CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES ,MUMBAI vs. DCIT EXEMPTION-1(1), MUMBAI

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Learned Assessing Officer [Ld. AO] in taking total income at Rs. NIL as against total loss/ deficit of Rs. (179,15,20,936)/- as per income tax return e-filed without assigning any reasons for doing so, which is wrong and contrary to facts of the case, provisions of the Act and Income Tax Rules, 1962 (hereinafter referred to as "the Rules") made thereunder.

3(4) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO of making addition of Rs. 93,73,75,000/- u/s 2(24)(iia) of the Act being contribution received from settlors namely, Government of India (GOI) and Small Industries Development Bank of India (SIDBI) towards corpus fund in terms of the trust deed and the 3 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai reasons assigned for doing so are wrong and contrary to facts of the case, provisions of the Act and Rules made thereunder.

(b) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO of making addition of Rs. 93,73,75,000/- u/s 2(24)(iia) of the Act without appreciating the fact that agreed contribution towards corpus fund received by the appellant trust from GOI and SIDBI (i.e., the settlors) is an obligation of settlors as per the trust deed and hence, cannot be treated or added as income u/s 2(24)(iia) to the total income of appellant trust.

(c) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO of not granting exemption u/s 11(1)(d) of the Act to corpus contribution received from settlors on the reasoning that DIT(E) has withdrawn the registration u/s 12AA(3) without appreciating the fact that order of cancellation of registration u/s 12A has been set aside by the Hon'ble Income Tax Appellate Tribunal (ITAT) and Departmental appeal against the said ITAT order has been dismissed by the Hon'ble Bombay High Court.

(d) On the facts and circumstances of the case and in law, the Ld. CIT(A) and Ld. AO failed to appreciate that (i) The contribution received from the settlors in terms of the trust deed are with a specific direction that they shall form part of the corpus of the trust and hence, the same cannot be included in the total income in view of the provisions of section 11(1)(d) of the Act;

(ii) receipt of capital nature cannot be deemed to be income covered u/s 2(24) of the Act;

(iii) the Hon'ble ITAT, Mumbai in appellant trust's own case in preceding years have already held that the corpus contribution received by the appellant trust from settlors in terms of trust deed cannot be said to be covered u/s 2(24)(iia) of the Act.

4 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai

4(a) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO of not granting deduction u/s 11(1)(a) of the Act being 15% of the income derived from property held under trust and not doing so is wrong and contrary to facts of the case, provisions of the Act and Rules made there under.

4(b) On the facts and circumstances of the case and in law, the Ld. lower authorities have failed to appreciate that -

(i) the objects of the appellant trust are covered within the meaning of charitable purpose and the appellant trust was granted registration u/s 12A of the Act. The order of cancellation of registration u/s 12A of the Act in AY 2009-10 has been set aside by the Hon'ble ITAT, Mumbai and confirmed by Hon'ble Bombay High Court. Further, the Hon'ble ITAT, Mumbai in the appellant trust's own case for AY 2010-11, AY 2011-12, AY 2014-15, AY 2018-19 and AY 2019-20 has held that the proviso to section 2(15) of the Act cannot be invoked and it is eligible for benefits of section 11 and section 12 of the Act.

(ii) there is no change in the activity undertaken by the appellant trust during AY 2019-20 as compared to AY 2009-10 being the year in which cancellation of registration was restored.

(iii) the appellant trust has no profit motive and to fall within proviso to section 2(15) of the Act, rendering of service to trade, commerce or business must be such that it is in the course of carrying on business and has a profit motive.

(iv) the services rendered by the appellant trust are purely incidental or subservient to main objects of the trust which is "charitable purpose" and the fees received by the trust is only to recover the administrative operational cost and not to earn any profit or carry on as a business activity.

5 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai (v) the amended proviso to section 2(15) w.e.f. 01/04/2016 does not affect the position of the appellant trust as it does not carry on any trade, commerce or business as held by the Hon'ble ITAT, Mumbai in appellant trust's own case for AY 2010-11, AY 2011-12, AY 2014-15, AY 2018-19 and AY 2019- 20.

