COMMISSIONER OF INCOME TAX Vs. SACRED HEART CHURCH

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Ahmedabad Bench "A", has referred the following question for the opinion of this Court under Section 256(1) of the Income-tax Act, 1961 (the Act), at the instance of the Revenue :

(2.) The Assessment Year is 1985-86 and the relevant accounting period is the year ended on 31st December, 1984. The assessee, a Public Charitable Trust, filed its return of income declaring deficit of Rs.1,40,760/- on 2nd March, 1987. On perusal of the statement of income and expenditure the Assessing Officer found that the assessee had deducted an amount of Rs.1,65,201/- against the current year's income and accordingly, had arrived at the said deficit. As per the assessee the said amount had been advanced as loan to members of the weaker sections of the public in the earlier years, under a self housing scheme formulated by the assessee Trust. In the year under consideration it was found that the chances of recovery of the said loan amount were remote, hence, the said amount was transferred to the expenditure account with the following narration: SLoans under self housing Scheme of residence for poor and weaker section given as a transfer from Balance-Sheet.

(3.) The assessee carried the matter in appeal before the Dy. Commissioner of Income-tax, who by his order dated 2nd March, 1989 dismissed the appeal and confirmed the order of the Assessing Officer.