https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=462247 https://www.taxtmi.com/caselaws?id=462247 Disallowing / withdrawing the claim of exemption u/s. 11 - action of the AO in presuming that the activities carried out by the assessee falls under the category of commercial activities due to the higher interest rate charged compared to its borrowing rates - HELD THAT:- There is a concurrent finding by AO as well as CIT(A) that the activities carried on by the assessee cannot be classified under any of the specific activities of relief of the poor, education or medical relief and held that the correct way to express the nature of activities carried on by the assessee is that the assessee is carrying on advancement of any other object of general public utility and the case of the assessee is hit by the proviso to section 2(15) of the Act, which reads that advancement of any other object of general public utility shall not be a charitable purpose if it involves carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for consideration irrespective of application of money. Both the authorities below has given a concurrent finding that the assessee is providing loans by making association with commercial banks by raising loans at the rate of 12 to 14% from them and advancing these loans to the customers or the alleged poor beneficiaries at the rate of 25.13%. It means that the assessee is carrying out organized commercial activity of micro financing predominantly with the intention of making profit and no activity other than micro finance activity was conducted by the assessee in the nature of charity. It can be called as a business in the nature of adventure. From the very activities practically carried out by the assessee it is financing to the poor people at the rate of 25.13% after taking loans from commercial banks at the rate of 12 to 14%, it means that the assessee's organized activity is for earning profit only, being business of micro finance. This issue now stands covered by the decision of Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT]. The sub-committee of the Central Board of Directors of Reserve Bank of India in its categorical report, when compared with the activities of the assessee, we reached to a conclusion that the assessee is only doing micro finance activities by charging exorbitant interest which does not commensurate with the prevailing rate. It is also noted that the activities is not in lieu of any benefit to low income group or poor people who are vulnerable and not in a position to cope up with financial burdens. In our considered view, the activity of the assessee to be in charitable in nature, the services rendered must commensurate with the benefit that may arise to such poor people. Appeal filed by the assessee is dismissed. Case-Laws Income Tax Wed, 10 Jul 2024 00:00:00 +0530