TMI Blog2008 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... dent : Mr Navneet Negi CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER BADAR DURREZ AHMED, J (ORAL) 1. These appeals are directed against the common order dated 30.11.2007 passed by the Income Tax Appellate Tribunal in respect of assessment years 2002-2003 and 2003-2004 Common issues have been raised in respect of both the years. The assessee is a charitable trust. It purchased certain land. Thereafter, it constructed a building out of borrowed funds as well as out of the corpus. The building was rented out. According to the revenue since the building was rented out to concerns in which some of the trustees were directors, it implied that the income derived out of the renting out of the building w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrowed funds for the purposes of constructing the building. The rent that was derived from the said building was utilized by the assessee trust to re-pay the borrowed funds. It was contended on behalf of the assessee that the re-payment of the loan, in these circumstances, has to be regarded as application of income for charitable purposes. The Tribunal accepted this plea of the assessee. The Tribunal noted that if the argument of the revenue was to be accepted, then it would amount to concluding that the assessee could not utilize the rental incomes received by it from the lease of the property for charitable purposes. The Tribunal noted that as and when the loans are discharged and the assessee becomes free to utilize the rental income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principles set out in Dewan Daulat Rai Kapoor v. NDMC: 122 ITR 700 and concluded that the market rent could not be more than the standard rent. 5. We are informed that the Assessing Officer has since examined the issue of adequacy as directed by the Tribunal by virtue of the impugned order. After examining the lease deeds of adjacent properties immediately to the right and left of the assessee's property as also considering the fact that the rent received by the assessee in respect of the said building was more than the standard rent as computed in accordance with the Delhi Rent Control Act, 1958, the Assessing Officer came to the conclusion that the rent received by the assessee trust was adequate. Consequently, the question of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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