In a recent court decision, the Spandana Rural and Urban Development Organisation's case against the Income Tax Department took a new turn. Let's break down what happened and what it means.
Spandana, a charitable organization, faced a large tax demand of over 53 crore rupees for the assessment year 2023-24. They had filed a return showing no income, but the tax authorities disagreed, saying they misunderstood the tax rules.
The tax authorities argued that Spandana's activities didn't count as charitable. They claimed Spandana charged high interest rates on loans to people with low incomes, which seemed more like a business than charity.
"The organization takes advantage of their need/urgency by charging very high interest rates," said the tax order.
Spandana responded by pointing to a previous court ruling in their favor. They argued that their microfinance activities were indeed charitable, aimed at helping low-income groups improve their living standards.
The court, led by Chief Justice Sri Aparesh Kumar Singh and Justice G.M. Mohiuddin, found the tax department's order lacking. It didn't address the specific arguments Spandana made in their defense.
"The criticized order is unclear and does not show any consideration of the specific reasons given by the petitioner," the court noted.
The court canceled the tax department's order and sent the case back for a fresh review. The Commissioner of Income Tax (Exemption) now has four weeks to reconsider the case, taking into account Spandana's specific arguments.
