Exemption u/s 11 – Claim of repayment of loan as application of income – Since the assessee has already claimed exemption towards the cost of asset as application of income, the claim cannot be allowed.

Exemption u/s 11 – Claim of repayment of loan as application of income – HELD THAT:- 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 in the case of Janmabhumi Press Trust [1995 (8) TMI 2 – KARNATAKA HIGH COURT] to claim exemption on account of repayment of loan taken for acquiring the above said asset. CIT(A) has omitted to consider above said factual aspects and hence we cannot sustain his order passed on this issue. Accordingly, 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 issue.

THE INCOME-TAX OFFICER (EXEMPTIONS) , WARD-1, MANGALURU. VERSUS M/S MEDICAL RELIEF SOCIETY OF SOUTH KANARA, UNIVERSITY BUILDING, MANGALURU

ITA Nos.160,161 & 737/Bang/2018