- (1.) WE have heard learned counsels appearing for the parties.
(2.) IN all these Income Tax Appeals under Section 260A of the Income Tax Act, 1961 (for short, 'the Act') filed by the Commissioner of Income Tax, for the assessment years 1995 -96 to 2007 -08, the substantial question of law, on which these appeals have been admitted, is as follows: - "Whether in the facts and circumstances of the case, the ITAT was justified in law and have not acted perversely in holding that the assessee respondent is a charitable institution as contemplated u/s. 2(15) of the Act and is entitled for exemption u/s. 11(2) and 11(1)(a) of the Act - The assessee -Company is a Stock Exchange, registered as Public Limited Company under the Companies Act, 1956, and is alleged to be a charitable institution under Section 12A of the Act, within the meaning of the Income Tax Act, 1961. The Jaipur Stock Exchange Limited is recognized by Stock Exchange Board of India (SEBI) under the Securities Contracts (Regulation) Act, 1956.
(3.) THE objects set out in the Memorandum of Association, for which the Company (Jaipur Stock Exchange Limited) was established, are as follows: - "A. The main objects of the Exchange to be pursued by the Exchange on its incorporation are : 1. To support and protect the character and status of brokers, dealers and jobbers in stocks, shares and like securities and to further the interests of both brokers and the public dealing in Jaipur and elsewhere in Rajasthan and in India in stocks, shares and like securities and to maintain high standards to commercial honour and integrity to promote honourable practice, to discourage and to suppress malpractices, to settle disputes amongst brokers, dealers and jobbers to decide all questions of usage, custom or courtesy in conducting the business of brokers, dealers and jobbers and 2. 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 transactions of the members. B. The objects incidental or ancillary to the attainment of the main objects are : 1. Subject to the provisions of the Securities Contracts (Regulation) Act, 1956 and the Rules framed thereunder and any Law and Rules for the time being in force relating thereto, to make Rules and Bye -laws regulating the mode and conditions in and subject to which the business of the Stock Exchange shall be transacted and conduct of the persons transacting the same and generally for the good order and government of Members of the Exchange and from time to time to amend or alter such rules and regulations or any of them and to make any new, amended or additional Rules or Regulations for the purposes aforesaid. 2. To establish just and equitable principles and to settle points or practice and to decide upon any questions of business usage or courtesy between or among members of the Exchange. 3. To regulate and fix scale of commission and brokerage to be charged by members of the Exchange. 4. To protect the members of the Exchange amongst persons whose character or circumstances render them unworthy of credit. To erect, construct, extend, and maintain in Jaipur a suitable building to use as a place for the transaction of the business of the Exchange or of its members and for such other purposes of the Exchange as may be determined upon, and to erect, construct and maintain such other building or buildings as may be considered necessary or desirable for the purposes of the Exchange or for the use of the members thereof. To acquire by purchase, taking on lease or otherwise and develop lands and buildings and all other property movable and immovable which the Exchange may from time to time think proper to acquire for the purposes of the Exchange. 5. To sell, improve, manage, develop, Exchange, lease or let under lease or sublet, mortgage, dispose of, turn to account or otherwise deal with all or any part of the property of the Exchange. 6. To construct upon any premises acquired for the purposes of the Exchange any buildings for the purpose of the Exchange and to alter, add to or remove any building upon such premises. To borrow or raise any moneys required for the purposes of the Exchange upon such terms and in such manner and with or without such securities, as may be determined, and in particular by the issue of debentures charged upon all or any of the properties of the Exchange existing or to be acquired in future. 7. To subscribe for, become a members and cooperate with any other association, whether incorporated or not, whose objects are altogether or in part similar to those of this Exchange and to procure from and communicate to any such association such information as may be thought likely to further the objects of this Exchange or to promote measures for the protection of the trade or any interest therein. 8. To invest the money of the Exchange not immediately required, in such securities as may from time to time be thought fit. To remunerate any person, firm or company for services rendered in placing or assisting to place or guaranteeing the placing of any debenture or other securities of the Exchange. 