Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Kolkata Port Trust Versus Assistant Director of Income Tax (Exemption-II) , Kolkata

2016 (1) TMI 899 - ITAT KOLKATA

Application of income in the computation of total income of assessee u/s. 11 - 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? - Held that:- The board circular No.100 dated 24.01.1973 states that the repayment of loan originally taken to fulfill one of the objectives of the trust will amount to an application of the income for charitable purposes. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eans 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. & Shri Amit Agarwal, Adv For the Respondent : Shri S S Alam, JCIT, Sr. DR ORDER Per Shri Mahavir Singh, JM This appeal by assessee is ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t 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 finan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld not be treated as income 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 ₹ 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 ins .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nder consideration. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) after considering the submissions of the assessee dismissed 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 objec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rial to decide the nature of repayment. But in this case, when the loan was taken, there was no trust at all. The status of the assessee was different when the loan was taken. i) The assessee became a trust w.e.f. 01.04.2005. When there was no existence 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In view of the above discussion, it is held that in this case, the repayment of loan is not application of income as envisaged u/s.11 of the Act and the AO has rightly disallowed the claim of the assessee and his action is confirmed. In the result, the appeal is dismissed." Aggrieved, now assessee is in second appeal before the Tribunal. 4. We 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 ou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

u/s. 10(20) of the Act was withdrawn and assessee became a taxable entity. The Ld. Counsel for assessee argued that the assessee was a charitable entity even from AY 2003-04 to 2005-06 before grant of registration u/s. 12AA of the Act as a charitable institution for AY 2006-07 and thereafter by virtue of the status of the assessee created by legislature as an institution carrying on activities of general public utility. For this, Ld. Counsel for the assessee relied on the decision of Hon'bl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ose 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 out the activities of general public utility and hence, the purpose of this trust is charitable in nature. Ld. Counsel for the assessee narrated the facts that the assessee had taken "ways and means loan" of ₹ 66 cr. from Bank of India on 25.07,2003 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 court in the case of DIT(E) Vs. Govindu Naicker Estate (2009) 315 ITR 237 (Mad) wherein it has held that repayment of loan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version