DCIT, CHENNAI V. M/s. Madras Social Service Society, CHENNAI

ITA 2419/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7738 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 13-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 19-08-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: M P SENTHIL KUMAR
• Keywords: Business income; Search and seizure; Charitable institution; Maximum Marginal Rate; Question of law
• Section: 80G; 12A; 2; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ' # . $ & ' BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 2419/MDS/2016 / ASSESSMENT YEAR : 2012-13 DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHENNAI CIRCLE, AAYAKAR BHAVAN, ANNEXE BUILDING, III FLOOR, 121, M.G. ROAD, NUNGAMBAKAM, CHENNAI - 600 034. VS. M/S. MADRAS SOCIAL SERVICE SOCIETY, NO. 329, OLD NO. 128, KOLPING TOWER, II FLOOR, TTK ROAD, ALWARPET, CHENNAI - 600 018. [PAN: AAATM 0621R] ( / APPELLANT) ( / RESPONDENT) ) * / APPELLANT BY : SHRI A.V. SREEKANTH, JCIT -.) * / RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE & SHRI M.P. SENTHIL KUMAR, ADVOCATE * /DATE OF HEARING : 13.02.2017 * /DATE OF PRONOUNCEMENT : 16.02.2017 /O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE ARISE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI VI DE PROCEEDINGS IN ITA NO. 466/14-15 CIT(A)-17 DATED 30.03.2016 FOR THE AS SESSMENT YEAR 2012-13. :-2-: I.T.A. NO. 2419/MDS/2016 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 11 OF THE A CT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS CASE IS THAT THE ASSESS EE IS A SOCIETY REGISTERED U/S 12A OF THE ACT AND HAD FILED ITS RETURN OF INCO ME FOR THE ASST YEAR 2012-13 ADMITTING NIL INCOME AFTER CLAIMING EXEMPTION U/S 1 1 OF THE ACT. THE LD AO NOTICED FROM THE RECORDS THAT THE ASSESSEE OBTAINS FUNDS FROM KOLPING INDIA THROUGH KOLPING INTERNATIONAL AT AN INTEREST RATE O F 2% PER ANNUM AND ADVANCED THE SAME AS LOAN TO VARIOUS SELF HELP GROU PS (SHGS) AT AN INTEREST RATE OF 6% PER ANNUM. THE MONIES RECEIVED FROM VA RIOUS SHGS WERE IN TURN REPAID BACK TO KOLPING INDIA AFTER RETAINING THE IN TEREST DIFFERENTIAL OF 4% PER ANNUM, WHICH IN THE OPINION OF THE LD AO, WAS A COM MERCIAL ACTIVITY, WHICH EVENTUALLY LED HIM TO CONCLUDE THAT THE ASSESSEE WA S ENGAGED IN A SYSTEMATIC ORGANIZED ACTIVITY CONSTITUTING BUSINESS WITH PROFI T MOTIVE AND THEREBY FALLING WITHIN THE AMBIT OF THE PROVISO TO SECTION 2(15) OF THE ACT. THE LD AO ALSO OBSERVED THAT THE AGGREGATE VALUE OF RECEIPTS FROM THE ASSESSEES ACTIVITIES EXCEEDED RS. 25 LAKHS DURING THE YEAR AND AS SUCH, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. ACCORDIN GLY THE LD AO TREATED THE ASSESSEE SOCIETY AS AN ASSOCIATION OF PERSONS (AOP) AND TAXED THE ASSESSEE AT MAXIMUM MARGINAL RATE (MMR) AND COMPLETED THE AS SESSMENT. :-3-: I.T.A. NO. 2419/MDS/2016 4. THE ASSESSEE CONTESTED THE ASSESSMENT BY PREFER RING AN APPEAL BEFORE THE LD CITA. IT WAS PLEADED THAT THE MAIN OBJECTIV ES OF THE ASSESSEE SOCIETY ARE :- (A) TO INITIATE, ORGANIZE, ESTABLISH AND EXECUTE DEVEL OPMENTAL PROGRAMMES AIMED AT THE RELIEF AND DEVELOPMENT OF T HE POOR OF ALL CASTES AND CREEDS AND TO CREATE AWARENESS IN THEM T O IMPROVE THEIR SOCIO-ECONOMIC STATUS. (B) TO COORDINATE AND COOPERATE WITH THE STATE GOVERNM ENT AND OTHER LOCAL BODIES AT VARIOUS LEVELS, TO ENABLE THE SOCIETY TO CARRY OUT DEVELOPMENTAL PROGRAMMES ON THE BASIS OF SELF-HELP FROM THE PEOPLE. (C) TO ENCOURAGE ENVIRONMENTAL, HEALTH AND EDUCATIONAL PROGRAMMES, FOR THE UNDER-PRIVILEGED SECTIONS OF TH E SOCIETY. APART FROM THIS, THE ASSESSEE HAS BEEN PROVIDING FI NANCIAL ASSISTANCE TO VARIOUS WEAKER SECTIONS OF THE PUBLIC AND COLLECTIN G THE SAME WITH INCREMENTAL CHARGES TO MEET ITS ADMINISTRATIVE EXPENSES AND TO MONITOR THE UTILIZATION OF FUNDS. THIS ACTIVITY OF THE ASSESSEE WAS CONSTRUE D BY THE LD AO AS ONE WHICH INVITES THE INVOCATION OF PROVISO TO SECTION 2(15) OF THE ACT. THE ASSESSEE PLEADED THAT THE ACTIVITIES OF THE ASSESSEE FALLS U NDER THE FIRST THREE LIMBS VIZ. RELIEF OF POOR, EDUCATION AND MEDICAL RELIEF AND NO T UNDER THE 4 TH LIMB OF THE :-4-: I.T.A. NO. 2419/MDS/2016 DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT. THE VARIOUS ACTIVITIES CARRIED OUT BY THE ASSESSEE SOCIETY ARE ENUMERATED BELOW:- ' RELIEF TO THE POOR MSSS CARRIES ON ACTIVITIES WHICH ARE IN THE NATUR E OF RELIEF TO THE POOR AND THE DOWNTRODDEN PEOPLE. ESCALATION OF PROFESSIONALISM IN RELIEF OF POOR BY REGULAR CAPACITY BUILDING PROG RAMMES AMONGST THE RURAL POOR LIKE COUNSELLING GUIDANCE THROUGH SEMINA RS, EXHIBITION AND PILOT INITIATIVES AND THE OUTCOME OF THESE ARE ENCO URAGING AND REACHING THE BOTTOM POOR COMMUNITIES. SCIENTIFIC STUDIES ARE CONDUCTED IN VARIOUS AREAS AND FINDINGS ARE INCORPORATED INTO PR OJECT ACTIVITIES, COMMUNITY BASED REHABILITATION OF THE DIFFERENTLY A BLE PERSONS IN VARIOUS PANCHAYATS, EDUCATIONAL ASSISTANCE TO VULNERABLE CH ILDREN. THUS THE MARGINALISED FAMILIES IN CHENNAI AND TRIU VALLUR ARE GUIDED WITH DIVERSIFIED ACTIVITIES FOR THE SOCIO-EC ONOMIC EDUCATIONAL DEVELOPMENT THROUGH SUSTAINABLE LIVELIHOOD DEVELOPM ENT PROGRAMMES. THE PROGRAMMES AND THE ACTIVITIES ARE CATALYTIC IN NATURE TO FAMILY AS WELL AS COMMUNITY DEVELOPMENTS. THE FAMILIES WHO AR E THUS BENEFITED THROUGH THIS DEVELOPMENT AND TRAINING HAVE SET UP V EGETABLE GARDENS IN THEIR HOME TO RAISE THEIR LIVING CONDITIONS. RURAL DEVELOPMENT RURAL DEVELOPMENT IS THE KEY TO INDIA'S ECONOMIC TRANSFORMATION AS A MAJORITY OF ITS POPULATION LIVE S IN THE RURAL AREAS. MAHATMA GANDHI SAID THAT INDIA LIVES IN ITS VILLAGE S AND DESTRUCTION OF THESE VILLAGES WILL LEAD TO INDIA'S DESTRUCTION. HE NCE, THE FOCUS IS MORE ON DEVELOPMENT OF RURAL AREAS IN ALL PLANNING EFFOR TS. MAHALIR THITTAM IS :-5-: I.T.A. NO. 2419/MDS/2016 A SOCIAL-ECONOMIC EMPOWERMENT PROGRAM FOR WOMEN IMP LEMENTED BY TAMIL NADU CORPORATION FOR DEVELOPMENT OF WOMEN LTD . GOVERNMENT PROGRAMMES TAMIL NADU CORPORATION OF WOMEN SUPPORTS MSSS FOR IMPLEMENTING MAHALIR THITTAM PROJECT FOR POOR WOMEN IN TRIUVALLUR DISTRICT FOR ABOUT 14 YEARS. THE PROJECT AIMS REACH OUT TO THE POOREST OF THE POOR WOMEN TO EMPOWER THEM TO LIVE A SELF-SUSTA INED LIFE. THE TRADEMARK OF THE SHGS PROMOTED BY MAHALIR THITTAM I S THE SYSTEMATIC TRAINING PROVIDED TO THE SHG MEMBERS AND THE OFFICE BEARERS. THIS CAPACITY BUILDING BRINGS QUALITATIVE CHANGES IN THE ATTITUDE OF WOMEN AND PROMOTES UNITY AND EFFECTIVE FUNCTIONING OF THE GROUP. MAHALIR THITTAM PROJECT PROMOTES AMONG THE POOR WOMEN FOR S AVING HABITS, NURTURE ENTREPRENEURIAL SKILLS AND ATTITUDES, PROMO TES EXPOSURE TO THE BANKING TRANSACTIONS AND TO FREE THEM FROM THE CLUT CHES OF MONEYLENDERS. MONITORING ALL THE ACTIVITIES OF MSSS ARE MONITORED AND GUID ED BY THE OFFICE BEARERS OF MSSS AND THE MEMBERS OF THE MAHAL IR THITTAM HAVE THEIR OWN ACTION PLAN TOWARDS SOCIO-ECONOMIC AND ED UCATION DEVELOPMENT. IN ORDER TO IMPROVE THE ENTREPRENEURIA L APTITUDE SKILL OF THE DOWNTRODDEN PEOPLE MSSS HAS IMPORTED VARIOUS SK ILL TRAINING SO THAT THE POOR PEOPLE CAN START THEIR INCOME GENERAT ION ACTIVITIES LIKE DAIRY, GOAT AND SHEEP REARING, EMBROIDERY ETC :-6-: I.T.A. NO. 2419/MDS/2016 IMPACTS OF MAHALIR THITTAM AT FAMILY LEVEL: SELF-CONFIDENCE AND POSITIVE SELF-IMAGE. GENDER INTEGRATION DECISION MAKING POWER IMPROVEMENT IN LITERACY CHANGING THE ATTITUDES TOWARDS TRADITIONAL; CUSTO MS DECREASE OF VIOLENCE IN THE FAMILY ACCESS AND CONTROL OVER INDIVIDUAL AND FAMILY INC OME AND ASSETS LIKE LAND, HOUSE, VALUABLE GOODS ASSURANCE OF SOCIAL SECURITY SCHEMES TO THE SHGS AND FAMILY MEMBERS AT COMMUNITY LEVEL: ROTATION OF LEADERS IN ALL LEVELS MOBILITY TOWARD TOWNS, CITIES, BANKS, POST OFFICE S, EXHIBITIONS AND GOVERNMENT DEPARTMENTS WOMEN BECOMING OWNERS AND BENEFICIARIES OF MANY DEVELOPMENT PROGRAMS ACTIVE PARTICIPATION IN THE ISSUE-BASED PROGRAMS HIGH MOBILIZATION OF GOVERNMENT RESOURCES WORKING TOWARDS REDUCING GLOBAL WARMING AND MARCH ING TOWARDS SUSTAINABILITY OF ENVIRONMENT :-7-: I.T.A. NO. 2419/MDS/2016 EMERGENCE OF INDEPENDENT FUNCTIONING OF REGISTERE D PLFS SOCIAL MOBILIZATION FOR ECONOMIC EMPOWERMENT INDIVIDUAL INCOME GENERATION PROGRAMME (IIGP) INCOME GENERATION IS A KEY PROGRAMMATIC STRATEGY TO ADDRESS THE NEED TO FIND ALTERNATIVE MEANS TO CREAT E LIVING IN A DIGNIFIED WAY. IIGP AIMS AT CREATING OPPORTUNITIES FOR THE US E OF RESOURCES AMONG DISADVANTAGED PEOPLE IN A MEANINGFUL WAY AND WITH THE OBJECTIVE OF BECOMING LESS DEPENDENT, MORE SELF-REL IANT AND ABLE TO CARE FOR THE FAMILY. VOCATIONAL TRAINING PROGRAMME THROUGH THE VOCATIONAL TRAINING PROGRAMME, THE ME MBERS OF THE PROGRAMME HAVE STARTED TO MOBILIZE SCHEMES A ND PROGRAMMES FROM GOVERNMENT LIKE PENSIONS FOR THE AGED AND DESE RTED, SPECIAL ASSISTANCE TO DIFFERENTLY ABLED, ETC. A CASE STUDY OF MARY STELLA A 42- YEAR-OLD RESIDENT OF THENDRAL NAGAR LOST HER HUSBAN D MR. DHANASEKARAN WHO WAS SUFFERING FROM AILMENT AND UNA BLE TO WORK. SHE HAS TWO SONS NAMED AMULRAJ AND PRABHUDOSS AND THAT DURING THE YEAR 2007 SHE WAS STRUGGLING TO PROVIDE HERE CHILDREN A SINGLE MEAL. SHE WORKED AS A DAILY LABOURER AND STRUGGLED TO BRING H ER CHILDREN. SHE WAS MOTIVATED TO START INCOME GENERATION PROGRAMME TO S USTAIN HER FAMILY. SHE TOOK AN ASSISTANCE OF RS.1S000 TO START A PETTY SHOP AND EARNED HER INCOME FOR HER LIVELIHOOD THEREBY IMPROVING CON DITION OF LIVING. THE PROGRESS OF THE FAMILIES ARE CLOSELY MONITORED AND GUIDED THROUGH MONTHLY AND ANNUAL FAMILY GATHERINGS. THE P ROJECTS OF MSSS HAD MULTIFARIOUS ACTIVITIES WITH MORE JOB CREATIONS AND ASSET HOLDING. THE AGRICULTURAL COOLIES HAVE IMPROVED ASSETS AND B ARGAINING POWER. THE ENTERPRISE DEVELOPMENT IN THE BLOCK HAS HELPED THEM TO HAVE :-8-: I.T.A. NO. 2419/MDS/2016 SUPPLEMENTARY INCOME TO THE FAMILIES AND SOCIAL DEV ELOPMENT THROUGH COOPERATIVE VENTURES. THE PROJECT HAS NOT ONLY BUIL T LINKAGES WITH GOVERNMENT AND OTHER INSTITUTION BUT ALSO NURTURED GOOD RELATIONSHIPS FOR SUSTAINABILITY. CRECHE PROGRAM MSSS IS ALSO INVOLVED IN MAINTAIN CRECHE CENTRES FOR THE CHILDREN OF WORKING MOTHERS MOSTLY BELONGING TO BPL FAMILIES, WHOSE PARENTS ARE AILING AND WORKING AS DAILY WAGE EARNER S. EACH CENTER HAS CHILDREN AT THE AGE GROUP OF 1 TO 5 YEARS. THE CENT ERS ARE FUNCTIONING AT THE DESERVING AREAS OF PERIYAPALYAM 27 CHILDREN, UT HUKOTTAI 28 CHILDREN AND SASTRI NAGAR 30 CHILDREN. MSSS IS PROVIDING PRE-PRIMARY EDUCATION, NUTRITION AL SUPPLEMENT, AND BASIC HEALTH CARE TO THESE CHILDREN. IT IS AN I DEAL PLACE FOR EARLY LEARNING EXPERIENCE AND HOLISTIC DEVELOPMENT. YEARL Y HEALTH CAMPS, QUARTERLY MEDICAL CHECKUPS, MAINTAIN HEALTH RECORD, PARTICIPATION IN SPORTS ACTIVITIES ARE SOME NOTABLE PROGRAMS GOING O N IN THE CRECHES, SUPPORTED BY SOCIAL WELFARE BOARD. THROUGH THIS SUP PORT POOR FAMILIES ARE GIVEN A HAND TO WORK PEACEFULLY AS THEIR CHILDR EN ARE TAKEN CARE IN THEIR ABSENCE. SELF HELP GROUPS SELF HELP GROUPS ARE FORMED AMONG THE BOTTOM POOR COMMUNITIES THROUGH THESE INITIATIVES MSSS HAS ENAB LED THE POOR AND MARGINALIZED TO HAVE SELF-HELP INITIATIVES FOR THEI R SUSTAINABLE DEVELOPMENT. EVENING SCHOOL PROGRAM THE GOAL OF THE EVENING SCHOOL PROGRAM IS TO ENSU RE THAT THERE IS IMPROVEMENT IN RETENTION RATE AND STEP UP THE EDUCATIONAL :-9-: I.T.A. NO. 2419/MDS/2016 STATUS OF ALL THE DISADVANTAGED CHILDREN. THE ATMOS PHERE AT NIGHT SCHOOL PROVIDES AN ENCOURAGING, INSPIRING AND UNINTERRUPTE D CONTINUITY OF FORMAL EDUCATION IN THE RURAL AND SLUM AREAS. MSSS SUPPORTED 25 INSTITUTIONS DURING THE YEAR. THE EVENING SCHOOL PL AYS A VITAL ROLE FOR THE POOR CHILDREN TO UNDERSTAND THE SUBJECTS TAUGHT IN REGULAR SCHOOL AND TO COMPLETE THEIR HOMEWORK AND STUDIES. REGARDLESS OF THEIR BACKGROUNDS THE STUDENTS ATTEN D EVENING SCHOOL BECAUSE THEY HAVE A THIRST FOR EDUCATION. TH EY JOIN EVENING SCHOOLS ON THEIR OWN INITIATIVE IN ATTEMPT TO ACHIE VE EDUCATION. REGULAR EVENING CLASSES, SPECIAL COACHING FOR THE SCHOOL FI NALS, BRIDGE COURSES FOR THE SLOW LEARNERS; CAREER GUIDANCE AND COUNSELL ING ARE PART OF THIS PROGRAM FOR DISADVANTAGED CHILDREN. AS A RESULT OF THIS, THE CHILDREN IN THESE AREAS ARE ASSURED A BRIGHT FUTURE IN THE INCR EASINGLY COMPETITIVE GLOBAL MARKET OF TODAY. LIVELIHOOD DEVELOPMENT PLAN LIVELIHOOD PROMOTION INVOLVES' IMPROVING THE RESI LIENCE OF HOUSEHOLD LIVELIHOOD SO THAT FOOD AND OTHER BASIC N EEDS CAN BE MET ON A SUSTAINABLE BASIS (I.E. DEVELOPMENT). INTERVENTIO N OF THIS TYPE OFTEN AIMS TO REDUCE THE STRUCTURAL VULNERABILITY OF LIVE LIHOOD SYSTEMS BY FOCUSING ON THE FOLLOWING ASPECTS. CREATING ALTERNATIVE INCOME -GENERATING ACTIVITIE S TO REDUCE POVERTY (E.G ACTIVITIES TO DEVELOP SMALL. ENTERPRISE FOR EM PLOYMENT GENERATION AND POVERTY REDUCTION AS WELL) REINFORCING COPING STRATEGIES THAT ARE ECONOMICAL LY AND ENVIRONMENTALLY SUSTAINABLE (E.G SEASONALLY APPROPR IATE OFF-SEASON EMPLOYMENT) :-10-: I.T.A. NO. 2419/MDS/2016 ENSURING BUFFER TO GRAMA SANGAMS (VILLAGE LEVEL A SSOCIATIONS) TO SUPPORT VARIOUS IGP NEEDS OF MEMBERS PROMOTION-TYPE INTERVENTIONS COULD ALSO DEAL WITH THE EDUCATIONAL DEVELOPMENT OF THE POOR SHG CHILDREN UNDERSTANDING THE LIVELIHOOD SYSTEMS OF THE POOR IN SHGS IS CRUCIAL TO EFFECTIVE POVERTY REDUCTION. LIVELIHOODS OF THE POO R CAN NEVER BE UNDERSTOOD IN ANYONE-TRACK LOGIC - BE IT ECONOMIC, SOCIAL, TECHNICAL, CULTURAL OR POLITICAL. THE LIVELIHOOD SYSTEMS ARE M ADE UP OF VERY DIVERSE ELEMENTS WHICH - TAKEN TOGETHER-CONSTITUTE THE PHYS ICAL, ECONOMIC, SOCIAL, AND CULTURAL UNIVERSE WHEREIN THE FAMILIES LIVE. THUS, THE LIVELIHOOD SYSTEM IS MORE THAN JUST A SET OF PHYSIC ECONOMIC PRECONDITIONS FOR CONTINUED EXISTENCE. IT ALSO ENCO MPASSES PSYCHOSOCIAL DIMENSIONS OF EXPERIENCE OF LIVING. THE LIVELIHOOD APPROACH PUTS HOUSEHOLDS TO THE POOR AS ITS CENTRAL FOCUS. IT TAK ES HOLISTIC CONSIDERATION IF THINGS THAT THE POOR MIGHT BE VULN ERABLE TO ASSETS AND RESOURCES THAT HELP THEM THRIVE AND SURVIVE, POLICI ES AND INSTITUTIONS THAT IMPACT THEIR LIVELIHOODS, HOW THE POOR RESPOND TO THREATS AND OPPORTUNITIES AND WHAT SORT OF OUTCOMES THE POOR AS PIRE TO. AGRICULTURE AND ALLIED ACTIVITIES SUPPORT LIVELIHOODS OF NEARLY 70 PERCENT OUR SCHS ARE IN THE RURAL AREAS. IN THE RECENT YEARS, LAND B ASED LIVELIHOOD OF SMALL AND MARGINAL FARMERS ARE INCREASINGLY BECOMING UNSU STAINABLE. AS A RESULT, RURAL HOUSEHOLDS ARE FORCED TO LOOK AT ALTE RNATIVE MEANS FOR SUPPLEMENTING THEIR LIVELIHOODS. MSSS MANDATE THE COMMITMENT OF MSSS HAD MADE THE DIFFERENT STAKEHOLDERS DURING 2008 AND 2009 WHICH FURTHER LED TO DESIGN A PROGRAMME CALLED LIVELIHOOD DEVELOPMENT PLAN (LDP). THE :-11-: I.T.A. NO. 2419/MDS/2016 FURTHER OF DIFFERENT DONORS BUDGETED AS REVOLVING F UND, CONTRIBUTION OF ULF MEMBERS AND CONTRIBUTION OF THE MSSS FORMED THE LDP. FUND DISBURSEMENT THE DESERVING FAMILIES OF SHGS FOR STARTING IGP AP PLY TO RESPECTIVE GRAMA SANGAM(GS). THE GS AFTER A CAREFUL STUDY PASSES A RESOLUTION AND SUBMITS THE REQUEST TO UNION LEVEL F EDERATION(ULF). THE ULF SCRUTINIZES THE REQUEST AND PRIORITIES THE NEED S AND FORWARDS TO MSSS FOR SUPPORT. THE STAFF VERIFIES THE PARAMETERS USED BY THE ULF IN THE SELECTION OF DESERVING CANDIDATES AND CONDUCTS FEASIBILITY STUDY OF THE ENTERPRISES TO BE STARTED BY THE LDP FUND. THE REPORT OF THE STAFF AND THE APPLICATION OF THE ULFS ARE CONSIDERED FOR SUPPORT. AS COULD BE SEEN FROM THE ABOVE ACTIVITIES OF MSSS , THEY ARE IN THE NATURE OF RELIEF OF POOR SINCE IT ALLEVIATES PO VERTY AND BENEFITS SOCIO-ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY A ND THE ACTIVITIES ARE ALL MOSTLY IN RURAL AREA TO MAKE THE POOR PEOPLE AW ARE OF THE VARIOUS SCHEMES AND TO ENCOURAGE THEIR PARTICIPATION IN BRI NGING UP THEIR DAY TO DAY LIVING. AS COULD BE SEEN FROM THE ABOVE ACTIVITIES MSSS PR IMARY PURPOSES/ PREDOMINANT OBJECTS ARE TO PROMOTE THE WE LFARE OF THE PUBLIC, AND THAT THE PURPOSE WOULD ONLY BE FOR A CH ARITABLE PURPOSE AS HAS BEEN HELD IN THE CASE OF CIT VS GUJARAT MARITIM E BOARD [2007J 295 ITR 561 FURTHER MSSS ACTIVITIES CONCENTRATE MAINLY FOR RURAL RECONSTRUCTION NECESSARILY AND IT INVOLVES THE UPLI FT OF THE RURAL MASSES AND IS DIRECTED FOR THE WELFARE OF SUCH PEOPLE ONLY . THE MAJORITY OF SUCH PERSONS BELONG TO THE 'POOR (OR POORER) SEGMENTS OF THE SOCIETY AND HENCE IT FALLS WITHIN THE FIRST LIMB OF SEC 2(15) O F THE ACT VIZ., RELIEF OF POOR AS HAS BEEN HELD IN THE CASE OF THIAGARAJAR CH ARITIES VS ADDL. CIT [1997J 225 ITR 1010 MSSS ACTIVITIES INVOLVES BENEFI T FOR POOR CLASS OF :-12-: I.T.A. NO. 2419/MDS/2016 THE PUBLIC AND ANY PROVISION MADE FOR A POOR CLASS OF THE PUBLIC WELL EARMARKED AS RECIPIENT OF SUCH BENEFITS WOULD CERTA INLY MAKE THE OBJECT OF SUCH BOUNTY A CHARITABLE ONE [CIT VS KAMLA TOWN TRUST [1996J 21] ITR 699J UTILISATION OF DEVELOPMENT FUND FROM THE BENEFICIAR IES: THE FUNDS GIVEN TO BENEFICIARIES TOWARDS LIVELIHOO D DEVELOPMENT ACTIVITIES ARE REPAID BY THE BENEFICIARIES WITH INC REMENTAL FUNDS FOR DEVELOPMENTAL ACTIVITIES CARRIED OUT BY MSSS. THIS DEVELOPMENT FUND RECEIVED ARE ACCOUNTED SEPAR ATELY AND UTILIZED FOR UPLIFTMENT OF RURAL POOR. PLOUGH BACK OF DEVELOPMENT FUND THE RECEIPT BY WAY OF DEVELOPMENT FUND BY MSSS WHI CH IS FAR BELOW THE NORMAL BANK RATE IS BEING UTILIZED FOR RU RAL POOR UPLIFTMENT PROGRAMS OF MSSS AS A WHOLE. THIS MAKES THE POOR PE OPLE AWARE OF THE SCHEME AND ENCOURAGE THE SHGS PARTICIPATION AND THE INCOME ARISING OUT OF THESE ACTIVITIES ARE AGAIN SPENT ONLY FOR AC HIEVING THE 'OBJECTS OF THE SOCIETY'. COMPARISON OF INTEREST RATES THE DEVELOPMENT FUND RECEIVED WHEN COMPARED TO OT HER NORMAL RATE IS VERY MUCH BELOW THE BANK RATE. ICICI BANK - 14% P.A., INDIAN BANK - 12.25% P.A., PALLAVAN GRAMA BANK - 14% P.A., IN CASE OF ICICI BANK, IF THE REPAYMENTS ARE NOT I N TIME, THEY LEVY AN ADDITIONAL INTEREST OF 24% IF THERE HAS BEE N EVEN A DAY'S DELAY :-13-: I.T.A. NO. 2419/MDS/2016 (NORMALLY WE UNDERSTAND THAT IT IS CALCULATED ON AN HOURLY BASIS DEPENDING UPON THE TIME OF DISBURSAL OF THE LOANS T O SHGS). THUS THE BROAD AND EXTENDED DEFINITION OF THE TERM 'BUSINESS' CANNOT BE APPLIED IN RESPECT OF MSSS ACTIVITIES. TH E DEVELOPMENT FUND COLLECTED IS MAINLY BECAUSE THAT THE BENEFICIARIES SHOULD NOT THINK THAT THEY ARE RECEIVING THE FUNDS FREE OF COST AND SHOUL D BE AWARE THAT THEY HAVE TO RAISE INCOME FROM THE FUNDS RECEIVED BY THE M, THIS WILL IN TURN MOTIVATE THE HABIT OF INCREASING THEIR INCOME AND L IVELIHOOD. FURTHER AN ACTIVITY WOULD BE CONSIDERED 'BUSINESS' ONLY IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE. THE FACT THE ACTIV ITIES OF RECEIPT OF DEVELOPMENT FUND CANNOT BY ITSELF BE GROUND TO SAY THAT MSSS IS CARRYING ON A BUSINESS ACTIVITY PARTICULARLY WHEN T HE DEVELOPMENT FUND IS NOT DISTRIBUTED TO THE MEMBERS BUT APPLIED TOWAR DS THE OBJECTS OF THE SOCIETY (THANTHI TRUST 247 ITR 785 (SC) AND AGRICUL TURAL PRODUCE AND MARKET COMMITTEE 291 ITR 419 (BOM)' 4.1. IT WAS FURTHER PLEADED BEFORE THE LD CITA THA T THE ASSESSEE SOCIETYS ACTIVITIES FALL UNDER THE FIRST THREE LIMBS OF DEFI NITION OF CHARITABLE PURPOSE BY STATING THE FOLLOWING :- FURTHER THE ACTIVITIES SUCH AS CHARITY, RENT FROM PROPERTY, ORGANIZING WORKSHOP AND SEMINAR ETC SHALL STILL BE WITHIN THE FIRST LIMB OF THE DEFINITION OF 'CHARITABLE PURPOSE' AS CONTAI NED IN 'SEC 2(15) OF THE ACT SINCE THE ACTIVITIES OF MSSS IS TO UPLIFT T HE POOR PERSONS AND TO HELP THEM RISE OUT OF POVERTY WITHOUT ANY MOTIVE OF PROFIT AND MSSS HAS WIDE RANGE OF OBJECTS FOR THE WELFARE OF ECONOM ICALLY AND SOCIALLY DIS-ADVANTAGED PEOPLE AND THIS WOULD BE ELIGIBLE FO R EXEMPTION EVEN IF AT A VERY LONG STRETCH OF IMAGINATION CONSIDERED AS A BUSINESS AS HAS :-14-: I.T.A. NO. 2419/MDS/2016 BEEN HELD IN THE CASE OF BHARATHA SWAMUKHI SAMSTHE 28 DTR (BANG)(TRIB) 113 FOLLOWED LIVELIHOOD ACTIVITIES FOR DOWNTRODDEN PEOPLE THE FUND GIVEN TO BENEFICIARIES TOWARDS LIVELIHOO D DEVELOPMENT ACTIVITY TO THE WEAKER SECTIONS AND REC EIPT OF DEVELOPMENT FUND ARE LIVELIHOOD DEVELOPMENT FUNDS ARE PAID TO WEAKER S ECTIONS OF THE MSSS TO MEET THEIR URGENT NEEDS / LIVELIHOOD DEVELO PMENTAL ACTIVITY. THE FUNDS ARE GIVEN WITHOUT ANY SURETY OR GUARANT EE. FOR ASSISTANCE DISTRIBUTED AS LIVELIHOOD DEVELOPM ENT FUND TO POOR AND WEAKER SECTIONS OF THE MSSS, MSSS HAS TO INCUR LOT OF EXPENDITURE ON MAINTENANCE OF RECORDS, DEPLOYMENT OF STAFF AND MOST OF THE TIMES, THE SUMS COULD NOT BE RECOVERED FROM THEM AND THIS ASPECT IS ALSO TO BE TAKEN INTO ACCOUNT BY MSSS WHILE GRANTING MONIES TO THESE POOR PEOPLE. SUPPOSE THE MONEY GIVEN TO SOME OF THE POOR PEOPL E ARE NOT IN A POSITION TO REPAY, MSSS CANNOT IMPOSE RECOVERY AND ULTIMATELY HAS TO FOREGO THE MONEY SO GIVEN. MSSS HAS TO INCUR HEAVY EXPENDITURE IN MAINTAININ G THE ORGANIZED SECTOR. THE FUNDS ARE GIVEN FOR A SHORTER PERIOD SO THAT ON REPAYMENT THIS COULD BE ROLLED OVER TO OTHER WEAKER SECTIONS. BY DOING THIS, MSSS HELPS THE POOR AND WEAKER SEC TIONS OF THE MSSS IN MEETING THEIR URGENT NEEDS AS OTHERWISE SUCH WEA KER SECTIONS WOULD GET INTO THE CLUTCHES OF COMMERCIAL MONEY LENDERS A ND WHATEVER :-15-: I.T.A. NO. 2419/MDS/2016 INCOME THE WEAKER SECTIONS COULD DERIVE WILL GO TO MEET THE COST OF FUNDING ITSELF IF THEY WERE TO GET SUCH FUNDS FROM COMMERCIAL MONEY LENDERS. IF THE MONIES ARE NOT GIVEN WITH A MOTIVE TO REPA Y, THE RECIPIENTS WILL NOT HAVE AN INTENTION TO EARN INCOME OUT OF FROM TH E INCOME GENERATION PROGRAMMES AND WILL ONLY END UP IN SIP HONING OF THEIR HOLDINGS ITSELF AND AGAIN WILL GET INTO THE PROBLEM CONTINUOUSLY AND THIS WILL BE A PERENNIAL PROBLEM FOR SUCH WEAKER SECTION S. THE WEAKER SECTIONS OF PEOPLE OTHERWISE WILL HAVE TO INCUR HEAVY FINANCIAL COSTS FOR OBTAINING LOANS FROM BANKS. THE FOLLOWING PASSAGE ON MICRO CREDIT AT PAGE 41 O F THE BOOK 'LAW AND PROCEDURE ON CHARITABLE TRUSTS AND RELIGIO US INSTITUTIONS 2012-13 '2.30A. MICRO CREDIT MICRO-CREDIT FOR POOR WOMEN IN SOCIO-ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY WOULD QUALIFY FOR EXEMPTION IN THE CASE OF A TRUST, WHICH WAS FORMED WITH THE PROJECT OF POVERTY ALLEVIATION AND BENEFIT FOR SOCIO-ECONOMICALLY WEAKER SECTION. SINC E INTEREST WAS CHARGED ON THE LOANS, THE ASSESSING OFFICER FELT TH AT IT CANNOT BE TREATED AS A CHARITABLE ACTIVITY. THE ASSESSING OFFICER ALS O CHARACTERISED THE RATE OF INTEREST CHARGED AS EXORBITANT. THE TRIBUNAL FOU ND THAT THE RATE WAS COMPARATIVELY LESS AND THAT THE LOANS WERE GIVEN TO WOMEN BELOW THE POVERTY LINE. IT WAS MEANT FOR UPLIFT OF THE ECONOM IC STATUS OF SUCH WOMEN. THERE WAS NOTHING IN THE ORDER OF THE ASSESS ING OFFICER TO SUGGEST THAT THEY COULD HAVE GOT A CHEAPER LOAN ELS EWHERE. IT WAS IN THIS CONTEXT, THAT THE RIGHT OF RENEWAL OF RECOGNIT ION UNDER SECTION BOG :-16-: I.T.A. NO. 2419/MDS/2016 WAS GRANTED IN ASST. DIRECTOR OF INCOME-TAX (EXEMPT ION) V. BHARATHA SWAMUKTI SAMSTHE [2009] 319 ITR (AT) 422 (BANGALORE ).' FURTHER, LOAN BY WAY OF MICRO CREDIT FOR POOR WOME N WOULD QUALIFY FOR EXEMPTION, SO THAT APPROVAL UNDER SECTI ON BOG CANNOT BE DENIED AS FOUND BY THE TRIBUNAL IN ASST. DIRECTOR O F INCOME-TAX (EXEMPTION) V. BHARATHA SWAMUKTI SAMSTHE [2009] 319 ITR (AT) 422 (BANGALORE). IN THE CASE OF SCHOLARSHIP LOANS SCHOLARSHIP LOANS WERE ACCEPTED AS APPLICATION FO R CHARITABLE OBJECTS SUBJECT TO THE AMOUNT ON REALISA TION BEING TREATED AS APPLICABLE INCOME IN THE YEAR OF REALISATION OF LOA NS OR ADVANCES AS REQUIRED IN BOARD CIRCULAR NO.L00 DATED 24TH JANUAR Y, 1973 (1973) 88 ITR (ST.) 66. ADVANCEMENT OF FUNDS IN THE CASE OF CIT V. CUTCHI MEMON UNION (1985) 1 55 ITR 51 (KARN), THE HIGH COURT ADOPTED THE CIRCULAR AND ACCEPTED, THAT THE OBJECTS OF HELPING WIDOWS IN THIS CASE ACHIEVED BY GIVING LOANS WITHOUT INTEREST WAS ACCEPTABLE APPLICATION. IT NEED NOT AL WAYS BE INTEREST FREE WAS ALSO ACCEPTED.' 4.2. THE ASSESSEE MADE ITS SUBMISSIONS ON THE IMPA CT OF THE INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT AND ITS RELATED CASE LAWS TOGETHER WITH THE SPEECH OF THE HONOURABLE FINANCE MINISTER IN THIS R EGARD AS BELOW:- :-17-: I.T.A. NO. 2419/MDS/2016 ' ASSURANCE BY FINANCE MINISTER WE ALSO WISH TO BRING TO YOUR KIND NOTICE THAT TH E FINANCE MINISTER WHILE PILOTING THE AMENDMENT BEFORE THE PA RLIAMENT HAS GIVEN AN ASSURANCE THAT GENUINE INSTITUTIONS WILL NOT BE AFFECTED. THIS WAS FOLLOWED BY A CIRCULAR AS WELL. SUCH ASSURANCE IS B INDING ON THE AUTHORITIES AS HAD BEEN LAID DOWN IN K.P. VARGHESE V. ITA (1981) 131 ITR 597 (SC). IT CAN BE NOBODY'S CASE THAT THIS WOR LDWIDE ORGANISATION WITH STRONG REPUTATION MANAGED BY MEN OF INTEGRITY AND A TRACK RECORD OF SERVICE DOES NOT OVERNIGHT BECOME A NON- GENUINE ORGANISATION. IT ALSO DOES NOT BECOME A PROFIT ORIENTED ORGANISATION WHEN IT IS MANAGED AND SERVICED BY PEOPLE WHO DO SO WITH CONSIDERABLE SELF-SACRIFICE ON THEIR PART MOTIVATED BY PUBLIC SERVICE. THE FACTS S PEAK FOR THEMSELVES, SO THAT THERE COULD BE NO DOUBT AS TO THE ELIGIBILI TY. 'CHARITIES- VALIDITY OF PROVISO TO SECTION 2(15) THE FINANCE MINISTER HAD GIVEN AN ASSURANCE THAT THIS AMENDMENT WOULD NOT AFFECT GENUINE TRUSTS AND INSTI TUTIONS. THIS ASSURANCE WAS FOLLOWED BY CIRCULAR NO. 11 DATED DEC EMBER 19, 2008 [2009] 308 ITR (ST.) 5. BUT THE ASSURANCE WAS OBSER VED MORE BY BREACH. THE ASSESSING OFFICERS INFERRED BUSINESS EV EN FROM LEGITIMATE ACTIVITY IN PURSUANCE OF ITS OBJECTS, EVEN WHERE IT IS NOT PROMPTED BY PROFIT MOTIVE. EVEN FUNCTIONS OF THE STATE CARRIED OUT BY THE INSTITUTIONS SET UP BY THE GOVERNMENT WERE TARGETED BY THE AUTHO RITIES TO FOIST LIABILITY ON THE INFERENCE OF BUSINESS, WHERE THE O BJECT WAS ONE OF GENERAL PUBLIC UTILITY. THE INFERENCE OF BUSINESS W AS NOT HELD JUSTIFIED IN BUREAU, OF INDIAN STANDARDS V. DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS) [20137 358 ITR 78 (DELHI, INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V. DGIT (EXEF7!PTIONS) [20137 358 ITR 91 (DELHI AND GS1 INDIA V. DIRECTOR GENERAL OF INCOME-TAX (EX EMPTION) [20147 :-18-: I.T.A. NO. 2419/MDS/2016 360 ITR 138 (DELHI, STATE OF ANDHRA PRADESH V. H. A BDUL BAKSHI AND BROS. [19647 15 STC 644 (SC) AND CST V. SAI PUBLICA TION FUND [20027 258 ITR 70 (SC) UNDER THE SALES TAX LAW. THE HIGH COURT FOUND THAT TO THE EXTENT, AN INCOME FROM AN ACTIVITY IN THE COURS E OF CARRYING OUT AN OBJECT OF GENERAL PUBLIC UTILITY IS TAXED, THERE IS DISCRIMINATION. BUT THE LAW WOULD BE SATISFIED, IF THE PROVISION IS READ DO WN TO ACCORD WITH THE CONSTITUTION. IF IT IS SO READ DOWN, THE PROVISO WO ULD BE INEFFECTIVE, IF THE ACTIVITIES ARE IN PURSUANCE OF ITS OBJECTS WITH OUT PROFIT MOTIVE. IT IS A WELCOME DECISION, WHICH HAS UPHELD THE VIEW CONSIST ENTLY TAKEN BY THE COURTS IN OTHER CASES WHILE FINDING THAT THE PROVIS O HAS TO BE READ DOWN TO ACCORD WITH THE CONSTITUTION. THE DELHI HIGH COURT IN INDIA TRADE PROMOTION ORGA NIZATION V. DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS) [2015] 371 ITR 333 (DELHI) HAS ELABORATELY CONSIDERED THE VALIDITY OF THE AMENDMENT TO THE DEFINITION OF CHARITABLE PURPOSE BY INSERTION OF A PROVISO TO SECTION 2(15) OF THE INCOME-TAX ACT, 1961. THE PROVISO SOUG HT TO WITHDRAW THE EXEMPTIONS FOR THOSE TRUSTS AND INSTITUTIONS WITH T HE OBJECT OF GENERAL PUBLIC UTILITY, IF THEY HAVE BUSINESS INCOME EXCEED ING THE LIMIT OF RS. 10 LAKHS LATER ENHANCED TO RS. 25 LAKHS FROM BUSINESS. IT IS APPARENTLY IN THE LIGHT OF THE DECISIONS, TH E FINANCE BILL, 2015, WOULD NOW CONCEDE THE VIEW TAKEN BY THE COURT S BY SUBSTITUTING THE FIRST PROVISO AND SECOND PROVISO BY A SINGLE PR OVISO, WHICH WOULD NOW EXEMPT THE BUSINESS INCOME, WHERE THE ACTIVITY 'IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEME NT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY', SO THAT IT RECOG NISES ALL THE ACTIVITIES CONSISTENT WITH THE OBJECTS, WHERE THE OBJECTS ARE NOT PROMPTED BY PROFIT MOTIVE, FROM THE PURVIEW OF LIABILITY BRINGI NG THE LAW TO CONFORM THE ASSURANCE OF THE FINANCE MINISTER AND THE CONST ITUTION. THE EFFECT OF THIS PROVISION WOULD BRING THOSE TRUSTS AND INST ITUTIONS WITH THE :-19-: I.T.A. NO. 2419/MDS/2016 OBJECT OF GENERAL PUBLIC UTILITY ON PAR WITH THOSE WITH THE OTHER THREE OBJECTS IN RESPECT OF THE TREATMENT FOR INCOME FROM BUSINESS, IF IT IS INCIDENTAL TO THE OBJECTS AS PROVIDED UNDER SECTION 11 (4A) OF THE ACT. THE PRESENT INTENT IN THE BILL COULD HAVE BEEN BET TER ACHIEVED BY OMITTING THE PROVISO, SINCE THE AMENDMENT PROPOSED BY THE BILL IS MORE CLARIFICATORY. THE OTHER PROVISION IN THE PROPOSED PROVISO SUBSTITUTES THE CEILING BY 20 PER CENT. OF TOTAL RECEIPTS AS AGAINS T RS. 25 LAKHS OF SUCH BUSINESS RECEIPTS. THIS PART OF THE PROVISION CAN O NLY BE CONFINED TO THOSE CASES WHERE THE BUSINESS IS NOT CONSISTENT WI TH THE OBJECTS, BUT ALL THE SAME PERMITTED UP TO THE LIMITS.' (EMPHASIS SUPPLIED) WE ALSO DRAW YOUR KIND CONSIDERATION FOR THE PASSA GE IN INDIA TRADE PROMOTION ORGANIZATION'S CASE (SUPRA) IN INCO ME-TAX REPORTS (2015) 371 ITR (JOURNAL) 21 AT 24 HAS THIS TO SAY O N THE SUBJECT: 4.3. BASED ON THE AFORESAID SUBMISSIONS, THE ASSES SEE SOCIETY PLEADED THAT THE INFERENCE THAT ASSESSEE FALLS UNDER THE FOURTH OBJECT OF GENERAL PUBLIC UTILITY IS MISTAKEN AND WOULD ONLY RESULT IN JURISD ICTIONAL ERROR AND ERROR IN FACTUAL INFERENCE WHEN ITS SUBSTANTIAL ACTIVITIES A RE RELIEF OF THE POOR AND EDUCATION. 5. THE LD CITA ON APPRECIATING THE AFORESAID CONTE NTIONS OF THE ASSESSEE TOGETHER WITH THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE HELD THAT THE OBJECTS, AIMS AND OBJECTIVES OF THE ASSESSEE SOCIET Y ARE CLEARLY COVERED UNDER THE FIRST, SECOND AND THIRD LIMB OF DEFINITION OF C HARITABLE PURPOSE U/S 2(15) OF :-20-: I.T.A. NO. 2419/MDS/2016 THE ACT. THE LD CITA ACCORDINGLY HELD THAT ONE OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE IN GRANTING LOANS TO SHGS IN ORDER TO EFFECTUATE THE AIMS AND OBJECTIVES OF THE SOCIETY COULD NOT THEREFORE BE CO NSTRUED AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY INVOLVIN G THE CARRYING ON OF ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY AC TIVITY OF RENDERING SERVICES WITH PROFIT, BEING THE DRIVING AND DOMINAN T MOTIVE THERETO, LOSING ITS CHARITABLE CHARACTER. HE FURTHER CATEGORICALLY HEL D THAT THE ACTIVITIES OF THE ASSESSEE THAT THE MOTIVE BEHIND ITS ACTIVITIES WAS NOT FOR PROFIT AND HENCE BY NO STRETCH OF IMAGINATION, THE SAME COULD BE CONSID ERED AS BUSINESS / COMMERCIAL ACTIVITY IN THE CONVENTIONAL SENSE WITH EARNING PROFITS. THE LD CITA CONSTRUED THE ACTIVITIES CARRIED OUT BY THE AS SESSEE SOCIETY AS CHARITABLE ACTIVITIES AND DIRECTED THE LD AO TO GRANT EXEMPTIO N U/S 11 OF THE ACT TO THE ASSESSEE BY OBSERVING AS UNDER :- 'IT IS ALSO CLEAR FROM THE AR'S SUBMISSIONS THAT T HE ACTIVITIES OF MADRAS SOCIAL SERVICE SOCIETY(MSSS) INCLUDES