2019 (5) TMI 1116

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ection 12AA(1)(b) of Income Tax Act and treading the assessee Charitable company registered under rule 19(2) of the Companies (incorporation) Rules-2014 as a business/services entity for the purpose of earning interest. (2) Ld. Pr. CIT(c) was not justified refusing registration U/s 12AA of IT Act by ignoring its objects (incorporated in Memorandum of Association):- (a) of charitable activity of the assessee company in providing micro finance to economically and financially weaker section without any discrimination as to caste, creed, religion or sex for earning their livelihood at nominal rate of interest on their personal guarantee only; (b) of relief and help to poor, old, infirm and destitute people of society ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... section society at concessional rate of interest is charitable in nature as the assessee is working on no profit and no loss basis and further, the surplus if any earned by the assessee is not liable for payment to promote or trustee but has to be applied only for the objects of the assessee. The rate of interest charges on unsecured loan/micro finance ranging between Rs. 10,000/- to Rs. 30,000/- per person is just 9% per annum. The said charge of interest is to meet day to day administration and office expenses. The major beneficiaries from such finance are poor and widow ladies having no or negligible support or source of income and whom, finance is not available without security. Therefore, the activity of the assessee falls in the ambi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Ind. Dev. Authority (2017) 395 ITR 18. * CIT Vs Ameliorating India (2017) 399 ITR 196. 4. On the other hand, the ld. DR has submitted that the ld. CIT(E) has carried out necessary enquiry to satisfy itself about the activities of the assessee. On examination of the record and particularly profit and loss of the assessee the ld. CIT(E) found the activities of the assessee cannot be termed as charitable as per Section 2(15) of the Act but all these activities are in the nature of trade and commerce/business. Therefore, when the gross receipts for such activity exceed 20% of the total receipt then it will not be termed as charitable activity as per proviso to Section 2(15) of the IT Act. He has relied upon the order of the ld. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The activity of the assessee has to be analyzed in light of the objects of the assessee that the formation of the assessee company with charitable objects and not with profit motive. The expression charitable purpose as per provisions of Section 2(15) of the Act includes any other objects and general public utility and therefore, if the objects of the assessee are in advancement of any object to benefit to public or a section of public then it is distinguished from benefit to an individual or group of individual and would be regarded as charitable purpose. We find that the primary and predominant object of the assessee are to promote the welfare of the economically weaker and destitute persons of the society by way of providing finance at....