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HC determined that the microfinance entity's primary objective of lending with 2-2.5% processing fees constitutes a commercial activity, not a charitable purpose. The court held that the exemption under Section 11(4A) of the Income Tax Act does not apply, as the lending operation is the main business object rather than incidental to charitable objectives. The income is not eligible for exemption under Sections 11 and 12, and the appellant's claim was conclusively rejected. The court emphasized that the 2009 amendment to the definition of charitable purpose precludes activities involving trade, commerce, or business from qualifying for tax exemption, irrespective of income application or retention.
HC determined that the microfinance entity's primary objective of lending with 2-2.5% processing fees constitutes a commercial activity, not a charitable purpose. The court held that the exemption under Section 11(4A) of the Income Tax Act does not apply, as the lending operation is the main business object rather than incidental to charitable objectives. The income is not eligible for exemption under Sections 11 and 12, and the appellant's claim was conclusively rejected. The court emphasized that the 2009 amendment to the definition of charitable purpose precludes activities involving trade, commerce, or business from qualifying for tax exemption, irrespective of income application or retention.
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