COMMISSIONER OF INCOME TAX VS JANMABHOOMI PRESS TRUST
2002 P T D 1293
[242 I T R 709]
[Karnataka High Court (India)]
Before V.K. Singhal and T.N. Vadlinayagam, JJ
COMMISSIONER OF INCOME‑TAX
Versus
JANMABHOOMI PRESS TRUST
I. T. R. C. No. 14 of 1996, decided on 07/12/1999.
Income‑tax‑‑‑
‑‑‑‑Charitable purposes‑‑‑Charitable trust‑‑‑Exemption‑‑‑Borrowed funds utilised in construction of building which would augment income of trust‑‑‑Repayment of debt amounted to application of income for charitable purposes‑‑‑Indian Income Tax Act, 1961, S.11.
Held, that the Tribunal was right in holding that the repayment of debt incurred by the assessee for the construction of the commercial building taken up by .the assessee for the purpose of augmenting its funds, should be treated as "application" of the income of the assessee trust for charitable purposes.
CIT v. Janmabhumi Press Trust (2000) 242 ITR 457 (Kar.) fol.
CIT v. St. George Forana Church (1988) 170 ITR 62 (Ker.) and CIT v. Kannika Prameswazi Devasthanam and Charities (1982) 133 ITR 779 (Mad.) ref.
E.R. Indrakumar for the Commissioner.
S. Ganesh Rao for the Assessee.
JUDGMENT
V.K. SINGHAL, J.‑‑‑The Income‑tax Appellate Tribunal has referred the following question of law arising out of its order, dated June 16, 1992, for the assessment year 1983‑84.
"Whether, on the` facts and in the circumstances of the case, the Tribunal is right in holdi4g that the repayment of debt incurred by the assessee for the construction of the commercial building taken up by the assessee for the purpose of augmenting its funds, should be treated as `application' of the income of the assessee trust for charitable purposes?"
The assessee is a trust. While framing the assessment order for the assessment year 1983‑84, the Assessing Officer did not treat the repayment of loan taken by the assessee for the purpose of construction of a commercial complex as income applied for charitable purposes. In an appeal filed by the assessee, the Deputy Commissioner of Income‑tax (Appeals) directed the Assessing Officer to allow the assessee's claim. Against the order of the Deputy Commissioner of Income‑tax (Appeals), the Department appealed before the Income‑tax Appellate Tribunal.
The controversy in the present matter is covered by the decision given in I.T.R.C Nos. 100‑102 of 1993, dated August 9, 1995 (CIT v. Trust (2000) 242 ITR 457 (Kar.)) wherein it was observed (page 458):
"It is plain that when the assessee is a trust entitled to benefit under section 11 of the Income‑tax Act, the only question that arises for consideration is whether that income or the accumulated income thereof is applied for charitable purpose. If investments have been made in the construction of a building which in turn would augment its income, it should also be held that the application of the funds is for the purpose of the trust. On this principle, we do not think there can be any quarrel. WE are fortified in our view by the decision of the Kerala High Court in CIT v. St. George Forana Church (1988) 170 ITR 62, which in turn relied upon a decision of the Madras High Court in CIT v. Kahnika Parameswari Devasthan and Chanaties (1982) 133. ITR 779. "
In view of the above observation, the reference is answered in favour of the assessee and against the Revenue and it is held that the Tribunal is right in holding that the repayment of debt incurred by the assessee for the construction of the commercial building taken up by the assessee for the purpose of augmenting its funds, should be treated as "application" of the income of the assessee trust for charitable purposes.
M.B.A./740/FCReference answered.