TMI Blog2016 (1) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, [2007 (12) TMI 7 - SUPREME COURT OF INDIA ]. Accordingly, we allow the claim of assessee in respect to repayment of 'ways and means loan', borrowed during assessment year 2004-05 and wholly and exclusively used for its objects, as an application of income in the computation of total income of assessee u/s. 11 of the Act. - Decided in favour of assessee. - ITA No. 199/Kol/2013 - - - Dated:- 5-11-2015 - Mahavir Singh, JM And Waseem Ahmed, AM For the Appellant : Shri N K Agarwal, Sr. Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution was not in existence prior to 1st April, 2005, when the said loan had been borrowed by it for its objects and purposes. 3. That the learned CIT(A) erred in alleging and/or holding that the payment of salary to the employees was not an expenditure incurred for charitable purposes. 4. That the learned CIT(A) erred in alleging and/or holding that the Appellant Institution failed to substantiate that it satisfied the conditions laid down in the Circular No.100 dated 24th January, 1973 issued by the Central Board of Direct Taxes. 5. That without prejudice to the above the learned CIT(A) had no jurisdiction whatsoever to give any direction in respect of the assessment year 2006-07, which year was not in appeal before him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed the claim of the assessee by observing as under: I have carefully considered the submissions of the Ld. ARs and also perused the assessment order. I have also gone through the clarification issued by the CBDT in Circular No. 100 dated 24.01.1973. The Board has clarified that the '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 purpose.'. The ld. ARs heavily relied on the aforesaid Circular of the CBDT. Therefore, it is necessary to have a close look to the contents of the Circular. i) The Circular made it clear that if the loan originally taken to fulfill one of the objects of the trust, the repayment will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard rival submissions and gone through facts and circumstances of the case. Before us, Ld. Counsel for the assessee Shri N. K. Poddar drew our attention to the assessment order page 2 wherein AO himself has admitted that the assessee trust is a registered trust u/s. 12AA of the Act for the year under consideration and carrying on activities of general public utility. Ld. Counsel for the assessee also stated that this is not a registered trust but legal entity created by order of legislature. Prior to AY 2003-04, the assessee was not a taxable entity by virtue of exemption granted u/s. 10(20) of the Act and w.e.f. AY 2003-04 exemption u/s. 10(20) of the Act was withdrawn and assessee became a taxable entity. The Ld. Counsel for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business expenditure u/s. 37(1) of the Act in the computation of income of the assessee for AY 2004-05. The assessee claimed that during the relevant AY 2007-08 it has repaid ₹ 7.33 cr. out of the above stated loan and this payment was the last installment and the loan amount was squared up. Ld. Counsel for the assessment drew our attention to assessee's paper book volume-II wherein copies of assessment order passed u/s. 143(3)/11 of the Act is enclosed whereby in AY 2006-07 the repayment of ways and means loans of ₹ 22 cr. was allowed to have been made as an application of income and in earlier year also the same was allowed as deduction. Ld. Counsel for the assessee relied on the decision of Hon'ble Madras High cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to him, the circular fully supports the case of the assessee. 5. On the other hand, the Ld. Sr. DR heavily relied on the orders of the lower authorities. 6. We find that that the assessee is a registered trust u/s. 12AA of the Act for the year under consideration and carrying on activities of general public utility and he also clarified that this is not a registered trust but legal entity created by order of legislature. We find from the facts that the assessee had taken ways and means loan of ₹ 66 cr. from Bank of India on 25.07.2003 for the purpose of payment of area pension and area salary and such arrear pension and salary, pertain to sixth pay commission arrears, was allowed as deduction as business expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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