5. On the facts and circumstances of the case and in law, the Ld. AO erred in allowing TDS Credit of Rs. 32,93,13,444/- as against Rs. 43,95,61,400/- claimed in the income tax return resulting in non-granting of TDS to the extent of Rs. 11,02,47,956/- and as such doing so is wrong and contrary to the provisions of the Act and Rules made thereunder. The appellant trust craves leave to add, amend, alter, modify and/or delete all or any of the above grounds of appeal

, on or before the date of hearing.

4. At the very outset, the Ld. AR submitted that he has raised specific grounds before the Ld. CIT(A) and also filed statement of facts and voluminous paper book containing page No. 1 to 483 which contains documents for substantiating the claim of the assessee along with the orders passed by the Coordinate Bench of ITAT in assessee’s own case. But Ld. CIT(A) decided the appeal of the assessee without taking into consideration the statement of facts and the documents placed on record.

The appellant trust had filed the return of income for assessment year 2015-16 on 29.09.2015 declaring total loss of Rs.179,15,20,936/-. The regular assessment u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was completed vide order dated 06.12.2017 assessing total income at Rs.93,73,75,000/- by making an addition of Rs.93,73,75,000/- being the contribution from settlors to the corpus of the trust by treating the same as voluntary contribution u/s 2(24)(iia) of the Act. Further, the Id.AO has taken returned income at Rs.NIL as against the loss of Rs.179,15,20,936/- for the year. Aggrieved by which, this appeal has been preferred:

1.1 The appellant, Credit Guarantee Fund Trust for Micro and Small Enterprises ("the Trust"), is an irrevocable trust settled on July 27,2000 by the Government of India (GOI) and Small Industries Development Bank of India (SIDBI) (jointly "the Settlors") for the purpose of providing effective credit guarantee and/or counter guarantee for SSI loans and advances extended by eligible scheduled commercial banks and rural banks [Member Lending Institutions (MLIs)] without collateral security and/or third party guarantees.

1.2 The appellant trust has filed the Income Tax Return for the assessment year 2015-16 on 29.09.2015 declaring current loss of Rs.179,15,20,936/- and claiming refund of Rs. 43,95,61,400/-. However, the learned assessing officer, in the assessment order passed u/s 143(3) of the Act has erred in not considering current year loss of Rs. 179,15,20,936/- as per the computation of total income but considering the same as NIL. No reasons have been given for doing so.

7 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai 1.3 It is therefore requested to direct the ld. assessing officer to allow the current year's loss of Rs.179,15,20,936/-, and consider the same in the assessment order.

2.0 Reg. Ground of Appeal No.2: Addition of Rs.93,73,75,000/- being the contribution received from the Settlors in terms of the Trust Deed:-

2.1 The learned assessing officer in the captioned assessment order passed u/s 143(3) has made an addition of Rs.93.73,75,000/- being contribution of Rs.74,99,00,000/- & Rs.18,74,75,000/ received from settlors namely, Government of India (GOI) and Small Industries Development Bank of India (SIDBI) respectively in terms of the trust deed by treating the same as income on account of voluntary donation / contribution as income u/s 2(24)(iia) of the Act 1961. 2.2 The Settlors namely GOI and SIDBI have made this contribution as per the trust deed/Deed of modification. During the financial year 2014-15 relevant to captioned assessment year 2015-16, the appellant has received contribution towards part of the corpus fund in terms of trust deed from the settlors amounting to Rs.93,73,75,000/- as under:-

Settlors Credited to Cumulative Corpus during F.Y Balance as on 2014-15 31.03.2015 Government of India 74,99,00,000 19,11,23,33,000 SIDBI 18,74,75,000 4,77,80,83,250 Total Corpus 93,73,75,000 23,89,04,16,250 As per the deed of modification dated 30.06.2007, the total corpus fund shall not exceed Rs.2500 crore to be contributed by the Settlors i.e. the Government of India (GOI) and SIDBI in the ratio of 4:1 i.e. GOI (Rs.2000 crore) and SIDBI (Rs.500 crores).

2.3 In the order passed u/s 143(3) of the Act dated 06.12.2017, the Learned Assessing officer has erred in making the addition of Rs.93,73,75,000/- by treating it as an income u/s 2(24)(iia) of the Act.

