ISHWAR DAYAL PARSANDI DEVI VIDHYA PRASARNI SABHA,BULABDSHAHR vs. ADDL.CIT, CIRCLE EXEMPTION, GHAZIABAD

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ITA 7690/DEL/2018Status: DisposedITAT Delhi25 April 2019AY 2015-164 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the repayment of a loan originally taken to fulfil one of the objects of the trust amounts to an application of income for charitable and religious purposes. This finding was based on the explicit clarification in CBDT Circular No. 100 dated 24.01.1973, which addressed this specific issue. Additionally, the Tribunal noted that for the Assessment Year 2014-15, the Assessing Officer himself had allowed a similar claim for repayment of loan as an application of income under Section 143(3). Considering both the CBDT circular and the precedent set in the previous assessment year, the Tribunal directed the Assessing Officer to allow the sum of Rs. 82,66,627/- as application of income for repayment of loan. The appeal was allowed.

What were the facts?

The assessee, M/s. Ishwar Dayal Parsandi Devi Vidhya Prasarni Sabha, an educational institution claiming benefit under Section 80G, filed an appeal against the order of the CIT(A), Ghaziabad, dated 25.09.2018, for Assessment Year 2015-16. The Assessing Officer disallowed the assessee's claim of Rs. 82,66,627/- as repayment of loan treated as application of income, considering it an unallowable expense and a potential double deduction. The CIT(A) upheld this disallowance. The assessee's appeal before the ITAT challenges this confirmation.

What were the issues?

1. Whether the repayment of a loan incurred for charitable purposes by a charitable trust amounts to an application of income for charitable purposes, under Section 11 of the Income Tax Act, 1961. Assessee's contentions: The assessee argued that the repayment of debt should be treated as an application of income, relying on CBDT Circular No. 100 dated 24.01.1973. Furthermore, the assessee pointed out that in the immediately preceding Assessment Year 2014-15, the Assessing Officer had allowed the repayment of debt as an application of income after scrutinizing the return. Revenue's contentions: The Revenue, through the Senior Departmental Representative, strongly supported the findings of the CIT(A). No specific arguments or reliance on authorities were recorded for the Revenue.

Which sections of the Income-tax Act were involved?

Section 11,Section 80G,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: SH. N. K. BILLAIYA

For Appellant: Shri Deepsh Garg, Advocate
Hearing: 25/04/2019Pronounced: 25/04/2019

This appeal by the assessee is preferred against the order of the CIT(A), Ghaziabad dated 25.09.2018 pertaining to A. Y. 2015-16.

2 2. The solitary grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer in not treating the repayment of loan as application of income.

3.

Briefly stated the facts of the case are that the appellant is running educational institution and is registered with Registrar of Society, Uttar Pradesh under Society Registration Act. The appellant also avails the benefit of section 80G of the Act.

4.

During the course of the scrutiny assessment proceedings the Assessing Officer noticed that under the head capital expenditure the assessee has claimed repayment of loan of Rs.82,66,627/- as application of income. The Assessing Officer was of the firm belief that repayment of loan is not an allowable expense and if the repayment of loan is allowed the same tantamount to claim double deduction. Accordingly the claim was disallowed.

5.

The assesssee carried the matter before the CIT(A) but without any success.

6.

Before me the counsel for the assessee drew the attention to the circular No.100 dated 24.01.1973 issued by the CBDT and stated that the board has accepted the repayment of debt as application of income. The counsel further stated that in the immediately preceding year 2014-15 after scrutinizing the return of income the Assessing Officer had allowed the repayment of debt as application of income.

3 7. The DR strongly supported the findings of the CIT(A).

8.

I have carefully considered the orders of the authorities below. I find force in the contention of the Ld. Counsel the CBDT circular No.100 dated 24.01.1973 read as under :-

9.

Further I find that while framing the assessment for A. Y. 2014-15 framed u/s. 143 (3) of the Act the Assessing Officer at clause 6 of that order has allowed the repayment of loan of Rs.8098470/- as application of income.

4 10. In the light of the CBDT circular and the previous assessment of order I direct the Assessing Officer to allow Rs.82,66,627/- for repayment of loan as application of income.

11.

In the result, the appeal is filed by the assessee is allowed. Order pronounced in the open court on 25.04.2019.

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