Itta/304/2013 Of Commissioner Of Income Tax v. Spandana Rural And Urban Development Organization

IN THE HIGH COURT OF JUDICATURE, ANDHRAPRADESH AT HYDERABAD WEDNESDAY, THE TENTH DAY OF JULYTWO THOUSAND AND THIRTEEN PRESENT THE HON’BLE THE CHIEF JUSTICESRI KALYAN JYOTI SEN GUPTA AND THE HON'BLE MS. JUSTICE G.ROHINI I.T.T.A. No.304 OF 2013 Between: Commissioner of Income Tax,Rajkamala Complex,Laxmipuram, Guntur ..... Appellant AND Spandana Rural and Urban Development Organisation,Mangalagiri Road, Guntur. .....Respondent The Court made the following : JUDGMENT:(per the Hon’ble the Chief Justice Sri K.J. Sengupta) This appeal is intended to be preferred against thejudgment and order of the learned Tribunal dated17.02.2010 in relation to the assessment year 2005-2006,on the following suggested questions of law: 1.In the facts and circumstances of the casewhen the assessee charging higher rates ofinterest on loans, acts as agent for bodycorporate, earns service charges and do notprovide any subsidy and also diverts funds toinstitutions which are not registered under theAct, whether the finding of the Hon’bleTribunal that the activities of the assessee inmicro finance are charitable in nature andentitled for exemption under Section 11 of theIncome Tax Act are erroneous in law for wantof appreciation of material on record? 2.In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correctin law in holding that the assessee is entitledfor exemption under Section 11 of the IncomeTax Act, 1961, when the Revenue rejected theclaim on the ground that its micro financeactivity is business in nature and not acharitable activity in terms of Section 2(!5) ofthe Act and there is no proper registration asper Section 12A of the Income Tax Act, 1961? We have gone through the judgment and order of thelearned Tribunal and we have heard the learned counselappearing for the appellant. The learned Tribunal hasconcluded on fact that the activities of the assessee are inthe nature of charitable activities. It has been further held onappreciation of fact that micro finance activity in the instantcase is a charitable activity. Learned Tribunal has also reliedon the judgment of the Bangalore Bench of the Tribunal onidentical fact that the micro financing to the poor people is acharitable activity. Under such circumstances, the assesseewas granted exemption under Sec.11 of the Income TaxAct. The learned Tribunal further found that in order toachieve the main purpose of the charitable activity, theassessee has joined hands with some other financial organizations and banks. Such steps to collect money formicro financing, does not defeat the real object in order todeprive it of the exemption. We do not find any infirmity orillegality in the judgment and order of the learned Tribunal,which is based on fact-finding and such facts attract theprovision of exemption. Consequently, we dismissed the appeal. No order asto costs. ______________________ Kalyan Jyoti Sengupta, CJ. __________G.Rohini, J.