9911796707
TMI Blog2022 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and computing the surplus, the profits are divided among those members, whose shares are determinate and whose roles are well defined. We endorse the view of the CIT (Appeals) that all these SHGs working under the assessee trusts are concerns governed by the principles of mutuality and accordingly the 95 per cent of surplus distributed among them are not in the nature of income - grounds raised by the Revenue on this point are rejected. TDS u/s.194A on the interest payment made by the assessee's trust - HELD THAT:- As in assessee's own case in earlier years [ 2013 (11) TMI 1270 - ITAT CHENNAI] wherein the Tribunal exactly on same facts held that no disallowance can be made u/s. 40(a)(ia) of the Act, as there is no need for deducting TDS u/s. 194A of the Act. - ITA Nos. 1437 & 1438/CHNY/2016 - - - Dated:- 24-1-2022 - Mahavir Singh, Vice President And G. Manjunatha, Member (A) For the Appellant : K. Venkatesh Prabhu, CA For the Respondents : A.R.V. Sreenivasan, Addl. CIT ORDER Per Mahavir Singh, VP These appeals by the assessees are arising out of different orders of the Commissioner of Income Tax (Appeals)-13, Chennai in ITA No. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in ITA Nos. 1288 to 1322/Mds/2014 in assessee's own case and Tribunal in the aforesaid appeals has followed the order of Co-ordinate Bench in assessee's own case in ITA Nos. 1100 to 1104 1098/Mds/2012, order dated 05.02.2013. The relevant extract of the order of the Tribunal in ITA Nos. 1100 to 1104 1098/Mds/2012 is reproduced as under:- 3. The assessee is a prominent NGO working among the rural folk in different parts of India, with the aim of raising the living standard of poor villagers, especially scheduled casts, tribes and other backward communities. The assessee trusts are registered, in these cases in Tamil Nadu, to manage Self-Help Groups (SHGs for short). These SHGs are group of villagers and their families numbering around ten to fifteen and they undertake a particular programme of generating income for the benefit of the members of that SHG. The assessee trust SMBT is leading and managing about ten to twenty SHGs in their activities. The assessees SMBT, around twenty to thirty in numbers, working in Tamil Nadu, are under the common umbrella of M/s. Sarvodaya Nano Banking Finance Company Limited (SNBFCL for short). SNBFCL is approved by the Reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can indulge in different activities including agricultural, for creating an environment of sustainable growth. ASSEFA is a national nodal agency engaged in the upliftment of rural people through programmes designed for sustainable development. In that way, the national apex body ASSF is a charitable institution by the nature of the work carried on by it. Needless to say, it is a nonprofit organization. 6. It is under the overall guidance and policy formulation of ASSEFA that field organizations like SNBFCL, the assessee trusts and individual SHGs are working. SHGs are working at grassroot level in villages. The assessee-trusts arrange finance to these grassroot level SHGs by availing funds from SNBFCL. As already stated, SNBFCL arranges the finance from statutory institutions and nationalized banks. 7. The issues involved in all these appeals, which are common, arise out of the scenario of activities explained in the above paragraphs. 8. As already stated, because of the differential plans of charging of interest, the assessee trusts are generating surplus in their hands. They are distributing 95 per cent of the surplus to member SHGs, as mandated by the by-laws of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er accounts, formula and procedure. Every beneficiary is identified. The share of every beneficiary is quantified. Therefore, we find that the Commissioner of Income tax(Appeals) is justified in coming to the conclusion that the assessee trusts and the SHGs are inter-related and they are all concerns governed by the principles of mutuality. The 95 per cent surplus distributed by the assessee trusts to the various SHGs working under them is nothing but the income of those SHGs themselves. It is not something that those groups are getting from outside by way of income. It is the fruit of their efforts. After finalising the accounts and computing the surplus, the profits are divided among those members, whose shares are determinate and whose roles are well defined. Therefore, we endorse the view of the Commissioner of Income-tax(Appeals) that all these SHGs working under the assessee trusts are concerns governed by the principles of mutuality and accordingly the 95 per cent of surplus distributed among them are not in the nature of income. The Commissioner of Income-tax(Appeals) has rightly held that 95 per cent of the surplus distributed by the assessee trusts cannot be brought to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee trusts. They are utilized by the SHGs working under the trusts. The ultimate payer of the interest is not the assessee trusts, but the SHGs. Therefore, we have to see that the interest by way of expenditure is incurred in the cases of SHGs and not in the hands of the assessee trusts. The assessee trusts are facilitators. They are to be treated as representative assessees of the SHGs, who are ultimately utilizing the loan and incurring interest by way of expenditure. The SHGs are mutual concerns and ultimately the interest burden is shared by the individual members of the group. Therefore, de facto speaking, the expenditure by way of interest is incurred by the members of the SHGs and in fact the interests are paid by those members of SHGs to SNBFCL. These individuals, not being liable for audit under section 44AB, the provisions of section 194A are not applicable to them. What is not applicable to the members, will not apply to representative assessees. In the present case, all the assessee trusts are representative assessees of the members constituting the self help groups. 22. Therefore, on facts, we find that the Commissioner of Income-tax(Appeals) is justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
