22 October 2018
While calculating 85% of application the assessing officer has not considered the repayment of loan. The AO's contention is it will amount to double deduction as the capital asset acquired out of the loan was already considered. Whether the stand taken by the AO is correct
22 October 2018
Yes AO is right. But the right way is capital asset acquired out of loan should not be considered but loan repayment should be considered.
23 October 2018
Capital asset acquired out of loan cannot be allowed as a deduction since it is not an 'application of income'. However, repayment of loan out of income of the trust is an application rightly to be allowed u/s.11.
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