8 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai In this regard, it is submitted that during the course of the assessment proceedings, the appellant has submitted the copies of sanction letters dated 31.10.2014 issued by the Office of the Development Commissioner (Micro, Small & Medium Enterprises) Ministry of Micro, Small & Medium Enterprises, Government of India towards the contributions to the Corpus of CGTMSE and the copy of letter dated 30.10.2014 regarding the receipt of proportionate share of contribution from SIDBI to the corpus fund of CGTMSE of Rs.74.99 crores and R.18.7475 crores, respectively.

2.4 It is submitted that the contribution towards the corpus fund received by the appellant Trust from GOI and SIDBI (the Settlors) is not the donation but initial agreed contribution for corpus of the trust by the settlors as per the Trust Deed and hence cannot be treated or added in the total income of the Trust, u/s 2(24)(iia) of the Act.

2.5 The Ld. AO had asked the assessee trust during the course of assessment proceedings as to why the assessment order for the current year should not be passed in line with the assessment order of earlier years as the facts remained unchanged.

The assessee trust made detailed submissions vide letter dated 23.11.2017 and submitted that the contribution to the corpus by the Settlors as per Trust deed cannot be treated as income of the Trust. The same is not voluntary contributions within the meaning of Section 2(24)(iia) of the Act. It was also submitted that as the trust's registration u/s 12A was in force, the provisions of Section 11(1)(d) of the Act applies and the contribution to the corpus of the trust is exempted. Alternatively, it was also submitted that even otherwise the same being capital receipt the same cannot be treated as income in view of various judicial decisions.

The Ld. AO, however, rejected the detailed submissions of the appellant trust and made contradictory observations and held that the basic character of the assessee is a charitable trust. However, he held that the Trust is not eligible for exemption 9 Credit Guarantee Fund Trust Micro and Small Enterprises, Mumbai u/s.11 and hence, exemption w/s.11(1)(d) is not available to the assessee Trust. He held that the said amount of Rs.93,73,75,000/- is liable to be taxed as income u/s.2(24)(iia) of the Act, and added the same to the total income.

2.6 According to clause (d) of sub-section of (1) Section 11 of the Act, income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be included in the total income of the previous year of the person in receipt of the income.

The Ld. AO himself has held that the trust is a Charitable Trust Hence, the amount paid by settlors of the trust in terms of the Trust Deed specifically towards corpus of the Trust, cannot form part of total income. However, he has made the addition of the aforesaid amount.

In this regard, it is submitted that the trust was notified u/s. 10(23EB) of the Income Tax Act, 1961 by Finance Act 2002 w.e.f 01.04.2002 and accordingly the income of the Trust was exempt u/s. 10(23EB) of the Act for a period of five years commencing from A.Y. 2002-03 to A.Y. 2006-07. The Trust had claimed benefit of Section 11 of the Act for A.Y. 2007-08 and 2008-09. It is submitted that the order of the Director of Income Tax (Exempt) passed u/s 12AA(3) of the Income Tax Act, 1961, dated 07.12.2011 has been set aside by the ITAT vide its order dated 28.05.2014. Thereafter, the department had filed a petition before the High Court of Judicature at Bombay which was dismissed vide order dated 02.08.2017 (Ι.Τ.Α. No. 511/2015). Thus, the Registration of the trust u/s 12A/12AA is continuing. Hence, the provisions of section11(1)(d) and 12(1) are applicable in the present case.

Section 11(1)(d) of the Act reads as under:- the person in "11. (1) Subject to the provisions receipt of the income" of sections 60 to 63, the following income (a)

(b)..

(c)... (d) income in the form of voluntary contributions made with a specific direction that they shall form part of contributione trust or institution."

Further Section 12(1) reads as under:

1) Any voluntary contributions received by a trust created wholly for charitable or religious purposes or beived by aion established wholly for such purposes (not being contribution an institution specific direction that they shall form part of the corpus of the adest or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly."

Hence, contributions made with specific direction that they shall form part of the corpus of the trust is not included in the total Income by virtue of provisions of section 11(1)(d) of the Act and hence cannot fall into the definition of "income" under section 2(24)(iia) of the Act and cannot be taxed in the hands of the appellant.

