2022 (6) TMI 644

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....No.10151/CIT(A)/VJA/2019-20 DIN : ITBA/APL/M/250/ 2019 - 20/1022609760(1) dated 18.12.2019 for the Assessment Year (A.Y.) 2010-11 and the cross objection is filed by the assessee in support of the order of the Ld.CIT(A) 2. Brief facts of the case are that the assessee is a society registered under Societies Registration Act, 1816. The assessee is registered as a charitable institution u/s 12AA of the Income Tax Act, 1961 (in short 'Act') and engaged in rendering community development services. The assessee filed it s return of income for the A.Y.2010-11 on 20.09.2010 admitting excess of expenditure over income of Rs.1,87,34,946/-. The assessment u/s 143(3) was completed on 31.03.2013 determining total income at Rs.3,90,51,200/-. In the a....

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....of the I.T.Act, thereby rendering it to be a non-charitable activity and therefore not eligible for exemption u/s.11. 3. The Id.CIT(A) erred in law in deleting the addition made by the AO amounting to Rs.5,55,00,000/- towards Capital Grant Expenses debited to profit and loss account by allowing the exemption u/s. 11 of the Act in spite of the admitted fact that the activities of the assessee consists of Micro Finance Business which is an activity in the nature of trade, commerce or business, attracting the proviso to section 2(15) of the l.T.Act which is an activity in the nature of trade, commerce or business, attracting the proviso to section 2(15) of the I.T.Act, thereby rendering it to be a non-charitable activity and therefore....

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....activity. He further submitted that the Ld.AO held that the assessee is not eligible for exemption u/s 11 of the Act in terms of section 13(8) of the Act. The Ld.AO also relied on the decision of ITAT Bangalore in the case of Janalakshmi Social Services Vs. DIT(Exemption) (2009) 33 SOT 197 (Bang), wherein, it was held that micro financing is not charitable activity, if it is carried out on the commercial lines. Therefore, the Ld.AO passed the order relying on the decision of ITAT, Bangalore, hence, this Hon'ble Tribunal may be pleased to confirm the orders passed by the AO. 6. On the other hand, the Ld.counsel for the assessee submitted that the AO denied exemption u/s 11 of the Act to the assessee on the ground that the activity of micr....

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....e have heard both the parties and perused the material placed on record. The Ld.CIT(A), by following the decision of ITAT in assessee's own case as well as the decision of the Hon'ble High Court passed an order. Relevant part of the order of the Ld.CIT(A) is extracted as under : "17. Respectfully following the decision of the Hon'ble Tribunal in the assessee's own case and the decision of CIT(A) in the assessee's own case for A.Y.2009-10, it is held that the micro finance activity of the assessee falls under the category of 'relief of the poor' and not under the category of 'advancement of any other object of general public utility' within the meaning of sec.2(15) of the Act. It is accordingly held that the first proviso to sec.2(1....