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2010 (2) TMI 1166 - AT - Income TaxExemption u/s 11 - no registration u/s 12A was granted in the name of the assessees - Whether registration u/s 12A was properly granted to the assessee? - error in assessee name in the registration certificate - AO hold that since the claim of exemption of income was raised without having a valid registration in the name of the assessees the assessee has no right or locus-standii to raise such claim and thus rejected - HELD THAT:- We are of the opinion that the error in the name of the assessee appearing in the registration certificate is occurred due to the mistake on account of negligence on the part of the staff of the CIT and not the assessees and as such he cannot be held responsible for the mistake. Thus the benefit of exemption cannot be denied to the assessees for this reasons only. We however, direct the revenue to make necessary correction in the name of the registration certificate granted to the assessee and shall treat it to be granted to SPANDANA (Rural & Urban Development Organisation). Nature of activities undertaken by the assessees - Micro financing activities - HELD THAT:- We find that the assessee is a society registered with the Registrar of Societies in 1992 in the name of SPANDANA (Rural Development Organisation). Later on certain amendments were made in the objects of the society. The copy of the objects are placed on record and from its perusal, we find the objects of the assessees are almost for charitable activities. We therefore hold that the micro finance activity in the instant case is a charitable activity. Since the registration has already been granted to the assessees u/s 12A assessee is eligible for exemption u/s 11. We are of the view that by advancing a fund on interest to other organisations, assessee has accomplished its object of micro finance to the socio-economically weaker sections of the society and also to alleviate poverty beside collecting the interest on the advanced loan. Moreover, this fund was advanced for a shorter period and the assessee has also earned an interest thereon which was utilized in micro financing activity to the poor people. We therefore of the view that by joining hands with the banks or financial institutions for procuring funds/loans for its advancement to poor or needy people exemption u/s 11 cannot be denied. We accordingly, set aside the order of the CIT(A) and direct the A.O. to allow the exemption u/s 11. Disallowance towards provisions of loan loss - In this regard, no argument was advanced during the course of hearing of the appeal. We however carefully examined this ground and we find no infirmity in the order of the CIT(A). This claim can only be allowed either in the case of NBFC or banking institutions. Since the assessee is a charitable society, the provision for loan loss cannot be allowed. Accordingly, we confirm the order of the CIT(A) in this regard and reject the ground of the assessee. Appeal of the assessee is partly allowed for statistical purpose.
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