INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Trust carrying on micro-finance business in a commercial manner -

Assessee-trust claimed exemption under section 11. AO denied the claim of exemption on the ground that the assessee was engaged in micro finance activities, wherein it was charging exorbitant interest from its beneficiaries and there were no charitable activities involved in micro finance activities. Accordingly, the income claimed as exempt under section 11 was assessed as business income. Held: Tribunal in assessee's own case held that the activity of providing micro finance was not a charitable activity. Though the object of the assessee-trust was to carry on charitable activities, but it did not carry those charitable activities, and it was only carrying on micro finance business in a commercial manner, which could not be construed as a charitable activity. Accordingly, the Tribunal was justified in denying the assessee's claim of exemption under section 11.

Followed:M/s. Shalom Charitable Ministries of India v. Asstt. CIT 2018 TaxPub(DT) 3480 (Coch-Trib)

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2010-11 & 2011-12

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