.7 Similar addition of contribution from settlors was also made in A.Y. 2010- 11 which was confirmed by CIT(A). The appellant trust had preferred an appeal before ITAT for assessment year 2010-11 against the order of CIT(A) involving similar grounds as in the present appeal. The said appeal for A.Y 2010-11 has been disposed off by the Hon'ble Income Tax Appellate Tribunal -"C" Bench vide order dated 20.01.2017. Hon'ble ITAT para.5.11 and 5.12 and 7 on page nos. 18 to 21, as under:-

"5.11………… Considering the entirety of circumstances we are unable to find any credible reasoning taken by the Revenue to say that the purpose and object of the assessee Trust falls within the meaning of expression 'trade, commerce or business' used in the proviso to section 2(15) of the Act. In fact, as we had noted earlier, the assessee Trust has been settled on 27/07/2000 by the Government of India and SIDBI. The trust deed brings out the objects and purpose for which the assessee Trust has been set up, namely, to mitigate the difficulties faced by the small scale industries and micro enterprises in availing credit facilities from various lending institutions. It is also to be noted that the object and purpose of the Trust is focussed on small scale industries and micro enterprises and is not available to entrepreneurs at large. Apart there-from, it is also prescribed in the scheme operationalized by the Trust that the benefits are to be made available only to credit facilities aggregating upto Rs. 10.00 lacs sanctioned and disbursed by the lending institutions. Therefore, considering the focused area of the Trust, it could not be inferred that there is any profit motive so as to view the activities to be 'trade, commerce or business' as understood for the purposes of proviso to section 2(15) of the Act. Therefore, in our considered opinion, on facts, it is not possible to infer that assessee Trust is carrying on any regular 'trade, commerce or business' and on the contrary it is an entity which is essentially existing for charitable purposes but conducting some activities for consideration or fee. In this background, the proviso to section 2(15) of the Act cannot be invoked to exclude assessee Trust from the purview of section 2(15) of the Act since the said proviso only seeks to exclude institutions which are carrying on regular business, as inferred by us following the legal position explained by the Hon'ble Delhi High Court in the cases referred herein above. 5.12 In conclusion, we therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee for exemption under section 11 & 12 of the Act.

2.8 The above facts for the preceding assessment year 2010- 11 have been duly made in the submissions vide letter dated 23.11.2017. However, the Ld. AO has against the said submissions of the appellant at Para 4.3 of his order held as under:

The assessee further stated that similar additions on treatment of contribution to corpus by the settlors as income u/s.2(24)(iia) were made by the Ld. Assessing Officer for A.Y.2010-11 against which the Hon'ble ITAT ruled in favour of the assessee and has allowed the appeal of the assessee trust vide its order dated 20/01/2017 stating that the proviso to section 2(15) of the Act cannot be invoked to exclude assessee Trust from the purview of section 2(15) of the Act since the said proviso only seeks to exclude institutions which are carrying on regular business. The assessee quoting this decision of the ITAT, Mumbai requested to not make any addition in respect of the contributions to the corpus by the Settlors of the Trust namely GOI and SIDBI, persued appeal before the Hon'ble Bombay High Court, u/s. 260A of the Act.

In this regard, it is submitted that there has been no change in the facts in the case of the appellant trust for the current assessment year as compared to A.Y.2010-11 which would have warranted in taking a different view by the Id. AO. Although the principle of res judicata may not specifically apply, yet where a fundamental aspect running through preceding assessment year is subject matter of consideration then as held by the Apex Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC), the same approach ought to have been adopted by the ld. AO Further, in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 282 ITR 273, the Apex Court held that though the principle of Res-judicata would not apply to tax matters as cause of action for each assessment year is different / distinct, yet in case there is no change in the factual position or the law, the views expressed in one year are binding for the subsequent years. This is on the principle of consistency. It is submitted that in the appellant's case there has been no change since its inception till date and therefore the principle of Res-judicata is applicable in the instant case. Merely because the Department has not accepted the decision of the Hon'ble Mumbai ITAT for the A.Y.2010-11 and pursued an appeal before the Hon'ble Bombay High Court u/s. 260A of the Act, the Ld. AO ought not to have made the addition of the contribution towards corpus by the Settlors as the fact lies that the issue is squarely covered in favor of the appellant trust.