INDIVI DUAL INCOME GENERATION PROGRAMME(IIGP) WHICH AIMS AT CREATING O PPORTUNITIES FOR THE USE OF RESOURCES AMONG DISADVANTAGED PEOPLE IN A MEANINGFUL WAY AND ALSO VOCATIONAL TRAINING PROGRAMMES IN ORDER TO HELP THE MEMBERS OF THE SELF HELP GROUPS TO BUILD LINKAGES WITH THE GOVERNMENT AND OTHER AGENCIES TO LEVERAGE FUNDS FOR THEIR LIVELIHO OD AND THEREFORE IT COULD BE SAFELY SAID THAT IT PARTOOK THE CHARACTER OF CHARITABLE ACTIVITY OF RELIEF OF THE POOR WHICH IS THE VERY FIRST LIMB OF WHAT CONSTITUTES 'CHARITABLE PURPOSE' AS DEFINED IN TERMS OF SEC. 2( 15) OF THE ACT. :-21-: I.T.A. NO. 2419/MDS/2016 NOW, IF THE PRIMARY PURPOSES/PREDOMINANT OBJECTS O F MSSS WERE TO PROMOTE THE WELFARE OF THE PUBLIC, IT COULD ONLY BE FOR CHARITABLE PURPOSES AS HELD IN THE CASE OF CIT VS GUJARAT MARI TIME BOARD [2007] 295 ITR 561. FURTHER, IT ALSO BECOMES CLEAR THAT MS SS'S ACTIVITIES DETAILED IN THE FOREGOING PARAS CONCENTRATE MAINLY FOR RURAL RECONSTRUCTION AND INVOLVES THE UPLIFT OF THE RURAL MASSES AND IS DIRECTED FOR THE WELFARE OF SUCH PEOPLE ONLY. THE MAJORITY O F SUCH PERSONS BELONG TO THE 'POOR( OR POORER) SEGMENTS OF THE SOC IETY AND HENCE IT FALLS WITHIN THE FIRST LIMB OF SEC 2(15) OF THE ACT VIZ. RELIEF OF POOR AS HAS BEEN HELD IN THE CASE OF THIAGARAJAR CHARITIES VS. ADDL CIT [1997] 225 ITR 1010. FURTHER, THERE IS NO GAIN SAYING THAT ANY PROVISIO N MADE FOR POOR CLASS OF THE PUBLIC EARMARKED AS RECIPIENT OF SUCH BENEFITS AS IT IS IN THE INSTANT CASE, WOULD CERTAINLY MAKE THE OBJECT OF SU CH SOCIETY A CHARITABLE ONE [CIT VS KAMLA TOWN TRUST [1996] 217 ITR 699]. FURTHER STILL IT DOES APPEAR THAT THE AO FAILED TO APPRECIA TE THAT RECEIPT BY WAY OF DEVELOPMENT FUND BY MSSS WHICH AT 6% WAS WELL BE LOW THE NORMAL BANK RATE OF 12-14% AND WAS BEING MAINLY UTILIZED F OR RURAL POOR UPLIFTMENT PROGRAMS OF MSSS AS A WHOLE WHICH MADE T HE POOR PEOPLE AWARE OF THE SCHEMES AND ENCOURAGED THE SHGS PARTIC IPATION AND THE INCOME ARISING OUT OF THESE ACTIVITIES AGAIN SPENT ONLY FOR ACHIEVING THE 'OBJECTS OF THE SOCIETY AND THAT THE DEVELOPMENT FU ND RECEIVED WHEN COMPARED TO OTHER NORMAL RATE BELOW THE BANK RATES AND THUS THE BROAD AND EXTENDED DEFINITION OF THE TERM 'BUSINESS' COUL D NOT BE APPLIED IN RESPECT OF MSSS ACTIVITIES AS STATED EARLIER. FURTHER IT IS AGAIN NO GAIN SAYING THAT AN ACTIVIT Y WOULD BE CONSIDERED 'BUSINESS' IN THE CONVENTIONAL ONLY, IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE. THE ACTIVITIES CARRIED OUT BY UTILIZ ING DEVELOPMENT FUND CANNOT BY ITSELF BE A GROUND TO SAY THAT MSSS IS CA RRYING ON A BUSINESS :-22-: I.T.A. NO. 2419/MDS/2016 ACTIVITY AS CONTENDED BY THE AO PARTICULARLY WHEN S UCH DEVELOPMENT FUND WAS NOT DISTRIBUTED TO ITS MEMBERS BUT APPLIED TOWARDS THE OBJECTS OF THE SOCIETY AS HELD IN [THANTHI TRUST 24 7 ITR 785(SC)] AND AGRICULTURAL PRODUCE AND MARKET COMMITTEE 291 ITR 4 19 (BOM.). FURTHER, THE ADMINISTRATIVE CHARGES RECEIVED BY MSS S IN THAT CONNECTION REPRESENT THE EXPENSES TO MEET ESTABLISHMENT AND DI RECT COSTS AS WELL AS EXPENDITURE ON MAINTENANCE OF RECORDS, DEPLOYMEN T OF STAFF ETC AGAIN GIVING MONIES ON REPAYMENT BASIS FOR POOR WOM EN OF SOCIO- ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY WOULD Q UALIFY FOR EXEMPTION IN THE CASE OF A TRUST/SOCIETY, WHICH WAS FORMED WI TH THE PROJECT OF POVERTY ALLEVIATION AND BENEFIT FOR SOCIO-ECONOMICA LLY WEAKER SECTION. HOWEVER, SINCE INTEREST WAS CHARGED ON THE LOANS WH ICH THE ASSESSING OFFICER CHARACTERIZED AS EXORBITANT HELD THAT IT CO ULD NOT THEREFORE BE TREATED AS A CHARITABLE ACTIVITY. HOWEVER, IT IS SEEN THAT OUT OF THE TOTAL RECEIPTS OF RS.8,78,59,918/- WHICH INCLUDED AN AMOUNT OF RS.3,9 0,52,749 WHICH WERE RECEIVED BY THE INSTITUTION, ONLY AN AMOUNT OF RS.13,85,470 REPRESENTED THE AMOUNT RECEIVED FROM BENEFICIARIES TOWARDS ADMINISTRATIVE RECEIPTS WHICH WAS AGAIN RECYCLED AM ONGST THE BENEFICIARIES FOR VARIOUS ACTIVITIES AND FURTHER SU CH ADMINISTRATIVE RECEIPTS RECEIVED WHEN COMPARED TO OTHER NORMAL RAT ES WAS LOWER THAN THE BANK RATE AS ALREADY STATED EARLIER. THUS THE B ROAD AND EXTENDED DEFINITION OF THE TERM 'BUSINESS' COULD NOT THEREFO RE BE APPLIED IN RESPECT OF MSSS ACTIVITIES. THE ENTIRE BURDEN OF THE AOS REASONING IN HOLDING THAT THE DIFFERENTIAL BETWEEN 6% RATE OF INTEREST AT WHICH T HE MONIES WERE LENT TO THE SHGS AND THE 2% INTEREST REMITTED BACK TO KO LPING INTERNATIONAL, RESULTED IN THE APPELLANT MAKING A PROFIT OF 4% WIT HOUT ANY RISK AS TO RECOVERY OF THE PRINCIPAL AMOUNT, WHICH ACCORDING T O THE AO, INDICATED :-23-: I.T.A. NO. 2419/MDS/2016 THAT THE APPELLANT WAS ENGAGED IN A SYSTEMATIC ORGA NIZED ACTIVITY CONSTITUTING BUSINESS WITH PROFIT MOTIVE AND THEREF ORE CAME WITHIN THE AMBIT OF THE PROVISOS TO SEC. 2(15) WOULD NOT HAVE LEGS TO STAND ON IN VIEW OF THE DEFINITION OF RELIEF OF THE POOR VIDE C BDT CIRCULAR AND RATIO OF THE SUPREME COURT CASES MENTIONED HEREIN BELOW:- CBDT CIRCULAR NO. 11/2008[F.NO.134/34/200B-TPL] H AS DEFINED THE TERM 'RELIEF OF THE POOR' AS: ' RELIEF OF THE POOR' ENCOMPASSES A WIDE RANGE OF OBJECTS FOR THE WELFARE OF THE ECONOMICALLY AND SOCIALLY DISADVANTA GED OR NEEDY. IT WILL, THEREFORE, INCLUDE WITHIN ITS AMBIT PURPOSES SUCH A S RELIEF TO DESTITUTE, ORPHANS OR THE HANDICAPPED, DISADVANTAGED WOMEN OR CHILDREN, SMALL AND MARGINAL FARMERS, INDIGENT ARTISANS OR SENIOR C ITIZENS IN NEED OF AID & THEREFORE ENTITIES WHO HAVE THESE OBJECTS WILL CO NTINUE TO BE ELIGIBLE FOR EXEMPTION EVEN IF THEY INCIDENTALLY CARRY ON A COMMERCIAL ACTIVITY, SUBJECT, HOWEVER, TO THE CONDITIONS STIPULATED UNDE R SECTION 11(4A) OR THE SEVENTH PROVISO TO SECTION 10(23C). FURTHER, THE SUPREME COURT IN THE CASE OF THIAGARA JAR CHARITIES V ACIT[1997] 92 TAXMAN 152, HAS HELD THAT THE SCOPE O F 'RELIEF FOR POOR' IS VERY WIDE AND IT CAN EVEN INCLUDE BUSINESSES CAR RIED ON FOR THE BENEFIT OF THE POOR. THE COURT HELD THEREIN THAT BUSINESSES INVOLVING T HE POOR AND BENEFICIARIES CANNOT BE SAID AS BUSINESS OR ACTIVIT Y FOR PROFIT. THE APEX COURT PROVIDED TWO REASONS (1) THE BUSINESS IS ONLY A 'MEANS' OF ACHIEVING THE 'OBJECT' OF THE TRUST; IT IS A MEDIUM THROUGH WHICH THE 'OBJECTS' ARE ACCOMPLISHED, (II) THE BUSINESS HELD AS CORPUS - PROPERTY UNDER TRUST - PRODUCES OR RESULTS IN INCOME, LIKE A NY OTHER PROPERTY. IN THE LIGHT OF THIS LANDMARK DECISION, IT CAN SAFELY BE SAID THAT BUSINESS ACTIVITIES INVOLVING THE BENEFICIARIES AND DONE ONL Y WITH THE MOTIVE OF :-24-: I.T.A. NO. 2419/MDS/2016 PROVIDING RELIEF TO THE POOR AS IT WAS IN THE INSTA NT CASE, CANNOT BE CONSIDERED AS BUSINESS. AGAIN, THE ISSUE OF BUSINESSES INCLUDING BENEFICIA RIES WAS ALSO CONSIDERED BY THE DECISION OF SUPREME COURT IN THE CASE OF ASSTT. CIT V. THANTHI TRUST [2001] 247 ITR 785, WHEREIN IT WAS HE LD THAT EVEN THE BUSINESS OF WEAVING CLOTH AND STICHING CLOTHING BY EMPLOYING INDIGENT WOMEN, CARRIES ON THE BUSINESS IN THE COURSE OF ACT UALLY ACCOMPLISHING ITS PRIMARY OBJECT OF AFFORDING RELIEF TO THE POOR AND IT WOULD QUALIFY FOR THE EXEMPTION UNDER SECTION 11, RELEVANT EXTRACTS, OF WHICH JUDGEMENT IS AS UNDER: - 'THE REQUIREMENT OF SECTION 13(1)(BB) IS THAT THE EXEMPTION UNDER SECTION11 WILL NOT BE AVAILABLE TO SUCH A TRU ST THAT CARRIES ON ANY BUSINESS UNLESS THE BUSINESS IS CARRIED ON I IN THE COURSE OF THE ACTUAL CARRYING OUT OF THE PRIMARY COURSE OF ACTUALLY ACCO MPLISHING A PRIMARY PURPOSE OF THE TRUST; THE BUSINESS MUST, THEREFORE, BE CARRIED ON IN THE COURSE OF THE ACTUAL ACCOMPLISHMENT OF RELIEF OF TH E POOR, EDUCATION OR MEDICAL RELIEF. AS AN EXAMPLE, A PUBLIC CHARITABLE TRUST FOR THE RELIEF OF THE POOR, EDUCATION AND MEDICAL RELIEF THAT INDIGEN T