Treatment on borrowed funds utilization for application of income - Charitable Trust

[PRIYAM KHAMBHATA]

Respected Sir

In charitable trust, during the year borrowed funds taken of Rs.5,00,000, which has utilized in application. Further, out of borrowed funds, there are re-payment made of Rs.100000 during the year under consideration. What would be the treatment of application claimed for the year.

My understanding is below

Application of Rs.400000 (500000 borrowed funds - 100000 paid borrowed funds) to be disallowed. as during the year Rs.500000 borrowed funds utilized and its repayment made of Rs.100000 during the year. therefore, net borrowed funds of Rs.400000 is outstanding, which has utilized for application.

We are reporting Rs 400000 only as borrowed funds, which has utilized for application, and it would be disallowed for the year under consideration. Is this correct understanding in respect of reporting in ITR and Form 10B

Please guide me

AI Summary

Application of income from borrowed funds requires determining utilisation, repayment and reporting treatment for charitable trusts.
The issue is whether the net outstanding borrowing used for application should be excluded or disallowed in computing application of income for that year, despite the full borrowed amount having been used. It further concerns whether repayment changes the amount reportable as application, and the appropriate reporting treatment of borrowing-based application and repayment in the income-tax return and Form 10B.