TaxTMI 
TaxTMI 
2025 (9) TMI 902
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....ter referred as "the Act") arising out of Assessment Order dated 29.12.2019 of the Learned Assessing Officer/Learned Deputy Commissioner of Income, Circle Exempt 1(1), Delhi (hereinafter referred as "the Ld. AO") under Sections 143(3) of the Act for assessment year 2017-18. 2. Brief facts of the case are that the assessee filed its return of income on 30.10.2017 disclosing nil income. The case was selected for scrutiny. Notice under Section 143(2) of the Act was issued on 18.09.2018. Notices under Section 142(1) along with questionnaire was issued to the assessed. The assessee filed details. After considering objects and activities of the assessee, it was observed that the assessee is in receipt of commission income, processing fee, inte....
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....ave been completed accepting micro-finance as part of the 'charitable activities' of the assessee. The project of microfinancing in the earlier years was carried on by the assessee from its own resources of grants / donations made available by the donors /grantors. However, over a period of time since the out reach and the requirements grew and the policy of the RBI to extend microcredit facilities to NGOs vide their many circulars enclosed in the paper book allowed NGOs with rural outreach to participate in the micro-credit eco-system. Since HPPI had the experience, the requisite team and the branches at the grass root level, it accepted to act as a bridge between the banks and the beneficiaries for the micro-credit lending activit....
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....rade or commerce or any services in relation to business, trade or commerce. The ingredients of business, trade or commerce are missing. The AO was swayed by the interest rate of 26%. whereas, as explained to the AO, it is the model of micro-financing which is easier to understand, with less documentation, the repayments in installments are convenient and works on the concept of pay as you earn. Please see the CIT(A) letter dated 15.04.2024 where the assessee has explained with example. [P.B page 1 to 19]. The A.O. has erred in considering the specified grants received both foreign as well as non-foreign as the income of the assessee. It is the contention of the appellant that the specified grants by the donors are a liability in so far as ....
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....inancing by an institution to self-help poor people amounts to providing relief to the poor. 4. Visakhapatnam Bench of the Tribunal in the case of Spandana (Rural & Urban Development Organisation) vs. ACIT page 28 reported in (2010) 40 DTR 153 has dealt with this issue. 5. The Hon'ble Andhra Pradesh High Court affirmed the case of CIT vs. M/s. Spandana (Rural & Urban Development Organization) in ITANo.304/2013 dated 10.07.2013 and has observed as under: 6. Bangalore Bench of the Tribunal in the case of ACIT (E) vs Bharatha Swamukhi Samsthe reported in 28 DTR 113 (Bangalore) 7. Delhi Bench of the ITAT in the case of Disha India ITA No. 265/CTK/2017 Assessment Year: 2009-10-Hon'ble ITAT. 6. Learned A....
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.... iii) There is no element of relief to the poor, big micro-finance organizations acting on similar lines re-listed on stock-exchange as business entities. As such the assessee does not appear to be engaged in 'charitable activity'. iv) The AO places reliance on Circular No. 11/2008 dated 19/12/2008 for application of Proviso to section 2(15). v) AO relied on certain cases for coming to the conclusion that microfinance activities which are carried on by the assessee are not charitable activity. 6.6 Thus, the assessing officers stand in denying tax exemption u/s 11 and 12 is upheld. The income is computed treating the taxpayer as an AOP. While computing the said income he has not only included income as per....