Legal Case Summary

Case Details
Case ID 73f58f65-6b59-45eb-91ee-3b853656ab4a
Body View case body.
Case Number CASE REFERRED No. 84 OF 1963
Decision Date Nov 09, 1966
Hearing Date
Decision The court held that the Hyderabad Stock Exchange was entitled to exemption under section 4(3)(i) of the Indian Income-tax Act, 1922. The tribunal's previous view that stock exchanges primarily benefit brokers was found too narrow. The court emphasized that the stock exchange serves a general public utility and has a charitable purpose, as it assists the public interested in securities and maintains high standards of commercial integrity. The profits earned by the exchange are not distributed among members but are utilized for public objectives, fulfilling the conditions for exemption under the law.
Summary In the landmark case involving the Hyderabad Stock Exchange Ltd., the court examined the applicability of exemptions under the Income-tax Act, 1961, specifically section 11 and its predecessor, section 4(3)(i) of the Indian Income-tax Act, 1922. The case revolved around whether the profits earned by the stock exchange could be exempt from income tax, considering its charitable purposes. The court clarified that the stock exchange serves not just its brokers but the wider public interest, facilitating investment and economic growth. This ruling highlights the importance of stock exchanges in modern economies, reinforcing their role in promoting fair trading practices and ethical standards. The decision is crucial for understanding tax exemptions for entities with charitable purposes, providing a precedent for future cases in similar contexts.
Court Hyderabad High Court
Entities Involved Commissioner of Income tax, Hyderabad Stock Exchange Ltd.
Judges Jaganmohan Reddy, C.J., Venkatesam, J.
Lawyers N. Narasimha Iyengar, C. Kondaiah
Petitioners Hyderabad Stock Exchange Ltd.
Respondents Commissioner of Income tax
Citations 1967 SLD 548, (1967) 66 ITR 195
Other Citations CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC), Andhra Chamber of Commerce v. CIT [1961] 42 ITR 503 (Mad.)
Laws Involved Income-tax Act, 1961, Indian Income-tax Act, 1922
Sections 11, 4(3)(i)