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TMI Blog2019 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has raised two effective grounds viz., (i) the ld. CIT(A) has erred in confirming the disallowance of Rs..26,000/- being rent paid and (ii) the ld. CIT(A) has erred in confirming 50% [Rs..4,47,500/-] of salary paid to the Secretary of the society. The Department also raised two effective grounds viz., (i) the ld. CIT(A) has erred in not appreciating that the micro finance and insurance come under the last limb of the charitable purpose mentioned under section 2(15) of the Act and (ii) the ld. CIT(A) has erred in holding that the violation committed by the assessee by spending more than 50% towards administrative expenses does not have any implication with Income Tax Law. 2. Brief facts of the case are that the assessee society was for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety is not eligible for claiming exemption. It was also submitted that the assessee received service charges and commission from HDFC and other financial institutions for the service rendered and therefore, there was no charitable activity involved and it was purely commercial in nature. By relying on the decision in the cases of Socio Economic Development Association v. ITO [(2011)-TIOL-754-ITAT-Mad] and ITO v. Kalanjiam Development Financial Services 64 taxmann.com 25 (Chennai - Trib), wherein, micro finance activities are held to be "commercial" in nature, the ld. DR has submitted that the ld. CIT(A) has not given any findings with regard to eligibility of claiming exemption under section 11 of the Act except dealing with ceiling limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for managing its own expenses. Though the assessee claims that it was offering services to the poor, the Assessing Officer observed that no services were provided to the poorer on 'free of cost'. Therefore, by invoking the provisions of section 2(15) r.w.s. 13(8) of the Act, the Assessing Officer denied the claim of exemption under section 11 of the Act. However, in the appellate order, the ld. CIT(A) has not given any findings as to whether the assessee is eligible to claim exemption under section 11 of the Act since the assessee was carrying out micro finance activity. Under the above facts and circumstances, we remit the issue to the file of the ld. CIT(A) for adjudication and passing detailed speaking order keeping in mind the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Income Tax Law. 6.2 We have considered the rival submissions and gone through the orders of authorities below. We have also gone through the case law relied on by the ld. DR, in the case of Maddi Venataraman & CO. (P.) Ltd. v. CIT (supra), wherein, the Hon'ble Apex Court has held that it is against the public policy to allow the benefit of deduction under one statute of any expenditure incurred in violation of the provisions of another statute. In view of the above decision of the Hon'ble Supreme Court, we find that the assessee has clearly violated the Foreign Contribution Regulations Rules, 2011 and thus, the ground raised by the Revenue is allowed. 7. The first ground raised in the appeal of the assessee is with regard to the rent p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate order, we find that without asking any details from the assessee, the ld. CIT(A) has simply sustained the addition. We find that the provision made for rental was duly agreed by the concern agency and accordingly, out of the foreign fund, the said expenditure was met out as contended by the assessee in its written submissions that the said rent was not paid from the assessee's fund. In view of the above facts, the addition made and sustained by the ld. CIT(A) stands deleted. 8. The next ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming 50% [Rs..4,47,500/-] of the salary paid to the Secretary of the assessee society against the disallowance made by the Assessing officer. After consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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