Law: Income Tax Act, 1961

Section: 11

Income-tax----Charitable purposes---Charitable trust---Exemption---Borrowed funds utilised in construction of building which would augment income of trust---Repayment of debt amounted to application of income for charitable purposes---Indian Income Tax Act, 1961, S.11. Held, that the Tribunal was right in holding that the repayment of debt incurred by the assessee for the construction of the commercial building taken up by .the assessee for the purpose of augmenting its funds, should be treated as "application" of the income of the assessee trust for charitable purposes. CIT v. Janmabhumi Press Trust (2000) 242 ITR 457 (Kar.) fol. CIT v. St. George Forana Church (1988) 170 ITR 62 (Ker.) and CIT v. Kannika Prameswazi Devasthanam and Charities (1982) 133 ITR 779 (Mad.) ref. JUDGMENT V.K. SINGHAL, J.---The Income-tax Appellate Tribunal has referred the following question of law arising out of its order, dated June 16, 1992, for the assessment year 1983-84. "Whether, on the` facts and in the circumstances of the case, the Tribunal is right in holdi4g that the repayment of debt incurred by the assessee for the construction of the commercial building taken up by the assessee for the purpose of augmenting its funds, should be treated as `application' of the income of the assessee ­trust for charitable purposes?" The assessee is a trust. While framing the assessment order for the assessment year 1983-84, the Assessing Officer did not treat the repayment of loan taken by the assessee for the purpose of construction of a commercial complex as income applied for charitable purposes. In an appeal filed by the assessee, the Deputy Commissioner of Income-tax (Appeals) directed the Assessing Officer to allow the assessee's claim. Against the order of the Deputy Commissioner of Income-tax…

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