TMI Blog2017 (8) TMI 1640X X X X Extracts X X X X X X X X Extracts X X X X ..... s arising out of the advances. As also a well-known fact that to obtain loan from Banks is a cumbersome process which any ordinary persons cannot succeed. Entities such as the assessee Trust only has a potential to reach out to such persons and effectively avoid loss of capital and yet lift the poor and the downtrodden. The assessee Trust has rendered service in the nature of providing relief to the poor as envisaged in the Act and therefore the benefit of Section 11 12 of the Act cannot be denied - we hereby set aside the Order of the Ld.A.O and the Ld. CIT(A) and further direct the Ld.AO to grant the benefit of Section 11 12 of the Act, to the assessee. As examined the various extensive activities conducted by the assessee Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner invoking the provisions of Section 13(2)(c) r.w.s. 40A(2) of the Act, without considering the fact that the appellant was making payment towards service received from various professionals, who were consultants. 3. The brief facts of the case are that the assessee is a Trust registered U/s.12AA of the Act, engaged in the business of providing micro finance services to self-help groups, filed its return of income for the assessment years 2011-12 2012-13 on 30.09.2011. The case was selected for scrutiny under CASS and finally order was passed U/s.143(3) of the Act for the assessment years 2011-12 2012-13 on 30.03.2014 31.03.2015, wherein the Ld.AO withdrew the benefit of Section 11 12 to the assessee and brought to tax the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the banks. (iv) Mere existence of the objects in the Trust Deed such as relief to the poor is not sufficient to assess the real character of the Trust; but the actual performance of the trust should be that of providing relief to the poor. (v) In the case of the assessee, the assessee has obtained loan from the bank and had further lend to the SHGs charging higher interest than what is charged by the bank to the assessee. Thus the assessee has neither facilitated the SHGs from availing micro-finance loans directly from the bank nor it has passed on the benefits directly to the SHGs without charging extra interest costs. (vi) Charging of additional interest to the SHGs and thereby deriving surplus cannot be considered as a chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and lending to SHGs at higher interest, therefore hit by the first proviso to Section 2(15) and Section 13(8) of the Act. 6. Before us the Ld.AR reiterated the arguments made before the Revenue authorities on the earlier occasions and further argued by stating as follows:- (i) The assessee trust were engaged in various activities to uplift the poor by identifying the villages, organizing professional visit to rural areas, educating the poor people by forming SHGs, holding meetings and workshops, advising the SHGs in forming fair price shops, so on and so forth. (ii) In order to help the SHGs the assessee trust was organizing funds through bank loans and extending them to SHGs at a nominal markup in order to cover the overheads and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue had withdrawn the benefit of Section 11 12 of the Act to the assessee only for the reason that the assessee s activity is micro-financing by obtaining loan from bank and lending them to SHGs at a higher interest. However, surprisingly we find that the Revenue has granted registration to the assessee trust whose main objective is micro-financing. Further from the decision cited by the assessee herein above, it is clear that the activity of micro-financing by itself cannot be consider as not providing relief to the poor unless and until there is a finding that the micro- financing activity is rendered to service the rich and the affluent. In the case of the assessee, there is no finding by the Revenue that the assessee trust has exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and ₹ 91,51,142/- respectively. Thus it is evident that most of the income earned by the assessee is utilized for attaining the objects of the assessee trust. Proviso to Section 2(15) of the Act also does not bar the assessee from earning income during the course of its activities such as relief to the poor. When the assessee has utilized its entire funds for micro-financing in order to uplift the poor then the benefit of Section 11 12 of the Act cannot be denied to the assessee just because the assessee has charged some markup in its lending rates of interest. It is pertinent to mention that some markup in the lending rates is essential to cover up the administration cost and bad debts arising out of the advances. It is also a we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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