TaxTMI 
TaxTMI 
2025 (2) TMI 1540
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....d the following grounds: "1. The order of Ld.CIT(A) is opposed to facts and circumstances of the case; 2. The Ld.CIT(A) has erred in allowing the repayment of loan as application during the current financial year without examining whether the capital expenditure has already been allowed as application in earlier assessment years; 3. The Ld.CIT(A) has erred in holding that the assessee trust is eligible to claim repayment of loan as application of income without appreciating the fact that the assessee had not proved that the expenditure on construction of hostel building for which the funds were borrowed, had not been claimed as application in earlier years, and in such a scenario, allowing the repayment of loan in....
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....the construction of school and hostel building. Out of such loan, an amount of Rs. 2 crore was repaid during the year (i.e. F.Y. 2015-16) and accordingly claimed as an application of income in accordance with CBDT circular no. 100 of 1973 dated 24-01-1973 and in view of various judicial pronouncements. 5. However, the AO found that the assessee trust was asked to substantiate whether borrowed funds was shown as receipt and utilized for building construction which was claimed as application in earlier years. But the assessee failed to make a reply to the specific query. Thus, the AO held that if the assessee is allowed the repayment loan as application of income independently in the year under consideration and expenditure incurred or ass....
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....an as application in cases where capital expenditure out of such borrowing claimed as application. However, later on the board clarified that the repayment of loan shall be treated as application subject to the condition that the borrowing was shown as income in year of receipt i.e. A.Y. 2006-07 therefore repayment of same in the year under consideration shall be allowed as application. 8. Being aggrieved by the order of the learned CIT(A) revenue is in appeal before us. 9. The learned DR before us vehemently supported the order of the AO by reiterating the findings contained therein. 10. On the other hand, the learned AR argues before us that CBDT Circular No. 100 dated 24/01/1973, clarifies that loan repayment undertaken to fulfi....
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....upreme Court in CIT Vs. Vatika Township Private Limited, reported in 367 ITR 466 the learned AR asserts that amendments imposing a new burden or liability cannot be applied retrospectively. 11. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the trust availed a term loan of Rs. 10 crores in the financial year 2006-07, which was utilized for the construction of school and hostel buildings, fulfilling its charitable objectives. During the assessment year 2016-17, the trust repaid Rs. 2 crores of the said loan and claimed it as an application of income, relying on CBDT Circular No. 100 dated 24/01/1973. 11.1 The AO disallowed the claim of R....
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.... Now coming to the AO's concern regarding double deduction, we find the same to be misplaced in the present case. The assessee had shown the loan as income/receipt in the year of borrowing (AY 2006-07), which satisfied the conditions for allowing its repayment as an application of income in subsequent years. Since the assessee had not claimed any depreciation on the assets created from the loan, the issue of double deduction did not arise. 11.4 We further note there were multiple judicial pronouncements that have upheld the principle that repayment of a loan used for charitable purposes constitutes an application of income. Key cases cited in support of this position included the judgment of Hon'ble jurisdictional High Court of Karnataka....