TaxTMI 
TaxTMI 
2016 (1) TMI 899
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.... order dated 18.12.2009. 2. The only issue in this appeal of assessee is against the order of CIT(A) is, whether the amount borrowed by assessee in the AY 2004-05 and used for repayment of "ways and means" during the relevant AY 2007-08 be treated as an application of income u/s. 11 of the Act or not? For this, assessee has raised following five effective grounds: "1. That the learned Commissioner of Income Tax (Appeals) erred in holding that repayment of "Ways and Means" Loan, (borrowed by the Appellant Institution in the financial year ending 31st March, 2004 corresponding to the assessment year 2004-05, and wholly and exclusively used for its objects and purposes in that year itself), in the financial year ending 31st March, ....
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....come of the assessee and not an application of income u/s. 11 of the act. The assessee Trust filed details of "ways and means loans", which revealed that a loan of Rs. 66 cr. was raised during FY 2003-04 relevant to AY 2004-05 for the purpose of payment of pay arrears and compensation consequent to pay revision order in respect to 6th Pay Commission. Assessee claimed that repayment of loan is very much an application of income towards the objective of the institution and they relied on CBDT Circular No.100 dated 24.01.1973. The AO was of the view that the assessee institution has already claimed the expenditure incurred on payment of arrears of pay and pension as expenditure in the year of payment and, therefore, the claim made in the year ....
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....ce of the trust, the question of utilize the loan for charitable purpose does not arise. iii) The Ld ARs submitted that the loan was taken to make payment to the employees subsequent to the pay revision order. The payment of salary to the employees is not an expenditure incurred for charitable purpose. The Ld ARs failed to substantiate that the conditions laid down in the CBDT's Circular have been fulfilled. The decisions cited by the Ld ARs are different to the facts of the case. At the same time, the AO has allowed the claim in the assessment year 2006-07 cannot be the sole basis of allowability of the claim during the year under consideration. The AO is directed to take suitable remedial action in respect of assessm....
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.... the decision of Hon'ble Supreme Court in the cased of CIT Vs. Gujarat Maritime Board (2007) 295 ITR 561 (SC), wherein Hon'ble Supreme Court has interpreted the expression "any other object of general public utility" in section 2(15) of the Act, is of the widest connotation. That expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be a charitable purpose. Ld. Counsel for the assessee stated that the Kolkata Port Trust is created for that purpose only i.e. to carry....
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....closed in assessee's paper book Volume-I at page 97 and the relevant para 2 was read out by him, which reads as under: "2. The Board has decided that repayment of the loan originally taken to fulfill one of the objects of the trust will amount to an application of the income for charitable and religious purposes. As regards the loans advanced for higher studies, if the only object of the trust is to give interest-bearing loans for higher studies, it will amount to carrying on of moneylending business. If, however, the object of the trust is advancement of education and granting of scholarship loans as only one of the activities carried on for the fulfillment of the objectives of the trust, granting of loans, even if interest-be....
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....application of income by the AO. Even the board circular No.100 dated 24.01.1973 states that the repayment of loan originally taken to fulfill one of the objective s of the trust will amount to an application of the income for charitable purposes. In the present case the assessee is juridical entity created by act of parliament for the object of general public utility and was very much in existence prior to 1st April 2005. Once the object is of general public utility, which is charitable in nature, the assessee's case is covered by the decision of Hon'ble Supreme Court in the case of CIT V Gujarat Maritime Board, supra. Accordingly, we allow the claim of assessee in respect to repayment of 'ways and means loan', borrowed dur....