Interest on Loan Is a Valid Application of Income for Charitable Trusts: ITAT Chennai

Zenith Public School Vs ITO (ITAT Chennai) The Income Tax Appellate Tribunal (ITAT) in Chennai has set aside an order from the Commissioner of Income Tax (Appeals), ruling in favor of Zenith Public School, a charitable trust. The ITAT’s decision addresses the disallowance of Rs. 10.28 lakh, which the tax authorities had treated as an invalid application of income. The tribunal clarified that interest paid on a loan used to further the trust’s objectives is a legitimate application of income and is not restricted by the Income-tax Act, 1961. This ruling distinguishes between the repayment o...