9. To establish and support or aid in the establishment and support of associations, institutions, funds, trusts, conveniences calculated to benefit members or employees or ex -employees of the Exchange or ex -members of the Exchange and the dependents or connections of any such persons and to grant pensions and allowances and to make payments towards insurance and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public general or useful object. 10. To undertake and execute any trusts, the undertaking of which may seem to the Exchange desirable. To underwrite, float or subscribe for conditionally or unconditionally purchases or otherwise acquire and to hold, dispose of and deal in government securities, stock, shares and securities of any company or any body incorporated or unincorporated. 11. To take or otherwise acquire and hold shares in any other company having objects altogether or in part similar to those of the Exchange or carrying on any business capable of being conducted so as directly or indirectly to benefit the Exchange. 12. To enter into any arrangements with any State Govt. or other authorities Supreme, Municipal, Local or otherwise company or body that may seem conducive to the objects of the Exchange or any of them and to obtain from any such State Govt. or authority or company or body any rights, privileges and concessions which the Exchange may think it desirable to obtain and carry out exercise and company with such arrangements, rights, privileges and concessions. To enter into partnership or into any agreement for sharing profits, union of interests, cooperation, joint ventures, reciprocal concessions or otherwise with any person or company carrying on or engaged in or about to carry on or engage in any business of transaction which the Exchange is authorised to carry on or engage in any business or transaction capable of being conducted so as directly or indirectly to benefit the Exchange and to lend money to guarantee the contracts of or otherwise assist any person or company and to take or otherwise acquire shares and securities of any such company and to sell, hold, reissue with or without guarantee or otherwise deal with the same. 13. To promote any company or companies for the purpose of acquiring all or any of the properties, rights and liabilities of the Exchange or for any other purpose which may seem directly or indirectly calculated to benefit the Exchange. 14. To sell or dispose of subject to the provisions of Companies Act, 1956, the undertaking of the Exchange or part thereof for such consideration as the Exchange may think fit and in particular for shares, debentures or securities of any other company having objects altogether or in part similar to those of the Exchange. To carry on business as financiers, promoters, concessionaires, managers, secretaries, treasurers, agents or managing agents and any other business which may be conveniently carried on with the above. 15. To encourage the settlement of disputes by arbitration, to act as or to nominate arbitrators or umpires on such terms and in such cases as may seem expedient and to provide for arbitration of all disputes in respect of all transactions relating to or arising out of or pertaining to transactions in securities and including arbitration of disputes between members and persons who are not members and to provide arbitration Tribunals, Boards, Courts and subject to the provisions of the Securities Contracts (Regulation) Act, 1956 and the Rules framed thereunder to make Rules, Bye -laws and Regulations in relation to all such arbitration proceedings and to regulate the procedure with regard to the same and for enforcement of awards. 16. To make, draw, accept, endorse cheques, bills of exchange, promissory notes and other mercantile or commercial instruments. To promote the consideration and discussion of all questions affecting the business of the Exchange or of its members and allied businesses and generally to watch over and protect the interests of brokers, jobbers and investors in stocks, shares and like securities. 17. To give the government authorities, legislators and public bodies and other facilities of conferring with and ascertaining the views of the Exchange as regards matters directly or indirectly affecting the interests of brokers, dealers, jobbers and investors in stocks, shares and like securities. 18. To petition, if necessary, to the legislatures or promote deputation in relation to general and particular measures affecting the business of the Exchange, its members or investors in stocks, shares and like securities and to procure changes in law or in practice regarding the same. To promote or oppose legislative and other measures affecting the commercial, industrial and investing interests. 19. To collect, acquire, preserve, disseminate and circulate statistics and other information relating to stocks, shares and like securities and to maintain a library. 