WOMEN, CARRYING ON THE BUSINESS IN THE COURSE OF ACTUALLY ACCOMPLISHIN G ITS PRIMARY OBJECT OF AFFORDING RELIEF TO THE POOR AND IT WOULD QUALIF Y FOR THE EXEMPTION UNDER SECTION 11.' IN THE LIGHT OF THE ABOVE TWO SUPREME COURT RULING S AS ALSO CBDT CIRCULAR CITED SUPRA THE SCOPE OF THE TERM 'RELIEF FOR POOR' IS VERY WIDE AND CANNOT BE CONSTRICTED WITH LIMITED INTERPRETATI ON OF CONFINING IT TO SOME RELIEF OR EMERGENCY SUPPORT TO THE POOR IN THE SHORT RUN. THE SCOPE OF THE TERM 'RELIEF FOR POOR' IS WIDE ENOUGH TO INCLUDE ANY KIND OF ACTIVITY WHICH PROVIDES SUPPORT OR BENEFIT TO THE P OOR AND IN THAT PROCESS, EVEN BUSINESS ACTIVITY SHALL NOT BE CONSID ERED AS BUSINESS :-25-: I.T.A. NO. 2419/MDS/2016 PROVIDED IT SATISFIED THE CONDITION OF BEING ONLY A MEDIUM TO ACHIEVE THE OBJECTS OF' RELIEF FOR POOR', THEN THE BUSINESS INCOME SHALL BE TREATED AS INCOME FROM PROPERTY OF TRUST LIKE ANY O THER INCOME. FURTHER, IN THE INSTANT CASE THE AO HAS ALSO NOT E XPLAINED AS TO HOW THE AFORESAID DIFFERENTIAL INTEREST OF 4% COULD STRAIGHTAWAY BE CONSIDERED AS PROFITS OF THE APPELLANT, AS HELD BY HIM, AS SUBSTANTIAL AMOUNTS HAVE TO BE OBVIOUSLY SPENT ON DIRECT ESTABL ISHMENT AND ADMINISTRATIVE COSTS INCLUDING STAFF SALARIES, EXPE NDITURE ON MAINTENANCE OF RECORDS, DEPLOYMENT OF MAN POWER AND OTHER DAY TO DAY ACTIVITIES CONNECTED WITH THE RUNNING OF THE SO CIETY AND THEREFORE THE AFORESAID DIFFERENTIAL 4% COULD CERTAINLY NOT B E ATTRIBUTED TOWARDS PROFITS OF THE APPELLANT TO BE BROUGHT TO TAX AT MA XIMUM MARGINAL RATE, AS ERRONEOUSLY EFFECTED BY THE AO. FURTHER, IT IS MENTIONED HERE THAT THE SCHOLARSHIP LOANS FOR THE CHILDREN OF POOR FAMILIES WERE TREATED AS APPLICATI ON FOR CHARITABLE OBJECTS SUBJECT TO THE AMOUNT ON REALIZATION BEING TREATED AS APPLICABLE INCOME IN THE YEAR OF REALIZATION OF LOANS OR ADVAN CES AS REQUIRED IN BOARD CIRCULAR NO.L00 DATED 24TH JANUARY, 1973(1973 ) 88 ITR (ST.) 66. THEREFORE, ON A TOTALITY OF THE FACTS AND CIRCUMST ANCES AND EVIDENCE OF THE CASE OF THE INSTANT APPELLANT, VIEW ED AGAINST THE RATIO OF THE JUDGEMENTS AND CBDT CIRCULAR QUOTED SUPRA, I NCLUDING THOSE RELIED ON BY THE AR ENUMERATED IN THE FOREGOING PAR AS, IT IS QUITE CLEAR THAT THE ACTIVITIES OF THE INSTANT APPELLANT WOULD NOT COME UNDER PROVISOS TO SEC. 2(15) AS CONTENDED BY THE AO, BUT WOULD SQUARELY FALL WITHIN THE FIRST THREE LIMBS, MORE PARTICULARLY THE FIRST LIMB OF CHARITABLE PURPOSE IN TERMS OF SEC. 2(15) AND THEREFORE THE AO WAS NOT JUSTIFIED IN BRINGING THE APPELLANT WITHIN THE AMBIT OF THE PROV ISOS TO SEC. 2(15) AS EXPLAINED EARLIER, AS THE PRIMARY DOMINANT AND OVER RIDING MOTIVE OF THE :-26-: I.T.A. NO. 2419/MDS/2016 APPELLANT WAS OF PROVIDING RELIEF TO THE POOR AND N OT EARNING PROFITS THEREFROM AND THEREFORE IN VIEW OF THE ABOVE DISCUS SION, THE ACTION OF THE AO IN DENYING EXEMPTION U/S 11 BY INVOKING PROV ISOS TO SECTION 2(15) AS ALSO SECTION 13(8) AND CBDT CIRCULAR NO. 5 P DATED 19.6.1968 AND BY VIRTUE OF THE SAME MAKING A FURTHER ADDITION OF RS.65,17,460/- ON ACCOUNT OF AMOUNTS SPENT FOR PROJECTS AS ALSO TH E EXCESS OF INCOME OVER EXPENDITURE IN ORDER TO DETERMINE THE TAXABLE INCOME IN A COMMERCIAL SENSE, AS ACCORDING TO THE AO SEC.11 BEC AME INOPERABLE IN VIEW OF SUCH INVOKING OF THE AFORESAID PROVISIONS A ND CONSEQUENTLY TREATING THE APPELLANT AS AN AOP AND ITS INCOME TAX ED AT MAXIMUM MARGINAL RATES IS HELD TO BE LEGALLY UNTENABLE AND THEREFORE DIRECTED TO BE DELETED. THIS GROUND IS THEREFORE ALLOWED. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS:- '2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT (A) ERRED ON LAW IN HOLDING THAT THE ACTIVITY O F MONEY LENDING DOES NOT COME UNDER 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. 2.2 THE LD. CIT (A) ERRED ON NOT FOLLOWING THE DE CISION OF THE HON'BLE ITAT, CHENNAI, IN A SIMILAR SITUATION, IN T HE CASE OF THE INCOME TAX OFFICER (EXEMPTIONS), MADURAI VS. KALANJIAM DEV ELOPMENT FINANCIAL SERVICES [2015] 64 TAXMANN.COM 255 (CHENNAI - TRIB. ) WHEREIN IT IS HELD THAT, 'THE CORRECT WAY TO EXPRESS THE NATURE O F THE ACTIVITIES CARRIED ON BY THE ASSESSEE IS TO SAY THAT THE ASSES SEE IS CARRYING ON 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. ' :-27-: I.T.A. NO. 2419/MDS/2016 2.3 THE LD. CIT (A) FAILED TO OBSERVE THAT THE AC TIVITY OF THE ASSESSEE IS AKIN TO ANY OTHER 'FINANCIAL INSTITUTIO N' BY MOBILIZING FUNDS AT LOWER RATE AND LENDING THE SAME AT HIGHER RATE O F INTEREST TO THE PUBLIC. 2.4 THE LD. CIT (A) FAILED TO TAKE NOTE THAT THE ASSESSEE RECEIVED AN AMOUNT RS. 7,51 ,62,143/- DURING THE A. Y. 2012-13 WHICH EXCEEDED RS. 25 LAKHS, THEREBY CLEARLY BRINGING THE ASSESSEE WITHIN THE 1ST AND 2ND PROVISOS TO SECTION 2 (15) OF THE I.T. ACT. 2.5 THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THA T PROFITS ON PURSUING 'GENERAL PUBLIC UTILITY' WOULD NOT BE HELD TO BE A 'CHARITABLE ACTIVITY' IRRESPECTIVE OF 'NATURE OF USE' OR 'APPLI CATION' OF SUCH PROFITS, W.E.F. 1.4.2009. 2.6 THE LD. CIT (A) ERRED IN HOLDING THAT THE ASS ESSEE IS LENDING MONEY WELL BELOW THE NORMAL BANK RATE OF 12 - 14%, WITHOUT REGARD TO THE FACT THAT THE ASSESSEE IS RECEIVING F UNDS AT 2% AND LENDING THEM AT 6% THEREBY EARNING 200% MARGIN ON T HE MONEY LENT TO THE PUBLIC.' 7. THE LD DR ARGUED THAT THE ACTIVITIES CARRIED OU T BY THE ASSESSEE SOCIETY FALLS ONLY UNDER THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE VIZ ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY AND ACCORDINGLY THE PROVISO TO SECTION 2(15) OF THE ACT WOULD SQUARELY APPLY TO THE ASSESSEE. THE ASSESSEE WAS ENGAGED ONLY IN MICROFINANCING ACTIVIT Y BY BORROWING AT 2% PER ANNUM AND LENDING AT 6% PER ANNUM AND MAKING PROFIT S OF 4% THEREON TO MEET ITS EXPENSES, WHICH, IN HIS OPINION, IS ONLY C OMMERCIAL IN NATURE AND AS :-28-: I.T.A. NO. 2419/MDS/2016 THE GROSS RECEIPTS DERIVED FROM SUCH ACTIVITY EXCEE DS THE MONETARY LIMIT OF RS. 25 LAKHS, THE ASSESSEE CEASES TO ENJOY THE EXEMPTIO N U/S 11 OF THE ACT IN VIEW OF THE APPLICABILITY OF THE PROVISO TO SECTION 2(15) OF THE ACT. HE RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF ITO VS KALANJIAM DEVELOPMENT FINANCIAL SERVICES REPORTED I N (2015) 64 TAXMANN.COM 255 (CHENNAI TRIBUNAL) IN SUPPORT OF HIS CONTENTION . 8. IN RESPONSE TO THIS, THE LD AR REITERATED THE V ARIOUS SUBMISSIONS THAT WERE MADE BEFORE THE LD CITA. WITH REGARD TO THE L ENDING ACTIVITIES CARRIED OUT BY THE ASSESSEE EVEN IF CRUDELY MENTIONED AS MI CRO FINANCING ACTIVITY, HE ARGUED THAT THE SAME WOULD FALL WITHIN THE AMBIT OF RELIEF OF THE POOR AS ADMITTEDLY THE ASSESSEE IS NOT CHARGING EXORBITANT INTEREST FROM THE POOR PEOPLE AND THE LENDING RATE IS MUCH BELOW THE BANK RATE. HE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF BANGALO RE TRIBUNAL IN THE CASE OF ADIT (EXEMPTIONS) VS BHARATHA SWAMUKHI SAMSTHE REPO RTED IN (2008) 27 CCH 0909 BANGTRIB ; (2009) 28 DTR 113 DATED 24.12.2 008. