Case Law Details
Dhan Housing and Habitat Development of Poor for Empowerment Confederation Vs CIT (Exemption) (ITAT Chennai)
Assessee is facilitating the poor people to access to housing credit, which otherwise would not be available to them due to mortgage requirements etc. In the process, the assessee is obtaining loans from financial institutions @11.5% which is thereafter advanced at 13%, leaving margin of 1.5% in the hands of the assessee. It is admitted position that the donations received by the assessee are almost negligible and the main source of funding is loan obtained from financial institutions. In our opinion, this activity is nothing but money lending activity as rightly held by Ld. CIT(E). The objective may be noble but as per extant law, the assessee could not be said to be a Charitable Trust being eligible for registration u/s 12AA. The Ld. AR has submitted that the assessee has not receive any donation because the registration was not granted to the assessee and the assessee had to provide 80G benefit to the payers which could not be granted unless the assessee had registration u/s 12A(a). However, this assertion presume that only s.12A(a) registered entities would get donations otherwise not. Further, the donation so made to assessee would be forthcoming only and only if the same enable deduction u/s 80G to the payer. This assumption, in our considered opinion, is fallacious one. As per assessee’s submissions, its only source of funding is loans from financial institutions. The donations are almost negligible. In such a case, the activity is nothing but a mere-lending activity.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. By way of this appeal, the assessee contests the rejection of registration application u/s 12AA. The registration has been denied by learned Commissioner of Income Tax (Exemption), Chennai [CIT(E)] vide order dated 28.06.2018. The grounds taken by the assessee read as under:
1. For that the Commissioner of Income Tax (Exemptions) erred in rejecting the application filed by the appellant u/s.12AA of the Income Tax Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