20. To print, publish and circulate such papers, periodicals, books and daily and other periodical quotations, lists and circulars as may seem conducive to furtherance of any of these objects of the Exchange. To communicate with Chambers of Commerce and other mercantile bodies throughout the world and consult and promote measures for the protection and advancement of the objects of the Exchange. 21. To improve and elevate the technical and business knowledge of persons engaged in or about to be engaged in trade, banking, commerce or company administration or dealing in stocks, shares and like securities or in connection therewith and with a view thereto to provide for delivery of lectures and holding of classes and to test by examination or otherwise the competence of such persons and to award certificates and diplomas and to institute and establish scholarships, grants and other benefactions. 22. To receive moneys, securities and valuables of all kinds on deposit or for safe custody with or without remuneration therefor and on such terms and conditions as the Exchange may deem fit; PROVIDED THAT in case of deposits from the public, it shall be in accordance with Section 58A of the Companies Act, 1956 and Rules thereunder and as per the directions of the Reserve Bank of India from time to time; PROVIDED further that the Exchange, however, shall not carry on any banking or insurance business. To make advances on the security of any bonds, shares or real or personal property of any kind and on such terms as the Exchange may deem fit. 23. To undertake or to act as Clearing House for delivery and payment of shares, stocks, debentures, government securities and otherwise both for members as well as for the investing public and do all acts either banking or financial which may be required to be done in connection with the clearing house and to perform and carry out the various kinds of business incidental to and connected therewith. 24. To do all or any of the above things in any part of the world and as principals, agents contractors, trustees or otherwise and by or through trustees, agents or otherwise and either alone or in conjunction with other. To take over all the assets and liabilities of Jaipur Stock Exchange and pass necessary resolutions, to approve all the actions of and to adopt all arrangements made by the coordination committee prior to official formation of the Exchange and to enter into necessary agreements, accordingly with the parties concerned for the purposes of carrying on business of the Exchange. 25. To apply for and obtain from the Government of India, recognition of the Exchange as a recognised Stock Exchange for the purpose of regulating and controlling the business of purchase, sale, dealings and transactions in securities within the meaning of the Securities Contracts (Regulation) Act, 1956. 26. To use the safe deposit vaults for purposes of storage gratuitously or otherwise letting on hire and otherwise disposing of safes, strong -rooms and other receptacles for money, securities and documents of all kinds. To make payments or disbursements out of the funds or other movable property of the Exchange for any of the purposes specified in the Rules, Bye -Laws and Regulations of the Exchange. 27. To facilitate the transaction of business of the Exchange by establishing, providing for and maintaining Clearing House for the members. 28. To apply any surplus funds available with the Exchange in promoting its objects and not to distribute the same as dividend or in any other form to the members. To do all such other things as are incidental or conducive to the attainment of the above objects. C. Other objects are : Nil. AND IT IS HEREBY DECLARED that the objects set forth in any -sub clause of this clause shall not, except where the context expressly so requires be in any way limited or restricted by reference to or inference from the terms of any other sub -clause or by the name of the Exchange. None of the sub -clauses of this clause nor the objects herein nor the powers thereby conferred shall be deemed subsidiary or auxiliary merely to the objects mentioned in the first sub -clause of this clause but that the Exchange shall have full power to exercise all or any of the power conferred by any part of this clause in any part of the world notwithstanding that the business, undertaking, property or acts proposed to be transacted, acquired, dealt with or performed do not fall within the objects of the first sub -clause of this clause. AND IT IS HEREBY FURTHER DECLARED that the income and property of the Exchange, wheresoever derived from, shall be applied solely towards the promotion of the objects set forth herein above, and no portion thereof shall be paid off by way of dividend, bonus or profits to any of the members. IV. The Liability of the Members is limited. V. Every member of the Exchange undertakes to contribute to the assets of the Exchange in the event of its being would up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the Exchange contracted before he ceased to be a member, and costs, charges and expenses of winding up and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding Rs. 2,500/ - (Rupees Two thousand Five hundred) Only." ;