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TMI Blog2017 (7) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment. We have noted the written queries raised by the Assessing Officer and the answers given by the assessee to such questions. This included the applicability of the amended Section 2(15) of the Act. We also noted that the Assessing Officer in the order of assessment did not, with the aid of such provisions, hold that the activities of the trust are not for charitable purpose. He, thus, accepted the assessee’s stand in this regard. Any attempt now to reexamine this issue would be considered as change of opinion and clearly impermissible even if it is within the period of four years. Assessing Officer has tried to link the assessee’s transactions of transferring its micro finance business to a company. This transfer or even valuation of the assessee’s tangible and intangible assets would not automatically imply that the activities of the assessee trust were not in the nature of charitable purpose. Substantial portion of the valuation was for tangible assets which may have been acquired by the assessee trust over a period of time. Even though part of the consideration comprised of valuation of intangible assets, the same would be of no consequence. - Decided in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 45 Crores, payable by AFIG to FWWB was actually not paid, but a payment obligation note was made on 27/06/2010 to show that the sale consideration of ₹ 45 Crores was to be paid by AFIG. Later, on 27/06/2010 FWWB & IFIG passed a resolution stating that the amount of ₹ 45 Crores payable to FWWB by AFIG will be considered as paid as corpus donation to IFIG, by FWWB. The said amount was again routed back to AFIG through IFIG in the form of Share Capital. Thus, the entire sale of the micro finance unit has been arranged in such a fashion that the business of the assessee trust has been transferred to a private finance company without any consideration. It is evident that IFIG was created only for the purpose of routing the money [i.e. ₹ 45 Crore] back to AFIG. Thus, the entire scheme is a sham transaction. Further, from the above facts & discussions, it is evident that the assessee trust had treated micro finance activity as a business activity and valued it as business entity and transferred said business along with the assets & liabilities to another Private Finance Company and has siphoned off the money which was rightfully due to the Trust. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommerce of business, the micro finance activity carried out by the assessee is not to be treated as "Charitable purpose" in view of the amended provisions of section 2(15) of the I.T. Act, 1961. Taking in to account the above mentioned facts of the case, I have reason to believe that the exemptions granted u/s. 11 & 12 of the I.T. Act to a trust which was operating with a profit motive resulted in under assessment of income to the tune of ₹ 7,10,15,291/- the tax effect of which works out to ₹ 3,17,20,208/- Issue notice u/s. 148 of the I.T. Act, 1961." 2.2 The petitioner raised objections to the notice of reopening under communication dated 27.05.2014 in which it was contended interalia that the issue of transfer of the assessee's business of micro financing to Ananya Finance for Inclusive Growth (AFIG) took place during the period relevant to the assessment year 2011-12. Such issue was, therefore, not relevant for the assessment year 2009-10. It was also pointed out that the assessee trust was engaged in public charitable activities. The eligibility of the trust to seek exemption was examined by the Assessing Officer during the original assessment. Such issues, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment in such assets by way of application of the funds and granting depreciation on such investment would amount to double deduction. The Assessing Officer, thus, raised the issue of tax liability of the trust in light of amended definition of "charitable purpose" in the proviso to Section 2(15) of the Act but in the final order of assessment made no adjustment or disallowance. 7. We may recall that Section 2(15) of the Act was amended with effect from 01.04.2009 by substituting the original definition and instead providing as under: "(15) "charitable purpose" includes relief of the poor, education, medical relief, 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;" 8. This definition of "charitable purpose" which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IG in the form of share capital. According to the revenue, this complex web was cast by the assessee only for the purpose of routing the amount of ₹ 45 crores back to AFIG. 11. The first part of the reasons recorded referred to the events which admittedly did not take place during the period relevant to the assessment year 2009-10 for which the notice for reopening has been issued. This entire background is cited by the Assessing Officer only in order to point out that from such facts it is evident that the assessee trust had treated its micro financing activity as business activity and valued it as a business entity and transferred the business along with the assets and liabilities to a private limited company. On the basis of such foundation, the Assessing Officer refers to what one can categorize as reasons relatable to the present assessment year. According to him, the assessee had procured loans from various organizations and financial institutions which in turn were lent to poor women. The assessee was in the process charging interest from the beneficiaries. The assessee had claimed that this activity is incidental to its main activity of relief to poor and therefore c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(15) of the Act. We also noted that the Assessing Officer in the order of assessment did not, with the aid of such provisions, hold that the activities of the trust are not for charitable purpose. He, thus, accepted the assessee's stand in this regard. Any attempt now to reexamine this issue would be considered as change of opinion and clearly impermissible even if it is within the period of four years as laid down in the case of Commissioner of Income Tax vs. Kelvinator of India Ltd. reported in 320 ITR 561(SC). 14. Only question is, Would the assessee's action later on change this position? The Assessing Officer has tried to link the assessee's transactions of transferring its micro finance business to a company. This transfer or even valuation of the assessee's tangible and intangible assets would not automatically imply that the activities of the assessee trust were not in the nature of charitable purpose. Substantial portion of the valuation was for tangible assets which may have been acquired by the assessee trust over a period of time. Even though part of the consideration comprised of valuation of intangible assets, the same would be of no consequence. It is not as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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