Innovative Microfinance for Poverty Alleviation and Community Transformation Vs CIT (Exemptions) (ITAT Chennai)
Summary: The Chennai Bench of the Income Tax Appellate Tribunal allowed for statistical purposes both appeals filed by Innovative Microfinance for Poverty Alleviation and Community Transformation, presently known as Innovative Social Impact Foundation, against separate orders dated 30.03.2026 and 31.03.2026 passed by the Commissioner of Income Tax (Exemptions), Chennai [CIT(E)], rejecting its application for registration under section 12AB and approval under section 80G of the Income-tax Act, 1961.
The assessee was a social impact organisation incorporated under section 25 of the Companies Act, 1956. It had initially undertaken rehabilitation of livelihood activities for families affected by the 2004 tsunami in Tamil Nadu and subsequently provided micro credit to marginalised sections of society in remote areas. It was holding registration under section 12A and approval under section 80G since incorporation.
On 15.06.2022, the Reserve Bank of India informed the assessee that it was required to cease microfinance operations as a condition for registration under section 45-IA of the Reserve Bank of India Act, 1934. The assessee stopped disbursement of microfinance loans from 15.06.2022 and thereafter only collected outstanding dues, which was completed on 31.10.2023. Its Board, in a meeting held on 26.10.2023, resolved that microfinance operations would cease with effect from 31.10.2023.