2.9 Thus, it will be appreciated that the Hon'ble ITAT vide order dated 20.01.2017 has allowed the claim of the appellant trust for exemption under section 11 & 12 of the Act. It was also held that as the claim of appellant for benefits of sections 11 & 12 of the Act is upheld, the appellant also succeeds on the issue of addition of contribution made by settlers towards the corpus. 2.10 Accordingly in view of the above order of Hon'ble ITAT, as the appellant trust is eligible to claim the benefits of section 11 & 12 of the Act, the addition of Rs.93,73,75,000/- made by the Learned assessing officer on account of contribution made by settlers towards the corpus needs to be deleted.

3.0 Without prejudice to the ground of appeal no. 2, on the facts and circumstances of the case in law, the learned Assessing officer erred in not giving setoff of current year loss of Rs.179,15,20,936/- being excess of expenditure over income for the purpose of computing total income, against the additions made of Rs. 93,73,75,000/-, on account of the contribution received from Settlors towards the Corpus of the Trust and not doing so is wrong and contrary to the facts of the case, the provisions of the Income Tax Act, 1961, and Rules made thereunder.

Without prejudice to the above ground of appeal Nos. 1 to 3 4.0 Grounds of appeal No. 4 - Non-deduction of a sum of 15% of the income derived by the trust, under section 11(1) (a) of the Income Tax Act :-

4.1 The appellant had filed the return of total income for the captioned assessment year on 29.09.2015 declaring total loss at Rs.179,15,20,936/- During the course of Assessment proceedings, the Ld. AO has made an addition of Rs.93,73,75,000/- by treating it as an income u/s 2(24) (iia) of the Act and has assessed the total income at Rs.93,73,75,000/-. However, the Ld. AO, has erred in not allowing deduction of 15% of the said income derived under section 11(1)(a) of the Act.

In this regard, it is submitted that the trust was notified u/s. 10(23EB) of the Income Tax Act, 1961 by Finance Act 2002 w.e.f 01.04.2002 and accordingly the income of the Trust was exempt u/s. 10(23EB) of the Act for a period of five years commencing from A.Y. 2002-03 to A.Y. 2006-07. The Trust had claimed benefit of Section 11 of the Act for A.Y. 2007-08 and 2008-09. Further, after the amendment of Section 2(15) by Finance Act, 2008, the DIT(E) had vide order dated 07-12- with effect from A.Y. 2009-10. The appellant trust had preferred an appeal against the order of DIT(E) cancelling the registration of Trust u/s 12AA (3) of the Act before Income Tax Appellate Tribunal (ITAT). The Hon'ble ITAT has allowed the appellant trust's appeal vide order dated 28.05.2014. Thereafter the department had filed a petition before the High Court of Judicature at Bombay which was dismissed vide order dated 02.08.2017 (Ι.Τ.Α. No. 511 /2015) in favour of the appellant. In other words, the registration u/s 12A of the Act is continuing as on date.

4.2 With regard to applicability of proviso to section 2(15) of the Act, it is submitted that the expression 'rendering of any service to trade, commerce or business' is used in conjunction with the words 'trade, commerce or business' and has to be interpreted in the same sense. A profit motive is the essence of trade, commerce or business and where the services were rendered without a profit motive, such services will not have anything in common with trade, business or commerce. Accordingly, to fall within the second part of proviso to section 2(15), 'rendering of service to trade, commerce or business' must be such that it has a profit motive. It will be appreciated that services are performed in the true spirit of service to the beneficiaries of the trust and the fees charged are so calculated or fixed that it merely covers the costs incurred by the trust in rendering the service. Since accuracy in matching the costs and the fees charged cannot be maintained consistently, there can arise a surplus. The mere arising of a surplus does not clothe the activity of performing the services for the beneficiaries with a profit motive, which is essential in business. The most important feature of business is profit motive, which has not been disputed even by the Learned Assessing Officer that the trust has no profit motive.

The activity and objects to guarantee loans and advances disbursed by the lending institutions without any collateral security and/or third party guarantee to micro and small units is to help micro and small enterprises who do not have sufficient support/strength to obtain loans from lenders, is clearly within the scope of "Charitable". Thus, it can also be referred to as "relief of the poor". Small contribution by way of fee that beneficiary pays would not convert charitable activity into business, commerce or trade.

