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Showing contexts for: charitable trust objects in Sanghamitra Rural Financial Services, ... vs Assistant Commissioner Of Income Tax, ... on 3 January, 2024Matching Fragments
4.2 The ld. A.R. submitted that the assessee is not hit by the proviso to section 2(15) of the Act and is eligible for exemption under section 11 & 12 of the Act- Grounds of appeal No.(6) & (7):
i. The ld. A.R. submitted that it has been fulfilling the objectives of the trust of being charitable in nature, by financing individuals ITA Nos.744 & 745/Bang/2023 Sanghamitra Rural Financial Services, Bangalore below the poverty line and extending a line of credit to ensure that loans are available to the poorest of the poor, which is not extended by commercial banks and NBFC.
xii. The ld. A.R. submitted that the proviso to section 2(15) is applicable only if a charitable trust has its activities in the nature of 'advancement of any other object of general public utility'.
xiii. The ld. A.R. therefore submitted that the proviso to section 2(15) finds no force under the facts and circumstances of the case. The relevant portion of section 2(15) is extracted here under;
Sec 2.
(15) "charitable purpose" includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility:
17. The next reason given by the AO is that the assessee is generating surplus year after year. Further, its income from financing activities has been increasing year after year. The important point to be noted here is that, so long as the assessee has been utilizing its income derived from the property held under the trust for its charitable objectives, the provisions of sec.11 do not deny exemption to a charitable trust. Hence, mere generation of surplus cannot be a reason to deny exemption u/s 11 of the Act. The AO might have highlighted this aspect to drive the point that the activities of the assessee are carried on commercial lines and hence the proviso to sec.2 (15) would be hit. Before us, the Ld A.R placed her reliance on ITA Nos.744 & 745/Bang/2023 Sanghamitra Rural Financial Services, Bangalore the decision rendered by Hon'ble Allahabad High Court in the case of Lucknow Development Authority (supra) and Ahmedabad Urban Development Authority (supra). In both the cases, it was held that when the profit making was neither the aim nor object of the trust, then the incidental surplus generated while carrying on its activities would not render any activity in the nature of trade, commerce or business. Hence, this reasoning of the AO would also fail.