DCIT Vs BSE Investors Protection Fund (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal disposed of six Revenue appeals involving BSE Investors Protection Fund for AYs 2009-10, 2012-13, 2014-15, 2016-17, 2017-18 and 2023-24 through a consolidated order, with ITA No. 7628/MUM/2025 for AY 2009-10 treated as the lead case and the findings applied mutatis mutandis to the remaining years. The assessee-trust was constituted on 10.07.1986 pursuant to Central Government and SEBI directives for protecting small investors, including compensation of eligible claims arising against defaulting trading members, investor education, awareness and research.
It was registered under section 12A and was notified by CBDT Notification No. 65/2007 dated 02.03.2007 for the purposes of section 10(23EA). For AY 2009-10, the assessee had declared total income of Rs.43,47,638 after claiming exemption under section 11. The assessment was reopened under section 147 and the Assessing Officer denied exemption under sections 11 and 12, alleging, inter alia, that BSE and its members were specified persons under section 13(3), that compensation to investors indirectly benefited defaulting members, that corpus donations of Rs.37,28,00,305 were non-exempt, that interest of Rs.6,96,09,411 on auction proceeds was taxable, and that the trust was not irrevocable, leading to invocation of section 164(2). The CIT(A) deleted the additions. Before the Tribunal, the Revenue contended that the trust’s activities benefited specified persons and that simultaneous exemption under sections 11 and 10(23EA) was unavailable under the pre-amendment section 11(7).
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