4.3 Reliance, in this regard, is placed on the decision in the following cases: a) India Trade Promotion Organization v. Director General of Income-tax (Exemptions) [2015] 53 taxmann.com 404 (Delhi). b) S1 India v. Director General of Income-tax (Exemption) [2013] 38 taxmann.com 364 (Delhi) where High Court of Delhi has held that that c) The Institute of Chartered Accountants of India Vs DGIT (E) [(2013) 358 ITR 91]. d) Army Welfare Placement Organization v. DIT (Exemptions), New Delhi [2015] 53 taxmann.com 442 (Delhi - Trib.) e) ACIT, Gujarat vs. Surat Art Silk Cloth Manufacturers Association (SC) 121 ITR 1 4.4 Without prejudice to the above:-It is submitted that the main objects pursued by the trust is rendering services to that section of society which is economically disadvantaged and hence the objects pursued by the trust falls within the ambit of "relief of poor". Consequently, where the objects of the trust is relief of the poor, education or medical relief, it will constitute 'Charitable purpose' even if it incidentally involves the carrying on of commercial activities, for a cess or fee or any other consideration.

4.5 It is submitted that the Trust was registered u/s. 12A of the Income Tax Act, 1961 vide letters dated 18-10-2001 of DIT(E), Mumbai. The objects and purposes of the trust have been described in clause 7.1 of the Trust Deed which, were amended by Deed of Modification dated 23.10.2000. Pursuant to the enactment of The Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act), the Ministry and Medium Enterprises vide notification dated May 9, 2007. Consequently trust deed was amended mainly to change the name and replace 'SSI' with "micro small and medium enterprises" and accordingly Deed of modification dated 30-06- 2007 was made for change of name of the Trust and few administrative changes. The relevant Object Clause of the Trust as per the Deed of Modification is as under:

Clause 7.1(a) as per deed of modification dated 23 Oct 2000 :

To guarantee and/or counter guarantee the loans and advances (term loan and for working capital assistance) upto such sum as may be decided by Board of Trustees on the directions issued by the GOI from time to time sanctioned and disbursed by the lending institutions without any collateral security and/or third party guarantees to the new or existing micro, small and medium enterprises or such other industry (ies) as may be decided by the settlers from time to time and to levy guarantee feel annual service fee/ other charges on the lending institutions as may be decided by the trust from time to time On perusal of the aforesaid main objects which are being pursued by the appellant trust, it will be appreciated that the main objects of the Trust is to provide guarantee or counter guarantee the loans and advances (term loan and/or working capital assistance) exclusively to Micro, Small and Medium enterprises which will help them for income-generation and their welfare, not with the motive of profit. It is also submitted that none of the objects are carried out on commercial basis or with a motive to earn profit. Thus, the object of the Trust was to help Small Enterprises who do not have support/strength/back up to obtain loan or provide guarantee to the lenders.

4.6 The activity and objects to guarantee loans and advances disbursed by the lending institutions without any collateral security and/or third party guarantee to micro and small units is to help micro and small enterprises who do not have clearly within the scope of "Charitable. Thus, it can also be referred to as "relief of the poor".

The proviso to section 2(15) does not provide that in case assessee is having objects and activities of "relief of the poor" receives any payment incidental to the objects of the Trust, it will be hit by the said proviso. It does not apply to cases where services rendered are purely incidental or subservient to the main objects.

4.7 Section 2(15) as amended, by Finance Act, 2008 reads as under:

"2(15) charitable purpose includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility:

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [ten lakh rupees] or less in the previous year;]"

4.8 CBDT has issued Circular No. 11/2008, dated 19-12-2008 which has clarified that the newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities. 'Relief of the poor' encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under section 11(4A) or the seventh proviso to section 10(23C) which are that (1) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of account should be maintained in respect of such business.

Similarly, entities whose object is 'education' or 'medical relief would also continue to be eligible for exemption as charitable institutions even if they incidentally carry on a commercial activity subject to the conditions mentioned above.

The newly inserted proviso to section 2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility' i.e. the fourth limb of the definition of 'charitable purpose' contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities.

