WITH BY THE CO-ORDINATE BENCH. ON THE OTHER HAND, THE LD. D.R HAS RELIED UPON THE IMPUGNED ORDE R. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FUL PERUSAL OF THE RELEVANT RECORD WE NOTE THAT THE APPLICATION FOR RE GISTRATION U/S 12AA HAS BEEN REJECTED BY THE DIT(EXEMPTION) ON THE FOLLOWIN G GROUNDS: I) THE ACTIVITY OF THE ASSESSEE BEING CARRIED OUT N OT FOR THE OBJECT OF THE GENERAL PUBLIC UTILITY BUT MEANT FOR BENEFIT FO R SPECIFIC PERSONS INVESTING THROUGH SPECIFIC STOCK EXCHANGES. II) THAT THE ASSESSEE DOES NOT QUALIFY AS A CHARITA BLE INSTITUTION AS IT DOES NOT CATER FOR ANY PUBLIC AT LARGE BUT IT HAS B EEN CREATED TO INDEMNITY THE INVESTORS AGAINST THE LOSS CAUSED ON ACCOUNT OF NEGLIGENCE ETC. 6. AT THE OUTSET WE NOTE THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DEALT WITH BOTH THE OBJECTIONS OF THE DIT(EXEMPTION ) IN THE CASE OF INTER- CONNECTED STOCK EXCHANGE INVESTORS PROTECTION FUND VS DIT(EXEMPTION) (SUPRA) AND THE CONCLUSION OF THE CO-ORDINATE BENCH IS AS UNDER: HOWEVER, A COMPREHENSIVE AND HOLISTIC READING OF T HE TRUST DEED WOULD ALLAY ALL SUCH MISGIVING/S OR INFERENCE/ S, AND, IN OUR CLEAR VIEW THERE IS NO SCOPE FOR TAKING ANY SUCH VI EW. FIRSTLY, AS A CONDITION FOR AN ELIGIBLE CLAIM, THE RELEVANT MEMBE R OF THE STOCK EXCHANGE IS TO BE DECLARED AS A DEFAULTER FOLLOWI NG THE PRESCRIBED PROCEDURE. TWO, THE CORPUS OF THE FUND I S TO BE BUILT THROUGH, INTER ALIA, SHARE OF LISTING FEES, INTERES T ON 1% LISTING DEPOSIT, PAID AND KEPT BY THE ISSUER COMPANIES WITH THE ITA NO.7922/M/2011 MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRENCY DERIVATIVES SEGMENT TRUST 4 RESPECTIVE STOCK EXCHANGES. AN INDIVIDUAL MEMBER OF A PARTICULAR MEMBER STOCK EXCHANGE IS NOT CALLED UPON TO PAY ANY DIRECT CHARGES TO THE APPLICANT FUND. IN FACT, A PART OF T HE AUCTION MONEY OF THE DEFAULTING MONEY IS ALSO, IN TERMS OF THE SEBI CIRCULAR (FITTC/FII/02/2002 DATED 15.05.2002), MADE OVER TO THE CORPUS OF THE FUND. ACCORDINGLY, THE OBJECT OF THE APPLICANT CANNOT BE AS A SERVICE IN RELATION TO ANY TRADE, ET C. FURTHER, EVEN ASSUMING SO, THE SAME DOES NOT INVOLVE ANY CONSIDER ATION INASMUCH AS NO QUID PRO QUO CAN BE ATTRIBUTED TO TH E MANDATORY CONTRIBUTIONS TO THE FUND BY THE PARTICIPATING STOC K EXCHANGES. IN OUR CONSIDERED VIEW, THEREFORE, THE APPLICANT FUND IS A PUBLIC CHARITABLE FUND, SET UP TO ADVANCE AN OBJECT OF GEN ERAL PUBLIC UTILITY, AND HAS BEEN WRONGLY DENIED REGISTRATION A S ONE BY THE REVENUE. WE, ACCORDINGLY, VACATING THE FINDINGS OF THE COMPETENT AUTHORITY VIDE THE IMPUGNED ORDER, DIRECT IT TO GRANT REGISTRATION APPLIED FOR. WE DECIDE ACCORDINGLY. 7. AS IT IS CLEAR THAT THE CO-ORDINATE BENCH OF TRI BUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDIN G THAT THE ASSESSEE IS A PUBLIC CHARITABLE FUND, SET UP TO ADVANCE AN OBJECT OF GENERAL PUBLIC UTILITY AND THEREFORE, THE REGISTRATION U/S 12A HAS BEEN WR ONGLY DENIED BY THE AUTHORITY. FOLLOWING THE DECISION OF THE CO-ORDINAT E BENCH WE SET ASIDE THE IMPUGNED ORDER OF THE DIT(EXEMPTION) WITH THE D IRECTION TO GRANT REGISTRATION U/S 12A OF THE INCOME TAX ACT TO THE A SSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY 2014 SD/- SD/- ( . ) ! '# (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( ) $ '# (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 22 ND JANUARY 2014 SUBODH ITA NO.7922/M/2011 MCX STOCK EXCHANGE INVESTORS PROTECTION FUND CURRENCY DERIVATIVES SEGMENT TRUST 5 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI 1. DRAFT DICTATED ON 13 TH JANUARY 2014 DICT PAD PLACED IN THE ORG. FILE SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 15 TH JANUARY 2014 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS