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2016 (7) TMI 827 - AT - Income TaxExemption u/s.11 entitlement - assessee trust has been carrying on micro financial activities to rural poor women - charitable or non charitable purpose - Held that:- The assessee is lending money at commercial rate prevailing in the market. By advancing loans at that rate of interest, it cannot be considered as an activity carried on by the assessee as charitable and for the benefit of the public. When the assessee carried on micro finance activity in a commercial line, then it is not a charitable activity but an activity to expand the finance business by contracting weaker section of the public and it does not involve any charitable activity. Therefore, looking into the activities carried on by the assessee, we fully agree with the findings of the AO and this view of ours is squarely covered by the decision of the Tribunal in the case of Janalakshmi Social Services (2008 (8) TMI 606 - ITAT BANGALORE). The assessee relied on various judgments, which cannot be applied to the facts of the present case, as the assessee is carrying on micro finance business in a commercial manner so as to earn profit and there is no iota of charity carried on by the assessee so as to grant exemption under sec.11 of the Act. Hence, in our opinion, the CIT(A) not justified in granting exemption u/s.11 of the Act to the assessee. Accordingly, we reverse the order of the Ld.CIT(A) and restore the order of the AO. - Decided against assessee Allowance of bad debts - Held that:- CIT(A) is not justified in granting deduction as bad debts as that business of assessee trust, which is not continuing during the relevant period and in case of discontinued business, the claim of assessee u/s.36(1)(vii) cannot be allowed. - Decided against assessee Addition to the capital account of the assessee Trust - Held that:- The assessee took a plea befoe the AO that this impugned amount has been received on transfer of capital asset from M/s.Grama Vidiyal Trust to M/s.Grama Vidiyal Micro Finance Ltd. Contrary to this observation of the AO, the CIT(A) observed that there is no transfer of any asset, as such there is no levy of capital gain tax at ₹ 8,24,15,000/-. This findings of the CIT(A) is not based on any positive material. Hence, the facts brought on record not enough to give any findings on this issue. Therefore, the entire issue is remitted to the file of AO for fresh consideration after giving opportunity of hearing to the assessee. Allowability of depreciation on the assets on which the entire cost of assets has been allowed as application of income in earlier assessment years - Held that:- There is no question of allowing any depreciation in the assessment year under consideration on the assets which Written down value (WDV) had become ‘Nil’. Thus, this ground of the Revenue is allowed.- Decided against assessee Allowance of claim corpus Donation - Held that:- If the voluntary contributions received by the Trust created, partly or wholly, for charitable purpose, then in term of sec.2(24)(iia) of the Act it forms the part of the corpus fund of the Trust and it is a capital receipt. In the present case, since we have observed that assessee is not a charitable trust, it is engaged in the commercial activity and is not entitled for exemption u/s.11 of the Act. The assessee is required to give details of receipt of ₹ 3.70 crores and it is to be proved by assessee that it is not a revenue receipt and if it is in the field of capital receipt, capital receipt would not be liable for the exemption u/s.11 of the Act. Accordingly, this issue is remitted to the file of AO to examine afresh and assessee shall furnish necessary details. The ground of Revenue is partly allowed for statistical purposes.
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