The term 'relief for poor', has to be understood in a wider perspective. For instance, it is not necessary that the object should be for the betterment of all the poor people living in a particular country or province. It would be sufficient if the objects are for the benefit of a section of the public as distinguished from individuals. It may be noted that in order to become charitable, the relief should be for a section of the community which could be well defined and identified by some common quality of public nature. The Supreme Court in the case of Thiagaralar Charities v. ACIT[ 1997) 92 Taxmann 152, has held that the scope of 'relief for poor" is very wide and it can even include businesses carried on for the benefit of the poor. In this case, the objects of the Thiagaraiar trust were studied and debated whether they could be considered as "relief for poor'. The objects of the trust which were held to be towards 'relief for poor' inter alia includes:

To engage in, carry on, help, aid and assist and promote, rural reconstruction work, cottage industry and all other matters incidental thereto in India The question was whether the said objects could be considered as 'relief for poor' as it was talking about rural reconstruction and cottage industries. The Court held that businesses involving the poor and beneficiaries cannot be said as business or activity for profit. The apex Court observed that (i) the business is only a means' of achieving the object' of the trust; it is a medium through which the 'objects' are accomplished and (ii) the business held as corpus property under trust produces or results in income, like any other property. In the light of this landmark decision, the business activities involving the beneficiaries and done only with the motive of providing relief to the poor, cannot be considered as business.

4.9 In the light of the above two Supreme Court rulings, it is submitted that the scope of the term relief for poor' is very wide and cannot be constricted with limited interpretation 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 poor. In this process, even business activity shall not be considered as business provided it satisfied the condition of being only a medium to achieve the objects of 'relief for poor'. In that case, the business income shall be treated as income from property of trust like any other income. guarantee the loans and advances (term loan and/or working capital assistance) exclusively to Micro and Small enterprises which will help them for income-generation and their welfare, not with the motive of profit. Thus in fact, Trust is rendering services to that section of society which is economically disadvantage people. Therefore services rendered by Trust falls within the ambit of "relief of Poor".

As the services rendered by the Trust also falls under the relief of the poor, trust is not hit by the amendment to section 2(15) of the Act.

4.10 Reliance, in this regard, is placed on the decision in the following cases:

(a) Disha India Micro Credit V. CIT (ITA. No. 1374/Del/2010) where Hon'ble ITAT has held that The assessee, a micro-finance company, applied for registration u/s 12A for exemption u/s 11. The CIT rejected the application on the ground that (a) the objects showed a profit motive, (b) the assessee was charging an interest rate which was higher than that charged by banks & (c) the activity of giving loans was a business activity and not a "charitable purpose" u/s 2(15). On appeal by the assessee, allowing the appeal it was held as under:

(i) On the issue whether the assessee has a "profit motive" in pursuing its objects, the fact that the assessee is registered u/s 25 of the Companies Act prima facie shows that the assessee is set up to promote "charity or any other useful object" and intends to apply its profits in promoting those objects. The assessee is prohibited from making payment of any dividend to its members. The Objects provide that the assessee has to promote micro finance services to poor persons and to help them rise out of poverty without the motive of profit; (ii) On the issue whether the activity of promoting micro finance services is a "charitable purpose" u/s 2(15), as per CBDT Circular No.11 of 2008 dated 19.12.2008, a wide range of objects for the welfare of economically and socially disadvantaged people are covered and entities which pursue these objects will be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated in s. 11(4A) or the seventh proviso to s.10(23C) (Bharatha Swamukhi Samsthe 28 DTR (Bang)(Trib) 113 followed);

(iii) The fact that there is a surplus from the activity of micro financing cannot by itself be a ground to say that the assessee does not exist for charitable purpose particularly when the MOA & AOA provide that the profit shall not be distributed amongst the members but shall be utilized towards the objects (Thanthi Trust 247 ITR 785 (SC) & Agricultural Produce and Market Committee 291 ITR 419 (Bom) followed)