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE PAPE R BOOK FILED BY THE LD AR CONTAINING THE AUDITED FINANCIAL STATEMENTS WITH IT S SCHEDULES FOR THE YEAR ENDED 31.3.2012 (PAGES 1 TO 9 OF PB) ; COPY OF STAT EMENT SHOWING BREAK UP OF FUNDS RECEIVED AND UTILIZED VIDE PAGE 10 OF PB ; COPY OF STATEMENT SHOWING :-29-: I.T.A. NO. 2419/MDS/2016 BREAK UP OF DEVELOPMENT FUND VIDE PAGE 11 OF PB; CO Y OF REPLY FILED BEFORE THE ITO (EXEMPTIONS) ENCLOSING DETAILS OF RECEIPTS FOR THE FINANCIAL YEAR 2011- 12 VIDE PAGES 12 TO 29 OF PB AND COPY OF MEMORANDUM AND BYE LAWS OF THE ASSESSEE SOCIETY VIDE PAGES 30 TO 43 OF THE PB. WE FIND THAT THE VARIOUS ACTIVITIES CARRIED OUT BY THE ASSESSEE AS ENUMERATE D HEREINABOVE ARE NOT IN DISPUTE. THE MOOT QUESTION IS ONLY AS TO WHETHER T HOSE ACTIVITIES WOULD HAVE TO BE SOLELY CONSTRUED AS CARRYING ON THE OBJECT OF ADVANCEMENT OF GENERAL PUBLIC UTILITY SO AS TO FALL WITHIN THE MISCHIEF OF THE PROVISO TO SECTION 2(15) OF THE ACT. IT IS WELL SETTLED NOW THAT THE PROVISO W ARRANTING THE TAXATION OF THE CHARITABLE SOCIETY IN CERTAIN CIRCUMSTANCES WOULD A PPLY ONLY FOR THE ASSESSEE FALLING EXCLUSIVELY WITHIN THE FOURTH LIMB OF THE D EFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT I.E ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND NOT FOR THOSE WHO COLLECTIVELY OR INDI VIDUALLY FALL UNDER THE OTHER THREE LIMBS OF THE DEFINITION. WE HOLD THAT IF AN ASSESSEE CARRIES ON VARIED OBJECTS FALLING WITHIN THE FIRST THREE LIMBS OF THE DEFINITION OF CHARITABLE PURPOSE I.E RELIEF OF THE POOR, MEDICAL RELIEF AND EDUCATION , BUT ALSO CARRIES ON THE OBJECT OF GENERAL PUBLIC UTILITY, THEN, WE ARE AFRAID, THAT THE PROVISO TO SECTION 2(15) WOULD HAVE NO APPLICATION AT ALL. TH IS IS CLEARLY CLARIFIED BY THE CIRCULAR OF THE CBDT ISSUED VIDE CIRCULAR NO.11 DAT ED 19.12.2008 WHICH IS BINDING ON THE TAX AUTHORITIES. WE FIND THAT THE L D CITA HAD ELABORATELY DEALT WITH THE ISSUE UNDER DISPUTE TOGETHER WITH ITS RELA TED CASE LAWS WHICH ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE HOLD THAT FROM THE READING OF THE :-30-: I.T.A. NO. 2419/MDS/2016 MATERIALS AVAILABLE ON RECORD THAT THE DOMINANT ACT IVITY OF THE ASSESSEE IS ONLY RELIEF OF THE POOR AND HENCE THE PROVISO TO SECTI ON 2(15) OF THE ACT PER SE WOULD NOT BE APPLICABLE TO THE ASSESSEE SOCIETY. WE FIND THAT THE ISSUE UNDER DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT VS WOMENS IN DIA TRUST REPORTED IN (2015) 379 ITR 506 (BOM) WHEREIN IT WAS HELD THAT :- 6. A PERUSAL OF THE SAME WILL INDICATE AS TO HOW IF THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE CHARITABLE, IF THE ASSESSEE IS INVOLVED IN CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVI TY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS FOR A CESS, FEES OR ANY OTHER CONSIDERATION. IN THE PRESENT CASE, TH E UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A TRUST FORMED TO CARRY OU T THE OBJECT OF EDUCATION AND DEVELOPMENT OF NATURAL TALENTS OF THE PEOPLE HAVING SPECIAL SKILLS, MORE PARTICULARLY THE WOMEN IN THE SOCIETY. THE ASSESSEE TRAINS THEM TO EARN WHILE LEARNING. IT EDUCATES THE M IN THE FIELD OF CATERING, STITCHING, TOY MAKING, ETC. WHILE GIVING THEM TRAINING, THE ASSESSEE USES RELATED MATERIAL WHICH IT BUYS FROM T HE OPEN MARKET. THIS IS ESSENTIAL FOR CARRYING OUT THE ASSESSEE'S O BJECT. IN THE PROCESS, SOME FINISHED PRODUCT SUCH AS PICKLES, JAM, ETC. AR E PRODUCED AND WHICH THE ASSESSEE SELLS THROUGH THE SHOPS, EXHIBIT IONS AND PERSONAL CONTACTS. THE MOTIVE OF THE ASSESSEE IS NOT THE GEN ERATION OF PROFIT BUT TO PROVIDE TRAINING TO THE NEEDY WOMEN IN ORDER TO EQUIP OR TRAIN THEM IN THESE FIELDS AND MAKE THEM SELF CONFIDENT AND SE LF RELIANT. THERE IS NURSING TRAINING, WHICH IS ALSO BEING MANAGED AND A DMINISTERED BY THE ASSESSEE. THE DETAILS OF INCOME AND EXPENDITURE ACC OUNTS SHOWS THAT THE ASSESSEE HAD RECEIVED DONATION OF RS. 36,88,634 /- AND NURSING :-31-: I.T.A. NO. 2419/MDS/2016 SCHOOL FEES OF RS. 4,46,088/-. THE ASSESSEE POINTED OUT THAT THIS NURSING TRAINING PROVIDED AT THE CENTRE OF THE ASSE SSEE AT PANVEL IS FREE OF COSTS. THE CHARGE IS LEVIED FOR THE MESS BUT THE ACCOMMODATION AND OTHER FACILITIES ARE FREE OF COSTS AND APART FROM T HE COMMUNITY DEVELOPMENT PROGRAMMES, WHICH ARE UNDERTAKEN TO EDU CATE THE RURAL WOMEN, TEACH THEM VARIOUS SKILLS AND MAKE THEM, AWA RE OF HOW TO LIVE HONOURABLY. THUS, ON THESE UNDISPUTED FACTS, THE TR IBUNAL FOUND THAT THIS IS NOT AN ACTIVITY WHICH WOULD FALL WITHIN THE PROVISO. THE TRIBUNAL HAS RIGHTLY REFERRED TO THE TWO LETTERS WHICH HAVE BEEN ADDRESSED BY THE TRUSTEES OF THE ASSESSEE TRUST. THEY CLARIFY TH AT IN THE PAST, SUCH ACTIVITIES HAVE BEEN FOUND TO BE INCIDENTAL TO THE OBJECT OF THE TRUST. SECONDLY, THE DONATION RECEIVED DURING THE YEAR HAS BEEN UTILISED IN THE YEAR UNDER CONSIDERATION FOR ACHIEVING THE OBJECT O F THE TRUST. HOWEVER, THE BANK INTEREST RECEIVED IS CONTINUED AND, THEN, THERE IS A DEFICIT. IT IS IN THESE CIRCUMSTANCES THAT THE ARGUMENT WAS CANVAS SED THAT THE FEES COLLECTED FOR TRAINING WOMEN ARE ONLY TO MEET THE C OST OF EXPENSES FOR PROVIDING THEM FOOD ITEMS. THEIR ACCOMMODATION AND OTHER FACILITIES ARE FREE OF COSTS. ONCE THE ESSENTIAL NATURE OF THE ACT IVITIES CARRIED ON BY TRUST IS CONSIDERED, THEN, THE LARGER QUESTION NEED NOT BE DECIDED. THE TRIBUNAL FOUND THAT THE TRUST MAY BE SET UP FOR ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, BUT THAT WI LL NOT CEASE TO BE CHARITABLE PURPOSES IN THIS CASE, BECAUSE, THE ACTI VITIES IN WHICH THE TRUST IS INVOLVED CANNOT BE TERMED AS CARRYING ON O F TRADE, COMMERCE OR BUSINESS. THIS IS TO IMPRESS UPON THE WOMEN THE NEE D TO BE SELF RELIANT AND SELF SUPPORTING AND TO INSTILL IN THEM THE CONF IDENCE THAT THEY CAN MAKE A LIVELIHOOD FOR THEMSELVES IF THEY RELY ON TH E SKILLS AS AFORE- NOTED, THAT THE ACTIVITY HAS BEEN UNDERTAKEN. IT DO ES NOT PARTAKE THE CHARACTER OF TRADE, COMMERCE OR BUSINESS NOR OF REN DERING OF ANY SERVICE IN RELATION THERETO. IT IS ONLY TO TEACH OR IMPART SKILLS AND TO :-32-: I.T.A. NO. 2419/MDS/2016 INSTILL CONFIDENCE THAT THE PRODUCED GOODS OR ARTIC LES ARE SOLD. TO THAT EXTENT ALSO DEFICIT HAS OCCURRED. IN THE CIRCUMSTAN CES, THE TRIBUNAL TOOK A VIEW THAT OCCASIONAL SALES OR THE TRUST'S OWN FUN D GENERATION ARE FOR FURTHERING THE OBJECTS BUT NOT INDICATIVE OF TRADE, COMMERCE OR BUSINESS. IN THE CIRCUMSTANCES, THE PROVISO DOES NO T APPLY. 7. WE ARE OF THE VIEW THAT CONSIDERING THE FACT TH AT THE TRUST HAS BEEN SET UP AND IS FUNCTIONAL FOR THE PAST SEVERAL DECADES AND IT HAS NOT DEVIATED OR DEPARTED FROM ANY OF ITS STATE OBJECT A ND PURPOSE, UTILISATION OF THE INCOME, IF AT ALL GENERATED, DOE S NOT INDICATE CARRYING ON OF ANY TRADE, COMMERCE OR BUSINESS. THE TRIBUNAL 'S VIEW DESERVES TO BE UPHELD. IT IS A POSSIBLE VIEW AND CANNOT BE TERM ED AS PERVERSE. THE VIEW IS TAKEN ON AN OVERALL CONSIDERATION AND BEARI NG IN MIND THE FUNCTIONS AND ACTIVITIES OF THE TRUST. IN SUCH CIRC UMSTANCES, IT IS NOT VITIATED BY ANY ERROR OF LAW APPARENT ON THE FACE O F THE RECORD. AS A RESULT OF THIS DISCUSSION, THE APPEAL DOES NOT RAIS E ANY SUBSTANTIAL QUESTION OF LAW AND, THEREFORE, IT MUST BE DISMISSE D. IT IS ACCORDINGLY DISMISSED. HOWEVER, THERE WILL BE NO ORDER AS TO CO STS. 9.1. WE ALSO FIND THAT THE RELIANCE PLACED BY THE LD AR OF THE ASSESSEE ON THE RECENT DECISION OF THE CO-ORDINATE BENCH OF COCHIN TRIBUNAL IN THE CASE OF DCIT & ANR VS SOCIETY FOR RURAL IMPROVEMENT & ANR R EPORTED IN (2016) 47 CCH 0172 COCHINTRIB DATED 1.6.2016 IS WELL FOUNDED WHEREIN IT WAS HELD THAT:- :-33-: I.T.A. NO. 2419/MDS/2016 'THE DOMINANT OBJECT OF THE TRUST AS PER CL. (3) A RE - 'TO UNDERTAKE SUCH PROJECT AND PROGRAMMES AS MAY B E NECESSARY TO ALLEVIATE POVERTY OF THE POOREST AND N EEDY RURAL FOLK, ESPECIALLY RURAL WOMEN REGARDLESS OF CASTE, CREED, COLOUR, RELIGION OR POLITICAL AFFILIATIONS AND TO ENCOURAGE THRIFT A ND SAVINGS HABITS AMONG RURAL POPULATION FROM THE COMMENCEMENT OF THE TRUST IN 1996 ONWARDS.' THE ABOVE OBJECT OF THE TRUST IS CARRIED OUT BY PR OVIDING FINANCIAL ASSISTANCE TO INDIGENT WOMEN. THE RELIEF TO THE POO R IS THE DOMINANT ACTIVITY. THE DOMINANT OBJECTIVE IS LENDING MONEY T O POOR. MICRO FINANCING ACTIVITY IS NOT MONEY LENDING BUSINESS AS COMMERCIALLY UNDERSTOOD. FUNDS ARE PROVIDED TO THE RURAL WOMEN F OLK, WHO DO NOT HAVE ANY SECURITY TO OFFER FOR AVAILING