ITAT: Micro-finance to poor at higher interest, not ‘relief of poor’; Denies exemption u/s. 11

Cochin ITAT denies exemption to assessee-trust for AY 2007-08 and AY 2009-10, rules that assessee’s activities of providing micro finance to poor is purely commercial in nature and there is no element of charity involved, states that such activities cannot be classified under any of the specific activities of relief of the poor, education or medical relief; During the relevant AY, Revenue had denied exemption on the ground that assessee was providing micro finance by taking loan from commercial banks at an interest rate below 15% pa and charging interest @ 29% pa from its clients, thereby engaging in a commercial activity; States that assessee’s business is hit by proviso to sec.2(15), remarks that even if assessee’s activities were intended towards relief for poor, business of micro finance cannot be considered as incidental to the main objective of assessee-trust; Notes that if the main object of the assessee was providing finance to poor, assessee would have provided loans at interest rate below bank rates or by taking a nominal margin on the money they borrowed from banks, also observes that rate of interest charged by assessee was far above the rate prescribed by The Kerala Money Lenders Act.