1984 (8) TMI 28

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....come liable to tax ? " The assessee is a trust existing for charitable purpose. The objects of the trust are to help widows or persons whose financial condition is poor. In pursuance of these objects, the trust sometimes gives loans to needy persons without interest and those loans are subsequently repaid. During the assessment year 1973-74, the trust received back such interest free loans in a sum of Rs. 14,400 and during the assessment year 1974-75, it received Rs. 6,575. The ITO treated a sum of Rs. 12,000 out of Rs. 14,400 as income of the trust for the year 1973-74, and Rs. 6,000 out of Rs. 6,575 as its income for 1974-75. Being aggrieved by the assessment orders, the assessee appealed to the AAC, who held that the repayments of ....

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.... necessarily mean " actually applied " or " actually expended " on such objects as are mentioned in the deed of trust. In respect of income accumulated or set apart for application, the section also permits exclusion up to a limit of 25 per cent. of the income of the trust from the total income. Thus, the scheme under the Act permits exclusion only in respect of income applied or accumulated up to the permissible extent as aforesaid for charitable or religious purpose. Mr. Sarangan, learned counsel for the assessee, indeed has nothing to say on the benefit extended to the trust on the income actually applied for charitable purposes. He, however, urged that, if the income applied in one year is returned by the beneficiaries in another ....