LOAN. THESE WOMEN CANNOT APPROACH BANK OR LEADING INSTITUTIONS FOR HELP AS T HEY CANNOT AFFORD TO PROVIDE SECURITY FOR AVAILING LOANS. THE ASSESSEE I S HELPING THE SOCIALLY AND ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY, AS NO OTHER AGENCY REACHES OUT TO MEET THEIR REQUIREMENTS. THE FACT TH AT THE ASSESSEE DOES NOT DEMAND SECURITY FOR THE LOAN AND THAT THE LOANS ARE GIVEN TO RURAL WOMEN FOLK BELONGING TO LOW INCOME HOUSEHOLDS AND T HAT SUCH FINANCIAL ASSISTANCE IS BASED ON REASONABLE RATE OF INTEREST FOR SELF EMPLOYMENT, REHABILITATION AND SUCH OTHER SELF HELP PROGRAMMES, WOULD GO TO ESTABLISH THAT THE 4TH LIMB OF THE DEFINITION OF CH ARITABLE INSTITUTION AS DEFINED IN SEC.2(15) OF THE ACT, DOES NOT APPLY TO THE ASSESSEE'S TRUST. GOING BY THE ACTIVITIES CARRIED OUT BY THE ASSESSEE , IT IS CLEAR THAT THE OBJECTIVE OF THE TRUST IS NOT TO CONDUCT MONEY LEND ING BUSINESS, BUT TO DO RELIEF TO THE POOR. MICRO FINANCING ACTIVITY IS AN OBJECT BASED FINANCIAL ASSISTANCE TO THE POOR RURAL POPULATION, PARTICULAR LY TO THE POOR WOMEN, WHO DO NOT HAVE ASSETS OR PROPERTY TO OFFER AS SECU RITY.' :-34-: I.T.A. NO. 2419/MDS/2016 9.2. WE ALSO FIND THAT THE RELIANCE PLACED BY THE LD AR ON ANOTHER DECISION OF THE CO-ORDINATE BENCH OF BANGALORE TRIBUNAL IN THE CASE OF ADIT (EXEMPTIONS) VS BHARATHA SWAMUKHI SAMSTHE REPORTED IN (2008) 27 CCH 0909 BANGTRIB ; (2009) 28 DTR 113 DATED 24.12.2008 IS ALSO WELL FOUNDED , WHEREIN IT WAS HELD THAT :- ' 14. SEC. 2(15) OF IT ACT DEFINES 'CHARITABLE PURP OSES' AS UNDER: 'CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, E DUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY.' THUS, THE OBJECT OF THE TRUST IS MAINLY CONSTITUTE ALLEVIATION OF BOTTOM LINE POOR RURAL AND URBAN WOMEN AND THEIR FA MILIES BY MEANS OF MICRO CREDIT FACILITIES. THE PROGRAMME IS KNOWN AS 'BSS MICRO LOAN PROJECT' WHICH IS PRESENTLY EXTENDING ITS HELP TO A LL POOR WOMEN. THE ASSESSEE TRUST HAS FOUND THAT THE RURAL AND URBAN P OOR WOMEN HAVE BENEFITED FROM THE TRUST'S FUNDING ACTIVITIES AND W ERE ABOUT TO COME OUT OF THE DEPTHS OF THEIR POVERTY TO A GREAT EXTENT TO BE ABLE TO LEAD A NORMAL LIFE LIKE ANY OTHER CITIZEN. THIS GOES TO SH OW THAT THE RELIEF TO THE POOR HAS BEEN AIMED AT BY THE TRUST'S MICRO LOAN AN D THIS IS CLEARLY A CHARITABLE PURPOSE CONFIRMING TO THE PROVISIONS OF S. 2(15) OF THE IT ACT, 1961 BOTH AS RELIEF TO POOR AS WELL AS AN OBJECT OF GENERAL PUBLIC UTILITY. 15. THE MICRO CREDIT IS NOW RECOGNIZED AS ONE OF T HE MOST POWERFUL, EFFECTIVE AND ONE OF THE MOST SUSTAINABLE TOOLS TO ACHIEVE THE GOAL OF POVERTY ALLEVIATION. THIS FACT IS NOW WIDEL Y RECOGNIZED NOT ONLY IN INDIA, BUT THROUGHOUT THE DEVELOPING WORLD AS WE LL AS IN MANY DEVELOPED COUNTRIES. THE ASSESSEE IS UNDISPUTEDLY E NGAGED IN SUCH A POVERTY ALLEVIATION PROQRAMRNE AND THIS POINT HAS A LSO BEEN CONSIDERED :-35-: I.T.A. NO. 2419/MDS/2016 BY THE IT AUTHORITIES IN EARLIER YEARS. WHILE GRANT ING RECOGNITION UNDER S. 80G IN 1997-98 AND ALSO DURING THE RENEWAL OF RE COGNITION OF PREVIOUS YEAR, WHICH WAS GRANTED BY THE JT. CIT, AF TER CAREFULLY EXAMINING ALL THE RELEVANT FACTS. THE ASSESSEE IS R UNNING SIMILAR ACTIVITIES SINCE ITS INCEPTION. SO, THERE IS NOTHIN G ON RECORD TO JUSTIFY THE DISQUALIFICATION OF TRUST FOR RECOGNITION UNDER S. 80G OF THE IT ACT. WITH REGARDS TO OBJECTION THAT LOANS ARE OBTAINED ON A V ERY LOW INTEREST RANGING FROM 9.5 PER CENT PER ANNUM BY HYPOTHECATIN G THE BOOK DEBTS AND MOVABLE ASSETS AND LENDING AT A SUBSTANTIALLY H IGHER RATE OF INTEREST TO THE BENEFICIARIES IS CONCERNED, WE FIND THAT THE LOANS GIVEN BY THE FINANCIAL INSTITUTIONS AND BANKS ARE AT THE RATES N ORMALLY CHARGED TO ANY OTHER MICRO CREDIT ORGANIZATION AND THERE IS NOTHIN G ON RECORD TO SUGGEST THAT SPECIAL BENEFIT HAS ACCRUED TO THE ASS ESSEE TRUST FROM THE LOANS. IN FACT, THE BENEFIT HAS ACCRUED TO THE WOME N WHO ARE SERVED WITH FINANCIAL INPUTS FOR THEIR VOCATIONS UNDER AN ORGANIZED AND ORDERLY MICRO CREDIT PROGRAMME. THE MICRO CREDIT PROGRAMME HAS RECEIVED PLACE OF PRIORITY EVEN BY THE GOVERNMENT OF INDIA A ND OTHER BODIES CONCERNED WITH THE FINANCIAL WELL BEING OF RURAL WO MEN. 16. THE AMOUNT BORROWED FROM BANKS AND FINANCIAL I NSTITUTIONS IN THE RANGE OF 9.5 PER CENT PER ANNUM IS NOT HIGH CON SIDERING MARKET RATE AND NORMALLY LENT BY THE FINANCIAL INSTITUTIONS TO MICRO CREDIT ORGANIZATIONS. THE BORROWED AMOUNTS ARE ADVANCED TO THE BENEFICIARIES COVERING THE ABOVE, EMPLOYMENT, TRAINING AND ADMINI STRATIVE EXPENSES. THE ULTIMATE BENEFICIARIES OF THE SCHEME OF THE MIC RO LOANS ARE THE POOR WOMEN AND ESPECIALLY WOMEN WHO HAVE NO ACCESS TO THE CREDIT FACILITIES FROM BANKS AND OTHER FINANCIAL INSTITUTI ONS AS NOBODY CAN STAND AS SURETY FOR THE POOR WITHOUT ADEQUATE SECURITY. T HE TRUST'S MOTIVE IS NOT TO GAIN ANY ADVANTAGE IN THIS ACTIVITY BUT TO H ELP THE POOR IN UPLIFTING THEIR ECONOMIC STATUS IN THE SOCIETY. SO, IT IS NOT JUSTIFIABLE TO :-36-: I.T.A. NO. 2419/MDS/2016 LEVEL THE ASSESSEE AS A PROFIT MAKING BODY ALONE. F URTHER, THERE IS NOTHING ON RECORD TO JUSTIFY THAT THE ASSESSEE IS A CHARGING EXHORBITANT RATE OF INTEREST FROM THE POOR WOMEN MENTIONED ABOV E. THERE IS NOTHING ON RECORD TO SUGGEST THAT THESE POOR WOMEN ARE CAPABLE OF RECEIVING LOAN AT LESSER INTEREST THAN OFFERED BY T HE ASSESSEE. IN CASE, THERE IS AVAILABILITY OF FUNDS/LOANS AT LOWER RATE OF INTEREST, NOBODY INCLUDING THE ASSESSEE CAN FORCE THESE POOR WOMEN F OR SUCH ALLEGED HIGHER RATE OF INTEREST ON THE LOANS. THERE IS NOTH ING ON RECORD TO SUGGEST THAT THE FUNDS OF THE TRUST ARE USED OR MIS USED FOR PERSONAL BENEFIT OF THE TRUSTEES OR THEIR RELATIVES OR NEAR AND DEAR ONES. THE REVENUE HAS BROUGHT NOTHING ON RECORD THAT SURPLUS GENERATED IN THE ABOVE SAID ACTIVITIES ARE NOT PLOUGHED BACK INTO TH E ORGANIZATION FOR THE BENEFIT OF POOR. THE FINANCIAL SUSTAINABILITY AS A METHOD OF ACHIEVING OUR ULTIMATE OBJECTIVES, SHOULD NOT BE TERMED AS 'PROFI T MOTIVE'. BECAUSE THE ORGANIZATION AIMS AND WORK TO ALLEVIATE POVERTY OF POOR WOMEN. IT IS NOT OUT OF CONTEST TO MENTION HERE THAT DR. RAME SH BELLAMKONDA, TRUSTEE AND PROJECT DIRECTOR, IS A MEDICAL DOCTOR B Y BACKGROUND AND WAS IN MEDICAL PRACTICE ABROAD TILL MARCH, 1997. HE HA S LEFT HIS PRACTICE IN FOREIGN TO SERVE HIS MOTHERLAND AND IS ENGAGED IN P OVERTY ALLEVIATION PROGRAMME WITH ALL SINCERITY AND WAS INSPIRED BY TH E WORK OF PROF. MUHAMMED YUNUS AND GRAMEEN BANK OF BANGLADESH INVOL VING HIMSELF MAINLY BY OBSERVING THE DAY-TO- DAY ACTIVITIES OF T HE TRUST. IN VIEW OF THE ABOVE, IT IS NOT JUSTIFIED TO HOLD THAT THE ASS ESSEE TRUST IS FINANCIALLY EXPLOITING THE POOR WOMEN, BUT IN FACT THE TRUST IS RENDERING GREAT SERVICE TO THE SOCIETY BY THE ABOVE SAID POVERTY AL LEVIATION PROGRAMME. UNDER THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE ASSESSEE SHOULD BE GRANTED RENEWAL OF RECOGNITION UNDER S. 80G OF THE IT ACT. THE AO DIRECTED ACCORDINGLY.' :-37-: I.T.A. NO. 2419/MDS/2016 9.3. IN VIEW OF OUR AFORESAID FINDINGS IN THE FACT S AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECED ENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE ACT AND ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE LD CITA IN THIS REGARD. HENCE THE GROUNDS RAISED BY THE REVEN UE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THURSDAY, THE 16TH DAY OF FEBRU ARY, 2017 AT CHENNAI. SD/ - ( ' # . $ ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/ - ( ) (M. BALAGANESH) / ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 16TH FEBRUARY, 2017 JPV * -&45 65 /COPY TO: 1. ) APPELLANT 2. -.) /RESPONDENT 3. 7 ( )/CIT(A) 4. 7 /CIT 5. 5 -&& /DR 6. 9 /GF