(b) Reference is also made to the decision dated 24th December, 2008 of ITAT, Bangalore Bench 'A' in the case of Asstt. Director of Income-tax (Exemption) vs. Bharatha Swamukhi Samsthe reported in (2009) 28 DTR (Bang) (Trib) 113. In this case, the assessee trust's work was lending money to poor women for income generating activities. Loans given to women were borrowed from bank. There was nothing on record to show that the interest charged by the assessee was exorbitant. In the light of these facts, it was held by the Tribunal that the assessee's object of using money for micro credit to poor women for their poverty alleviation and for the benefit of the socio-economically weaker sections of the society is charitable object qualifying for exemption under section 11 of the Act. This decision is squarely covers the present case. In the instant case too, the assessee trust has been providing guarantees as per the Trust Deed settled by Government of India and SIDBI. It is also not a case where the assessee has been charging exorbitant processing and service charges and guarantee fees. Further, the Trust utilizes its income for the welfare of socio-economically disadvantaged people and the and also within the meaning of object of general public utility'.

In view of above referred decisions, considering the fact that the ultimate beneficiaries i.e. Micro and Small Enterprises (MSEs) contribute to nation's productivity and prosperity but suffer from an in-built handicap about their ability to leverage their financial equity, and that the object of the Trust is to guarantee loans and advances disbursed by lending institutions to such MSEs, without any collateral securities/third party guarantees; it can be appreciated that the income accruing to appellant trust is purely incidental to or subservient to the main objective of providing guarantee. Hence, the same is not hit by proviso to section 2(15) of the Act.

4.11 In any case, as submitted herein above, the Hon'ble ITAT has in A.Y 2010- 11 in assessee's own case held (at para 5.11 and 5.12 of the order dated 20.01.2017) that considering the focused area of the Trust, it could not be inferred that there is any profit motive as to view the activities to be 'trade, Commerce or business' as understood for the purpose of proviso to section 2(15) of the Act, and that the proviso to section 2(15) of the Act cannot be invoked in case of the assessee Trust. Accordingly, the claim of the assessee for exemption under section 11 and 12 of the Act has been allowed.

In view of the said order of the Hon'ble ITAT, it is submitted that the learned assessing officer ought to have given deduction of 15% of the income of the trust assessed by him under section 11(1) (a) of the Act.

5.0 Reg. Ground of Appeal No.5: Short credit of TDS to the extent of Rs.11,02,47,953/- 5.1 The appellant has claimed the credit for TDS of Rs.43,95,61,397/- in its return of total income. However, the learned Assessing Officer has granted the credit for TDS of Rs.32,93,13,444/- instead of Rs.43,95,61,397/- which is reflected in Form 26AS. It is submitted that the appellant is eligible for the credit of TDS of Rs.11,02,47,953/-, u/s. 199 of the Act as the income pertaining to the above was offered to tax in the captioned assessment year. The appellant prays that the learned assessing officer be directed to grant the further credit of TDS of Rs. 11,02,47,953/- and oblige. 6.0 Reg. Ground of Appeal No.6: Wrong initiation of penalty proceedings u/s 271(1)(c) of the Act:- 6.1 The learned Assessing Officer has erred in initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 in respect of addition made by him. It is submitted that as the appellant has neither concealed any particulars of his income nor furnished any inaccurate particulars, the Learned Assessing Officer's action in initiating penalty proceedings u/s.271(1)(c) of the Act is not correct, and requires to be quashed.

7. Apart from that the assessee has also filed voluminous paper book which contains page No. 1 to 483 which also contains the orders of the Coordinate Bench of ITAT in assessee’s own case but none of those documents were considered by Ld. CIT(A) and the grounds raised in the appeal were decided in a summary manner. Whereas we are of the view that Ld. CIT(A) is a quasi judicial authority and he is expected to pass a very reasoned orders based upon sound reasoning.

8. In the present case Ld. CIT(A) has not discussed or taken into considered any of the documents or the orders so passed by the Coordinate Bench in assessee’s own case.

9. Be that as it may, without going into the merits of the grounds taken by the assessee we are of the view that ends of the justice would be met in case the matter is restored back to the file of the CIT(A) to decide it afresh by giving elaborate findings considering the facts of the case, documents filed by the assessee and the orders passed by the coordinate Bench of ITAT in assessee’s own case.

10. Before parting we make it clear that our decision to restore the matter back to the file of the Ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the claim of the assessee. Which shall be adjudicated by the Ld. CIT(A) independently in accordance with law. Accordingly the grounds raised by the assessee are allowed for statistical purposes.