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Issues involved: Refusal to register the assessee society u/s 12AA of the Income-tax Act, 1961 and denial of approval u/s 80G of the Act.
Summary: The appeal was against the order refusing registration under section 12AA of the Income-tax Act, 1961. The society was formed for women welfare through micro-credits. The Commissioner found the society engaged in business activities by lending micro finance, thus not qualifying as charitable under section 2(15) of the Act, leading to the refusal of registration under section 12AA and denial of approval under section 80G. The assessee contended that the society served the public irrespective of religion or caste and provided financial help to downtrodden women. The Commissioner's conclusion that the activity was commercial was disputed, emphasizing the benefits to the poor. The society collected various charges related to financial help, arguing that without their assistance, members would resort to private moneylenders charging high interest rates. The Tribunal considered the society's various charitable activities and financial assistance to women self-help groups. Grants from government bodies and successful execution of projects for rural women were highlighted. The Tribunal concluded that the society's work in extending financial help to women through nationalized banks for poverty alleviation qualified as charitable under section 11 of the Act. Citing a similar case, the Tribunal held that the society's activities were charitable, and the interest charged was not exorbitant. The Tribunal allowed the appeal, granting registration under section 12AA and approval under section 80G. Considering the available material, the Tribunal decided against remanding the issue to the CIT(Appeals) to avoid unnecessary burden and litigation, in the interest of justice. The order was pronounced on 03.12.2010.
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