Law: Income Tax Act, 1961

Section: 10(23A),(23C)

Income-tax----Exemptions---Stock exchange---Application for continuance of exemption as charitable institution under S.10(23-C)---Rejected on ground assessee fell under cl. (23-A)---Request by assessee to treat application as under cl. (23-A)---Ground for rejection in earlier order deleted ---Assessee to apply afresh and Central Government to consider---Discretion of the Central Government is not an absolute discretion---Indian Income Tax Act, 1961, S.10(23-A) & (23-C). . The petitioner, the Ahmedabad Stock Exchange, was granted exemption in terms of section 10(23-C) of the Income Tax Act, 1961, up to the assessment year 1988-89. On an application for continuance of exemption under section 10(23-C), the Central Board of Direct Taxes by order, dated September 9, 1991, intimated that as the case of the stock exchange was covered by the specific provisions contained in section 10(23-A) of the Act, the exemption under section (23-C) of section 10, which applied to charitable and religious trusts, was not continued. The petitioner thereupon wrote to the Central Board to treat its application for renewal of exemption under section 10(23-C)(iv) made on December 27, 1988, as an application under section 10(23-A). By order, dated October 31, 1996, the Board directed that in its earlier order, dated September 9, 1991, the words "as the case of stock exchange is covered by the specific provisions contained in section 10(23-A)" be deleted, and the application seeking notification under section 10(23-A) was rejected. On a writ petition, the Court directed the petitioner to make a fresh application for the years in question and the Central Government to consider it and take a decision in accordance with law. Per Rajesh Balia, J.---There is a vital difference between the schemes of the two provisions (clauses (23-A) and (23-C) of section 10). Once there is a requirement of an application to be made to the Central Government, the necessary consequence is, that though the grant of approval or exemption, as the case may be, rests within the discretion of-the Central Government that discretion has to be exercised after due application of mind to the application within the…

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