SWAMI VIVEKANANDA RURAL WELFARE AND EDUCATIONAL TRUST,CHENNAI vs. ITO, SALEM

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ITA 954/CHNY/2015Status: DisposedITAT Chennai07 August 2015AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the nature of the receipt as loan and the nature of repayment were not clear. It noted that if it was a loan, it could not be treated as income upon receipt, and if treated as income, it could not be a loan.

What were the facts?

The assessee-Trust claimed repayment of a loan of Rs. 11,56,000/- to trustees. The assessee had previously disclosed a sum of Rs. 14,00,000/- received as loan in its return of income as income from other sources.

What were the issues?

The primary issue was whether the repayment of Rs. 11,56,000/- to trustees constituted a repayment of loan or was to be treated as income, given the conflicting disclosures made by the assessee.

Which sections of the Income-tax Act were involved?

Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, S M C BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN

Hearing: 03.07.2015Pronounced: 07.08.2015

आदेश /O R D E R

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Salem, dated 31.03.2015 and pertains to assessment year 2010-11.

2.

Sh. A.S. Sriraman, the Ld.counsel for the assessee, submitted that the assessee-Trust is not registered under Section 12A of the Income-tax Act, 1961. While filing the return of income, the assessee claimed repayment of loan to the extent of `11,56,000/- made to the trustees. According to the Ld. counsel, whenever a trustee is in urgent need of money, he use to take loan from other trustees and it would be repaid. Referring to the return of income filed before the lower authorities, the Ld.counsel submitted that in the computation, a sum of `14,00,000/- received by the assessee as loan, was disclosed to the Department as income from other sources. Therefore, addition of repayment of the said loan to the extent of `11,56,000/- would amount to double addition.

According to the Ld. counsel, since the loan itself is taken as income on the date it was received, the repayment cannot be considered for computation of total income.

3.

On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that when the assessee claims that what was received by it is a loan, then it cannot be treated as income on its receipt. According to the Ld. D.R., a loan cannot be an income. Therefore, the statement made by the Ld.counsel cannot be correct. Since the assessee repaid an amount of `11,56,000/-, according to the Ld. D.R., in the absence of details, the Assessing Officer made the addition. The CIT(Appeals) has also rightly confirmed the addition made by the Assessing Officer.

4.

I have considered the rival submissions on either side and perused the relevant material on record. The only dispute is with regard to the payment of `11,56,000/- made to the trustees. The assessee claims that it is a repayment made to the trustees for the loan received. The assessee claimed in the return of income that it was a contribution by the trustees. If it is contribution by the trustees, definitely it will form part of total income of the Trust. Once the contribution is made by the trustees, it is not known in what capacity it was repaid. As rightly submitted by the Ld. D.R., if it is treated as loan, then it cannot be treated as income on its receipt.

When the assessee has treated it as its income, then it cannot be a loan at all. Therefore, unless and until there was an obligation for repayment, it cannot be treated as repayment of loan. The nature of receipt of loan and the nature of repayment are not clear from the material available on record. The assessee has now filed the details with regard to receipts and repayments in respect of the individual trustees. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has to reconsider the matter afresh in the light of the details filed by the assessee. Accordingly, the orders of the lower authorities are set aside and the matter is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh and bring on record the nature of receipt by the assessee either as loan or contribution. The Assessing Officer shall also verify the nature of repayment made by the assessee to the trustees on the basis of the material filed and thereafter decide the issue in accordance with law, after giving reasonable opportunity to the assessee.

5.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 7th August, 2015 at Chennai.

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