TaxTMI 
TaxTMI 
2018 (5) TMI 426
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....1 of the Act and the Tribunal passed order in ITA.Nos. 2625 & 2626/MUM/2016 dated 28.07.2017 allowing the claim for exemption u/s. 11 of the Act to the assessee. Ld. Counsel submitted that in view of Tribunal's Order allowing exemption u/s.11 of the Act the appeals filed by the assessee against the order passed by the Ld.CIT(A) in rejecting the petitions filed u/s. 154 of the Act becomes infructuous and therefore it is submitted that the appeals may be dismissed as infructuous. 3. We have perused the order of the Coordinate Bench passed for the Assessment Years 2010-11 & 2011-12 in ITA.No. 2625 & 2626/Mum/2016 dated 28.07.2017 and find that the Tribunal held that, the assessee is entitled for exemption u/s. 11/12 of the Act. Therefore, in view of the decision of the Tribunal the appeals filed by the assessee for the Assessment Years 2010-11 & 2011-12 against the orders of the Ld.CIT(A) in rejecting the applications filed u/s. 154 of the Act becomes infructuous as the order of the Ld.CIT(A) was revered by the Tribunal allowing the claim for exemption u/s. 11 of the Act. In the circumstances, the appeals filed by the assessee for the Assessment Year 2010-11 & 2011-12 in ITA.No. 71....
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....escribes modes of investment / depositing of trust money. As per clause (xii) of the said Section 11(5), the investment could be made 'in any other form or mode of investment or deposit as may be prescribed'. This other form of investment or deposit has been prescribed in Rule 17C of the income Tax Rules and clause (v) of the said Rule as inserted by Income Tax (Tenth Amendment) Rules, 2006 with retrospective effect from 26/11/1999 reads as follows: - (v) investment made by a recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (hereafter referred to as investor) in the equity share capital of a company (hereafter referred to as investee) (A) which is engaged in dealing with securities or mainly associated with the securities market; (B) whose main object is to acquire the membership of another recognised stock exchange for the sole purpose of facilitating the members of the investor to trade on the said stock exchange through the investee in accordance with the directions or guidelines issued under the Securities and Exchange Board of India Act, 1992 (15 of 1992) by the Securitie....
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....ssessee was registered stock exchange governed by strict government / SEBI rules & regulations and the membership of the assessee exchange could be obtained by the public at large subject to fulfillment of certain entry conditions as to margins / safety / securities etc. The members of the assessee, in turn, could become sub-broker of the subsidiary company subject to fulfillment of further conditions which was in tune with the scheme framed by SEBI as evident from its letter dated 26/11/1999 titled as Floating of a subsidiary / company by a stock exchange to acquire the membership of other Stock Exchange which is placed on Page Nos. 210 to 211 of the paper book, a portion of which is extracted below: - DIVISION CHIEF SECONDARY MARKET DEPARTMENT SMD-ll/POLICY/CIR-37/99 November 26. 1999 To The Executive Directors/Managing Directors of all the Stock Exchanges Dear Sir/Madam. Subject: Gloating of a Subsidiary/Company by a Stock Exchange to acquire the membership of other Stock Exchange. A meeting at a Group on Revival of Small Stock Exchanges was held on September 8. 1999, to discuss the suggest....
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..../Articles of Association of the subsidiary/company. It is quite evident that the floating of subsidiary company was in tune with SEBI directions and contradicts the stand of the revenue that the sub-broker membership of the subsidiary was open to select few and not to public at large and the benefit to select few was extended by the assessee. It is an admitted position that the assessee was being reimbursed on actual basis by the subsidiary for various services and therefore, it was wrong to infer that the assessee extended benefits as mentioned in Section 13(2) to class of persons enumerated in Section 13(3) which prima-facie weakens the conclusion of the revenue that the case of the assessee was hit by the provisions of Section 13(2) & 13(3). 5.4. It is further noted that the assessee stood gain by the rule of consistency also since the said investment in subsidiary was made by the assessee way back in FY 1999-2000 and there was no change either in shareholding pattern or activities of the assessee or its subsidiary since then. The scrutiny assessment orders for AY 2004-05 & 2005-06 as placed on Page Nos. 187 to 193 reveals that the revenue has accepted the exem....
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....ional infrastructural facilities to its member brokers. The said infrastructural facilities included development of screen based trading system, terminals, net scape, browsers, computers and other accessories for participating in the Screen Based Trading System. The assessee spent further amount towards insurance of the members and setting up of interconnected stock exchange India Ltd. However, the same is not the case here rather the present assessee, in tune with the agreement with its subsidiary, is being reimbursed on actual basis for various services rendered by him and therefore, distinguishable. 5.7 The totality of above discussion leads us to an inevitable conclusion that the revenue was not justified in denying the said exemption to the assessee. Therefore, we are inclined to hold that the assessee was entitled for the said exemption u/s 11 / 12 and the appeal of the assessee stands allowed. 6. Now, we take up assessee's appeal ITA No. 2626 for AY 2011-12 where the Ld. AO, while denying the impugned exemption has determined the total income at Rs. 341.62 Lacs which upon, confirmation by Ld. CIT(A) vide impugned order dated 21/01/2016 has been further cont....
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....penditure against current year's income to the assessee which the Ld.CIT(A) sustained. 12. The Hon'ble Jurisdictional High Court in the case of CIT v. Institute of Banking Personnel Selection (supra) concurring with the view taken by the Hon'ble Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [211 ITR 293] held as under: "Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in s. 11 and that such adjustment will have to be excluded from the income of the trust under s. 11(1)(a)." 13. Respectfully following the said decision, we hold that excess of expenditure in earlier years can be adjusted against income of subsequent years and such adjustment would be application of ....