2026 (3) TMI 1614

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....ovisional approval under Clause (iv) of the First Proviso to Section 80G(5) of the Act. Such provisional approval was granted in Form 10AC, vide order dated 28 May 2021, for the period commencing from 28 May 2021 up to Assessment Year 2024-25. 2. Thereafter, the petitioner applied for final approval under Clause (iii) of the First Proviso to Section 80G(5) of the Act. However, the Commissioner of Income Tax (Exemption) rejected the said application on the ground that the statutory time limit for filing such an application had not been adhered to. It was observed that the application for final approval under Section 80G was required to be made at least six months prior to the expiry of the provisional approval period, or within six months....

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....om Charitable Ministries of India v. Assistant Commissioner of Income Tax ([2020] 81 ITR (Trib) 20 (Cochin)) and Income Tax Officer (Exemptions) v. Kalanjlam Development Financial Services ([2016] 6 ITR (Trib) OL 226 (Chennai)) to contend that microfinance activities do not constitute charitable purposes and are therefore not entitled to exemption under the Act. 6. It appears that the petitioner is incorporated as a non-profit organization under Section 8 of the Companies Act, 2013. The Memorandum of Association of the petitioner, inter alia, sets out the following objects:- "3 (A) 4. To provide technical, managerial and human resource training and to assist in getting finances from venture capitalists, Angel Funding and other f....

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....from such activity or activities during the previous year, do not exceed twenty percent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]]" 8. It is well settled in law that the provision of microfinance and credit facilities, even if aimed at economic upliftment, may not qualify as a charitable activity where such operations involve commercial elements, including the charging of interest or other profit-oriented considerations. The determinative criterion for an activity to be regarded as charitable is the absence of a profit motive. Where income is generated in the form of interest or the activity is conducted on commercial terms, it assumes the character of a business a....