TMI Blog2019 (10) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, we set aside the order passed by Ld CIT(A) in all the three years on this issue and restore the addition made by the AO in all the three years. Sale consideration received on sale of assets - reasoning given by the Assessing officer is that the assessee had claimed entire cost of assets as application of income in the earlier years and hence the sale consideration should be taken as income of the assessee - HELD THAT:- We notice that the provisions of sec.11(1A) of the Act prescribe the procedure for assessment of income arising on transfer of Capital asset held under trust wholly for charitable or religious purposes. The provisions of sec.11(1A) has been explained by the co-ordinate bench in the case of Al-Ameen Educational Society vs. DCIT(E) [ 2012 (11) TMI 346 - ITAT BANGALORE] Further, the CBDT has also explained the provisions of sec.11(1A) in Circular No.72 dated 06- 01-1972. We notice that the Ld CIT(A) has directed the AO to compute Capital gains arising on sale of capital asset following the decision rendered in the case of Al-Ameen Educational Society (supra). Hence we do not find any reason to interfere with the decision rendered by Ld CIT(A) on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessments by disallowing the claims of repayment of loan as application of income in all the three years and also by assessing the sale consideration arising on sale of capital assets in AY 2008-09 and 2010-11 as income of the assessee. 6. In the appellate proceedings, the Ld CIT(A) directed the AO to allow the claim of repayment of loan as application of income u/s 11 of the Act. With regard to the sale consideration arising on sale of capital assets, the Ld CIT(A) directed the AO to delete the addition made and substitute the same with the figure of capital gains as computed u/s 45 to 55A. For this purpose, the Ld CIT(A) relied upon the decision rendered by the co-ordinate bench in the case of Al-Ameen Educational Society (ITA No.575 (B)/2011). 7. The first issue relates to the claim of repayment of loan as application of income. The Ld D.R submitted that the assessee had already claimed the cost of capital assets purchased out of loan proceeds as application of income in the earlier years, when the said assets were purchased. Hence the repayment of loan taken for acquiring very same asset would result in double deduction of same it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) .. The provisions of Section 11(1) also requires that the income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in India, and where any such income is accumulated or set apart for application for such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property. 11. It can be noticed that both the third proviso to sec. 10(23C) as well as section 11(1) of the Act allows exemption of income applied to objects of the trust . The provisions of sec.11(1) was interpreted by the co-ordinate bench in the case of M/s Peoples Education Society (supra). It is pertinent to note that the Hon'ble Karnataka High Court has held in the case of Janmabhumi Press Trust (supra) that the repayment of loan is application of income within the meaning of sec.11(1) of the Act. Hence the co-ordinate bench held as under in the case of M/s Peoples Education Society (supra):- 19. In our view, Section 11 only contemplates the application of income and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim exemption as under:- (i) In the first instance, it will claim exemption of ₹ 10.00 lakhs, when the asset was acquired and (ii) in the second instance, it will claim exemption of ₹ 10.00 lakhs, when the loan is repaid. It can be seen that Trust B would be getting exemption twice for the same asset, i.e., once at the time of purchase of asset and again on repayment of loan. As observed by the co-ordinate bench, it could not be intention of the Statute. 14. In the instant appeals, it is the case of the AO that the cost of assets acquired out of loan funds have been claimed by the assessee as application of income in the years in which those assets were acquired. In that case, if the assessee is allowed to claim exemption again on repayment of loan taken for acquiring the very same asset, then the same would result in double exemption for the very same amount, which cannot be the intention of the statute. Since the assessee has already claimed exemption towards the cost of asset as application of income, in our view, the assessee cannot take support of the decision rendered by Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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