M/S.PODIKUNJU MUSALIAR MEMORIAL CHARITABLE AND EDUCATIONAL TRUST,KOLLAM V. CIT EXEMPTIONS, KOCHI

ITA 110/COCH/2023

AI Insights

The case involves the Podikunju Musaliar Memorial Charitable and Educational Trust, which appealed against the order of the Commissioner of Income-tax (Exemption) that set aside the AO's decision regarding the trust's claim of loan repayment as an application of income. The trust had repaid a loan in the assessment year 2017-2018, which was initially used to acquire assets for charitable purposes and on which depreciation was claimed. The CIT(E) viewed the AO's treatment of the loan repayment as an application of income as erroneous and prejudicial to the interest of the revenue, leading to the setting aside of the AO's order. The tribunal, however, disagreed with the CIT(E), citing a relevant High Court judgment that supported the trust's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360893 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: DIT(E) v. Govindu Naicker Estate 315 ITR 237 (Mad.)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDARASAN
• Assessee Lawyers: ARUN RAJ S
• Keywords: Set aside; Depreciation
• Section: 12

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member & Shri Prakash Chand Yadav, Judicial Member ITA No.110/Coch/2023 : Asst.Year 2017-2018 Podikunju Musaliar Memorial Charitable and Educational Trust, Chandanathoppe Kollam – 691 014. PAN : AAATP8905H v. The Commissioner of Income-tax (Exemption) Kochi. (Appellant) (Respondent) Appellant by : Sri.Arun Raj S, Advocate Respondent by : Sri.Sundarasan, CIT-DR Date of Hearing : 21.05.2025. Date of Pronouncement : 22.05.2025 O R D E R Per Prakash Chand Yadav, JM : The present appeal of the assessee is arising from the order of the learned Commissioner of Income-tax (Exemption) [“CIT(E)” for short] dated 25.03.2022 and relates to the assessment year 2017-2018. 2. There is a delay of 251 days in the present appeal. For the reasons mentioned in the application for condonation of delay, we hereby condone the delay and proceed to decide the appeal on merits. 3. Brief facts of the case as coming out from the orders of the authorities below are that the assessee is a trust filed its return of income for the impugned assessment year on 30th ITA No.110/Coch/2023. Podikunju Musaliar Memorial Charitable and Educational Trust. 2 October, 2017 declaring Nil income. The case of the assessee was selected for scrutiny. Thereafter order u/s.143(3) of the Act has been framed. It is pertinent to note here that during the course of assessment proceedings, the AO vide questionnaire dated 24th January, 2019 has specifically asked the assessee about the claim of the assessee vis-à-vis repayment of loan as application of income for the purpose of the benefits of sec.11 and 12 of the Act. 4. The CIT(E) was of the view that the AO has erred in treating the repayment of loan as application of income and accordingly set aside the order of the AO u/s.263 of the Act vide order dated 25th March, 2022. 5. Aggrieved with the order of the CIT(E) passed u/s.263 of the Act, the assessee has come up in appeal before us and argued that there is no error in the order of the AO and hence the CIT(E) was not correct in holding that the order of the AO is erroneous and prejudicial to the interest of the Revenue. 6. The learned DR, appearing on behalf of the Revenue, relied upon the order of the CIT(E). 7. We have heard the rival submissions and perused the material available on record. It is an admitted position of fact that the assessee has borrowed some loan in assessment year 2013-2014, which was used by the assessee for acquiring the assets for carrying out the charitable activities. On this asset, the assessee has claimed depreciation u/s.32. Thereafter the ITA No.110/Coch/2023. Podikunju Musaliar Memorial Charitable and Educational Trust. 3 assessee has repaid the loan in the impugned year, i.e., assessment year 2017-2018 and claimed that repayment of loan is application of income. The claim of the assessee is fully justifiable in view of the judgment of the Hon’ble Madras High Court in the case of DIT(E) v. Govindu Naicker Estate 315 ITR 237 (Mad.). Therefore, we are of the view that the order of the AO is neither erroneous nor prejudicial to the interest of revenue and the CIT(E) has erred in assuming the jurisdiction u/s.263 of the Act. Hence, we restore the order of the AO and quash the order of the CIT(E). 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 22nd day of May, 2025. Sd/- (Inturi Rama Rao) Sd/- (Prakash Chand Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 22nd May, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "