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. The CIT(A) suggested that allowing the loan repayment as an application would amount to a double claim. Before the ITAT, the trust’s counsel argued that the disallowance was made on interest payments, not on the loan principal. The ITAT’s ruling reaffirms that while a charitable trust cannot claim the repayment of a loan principal as an application of income, the interest paid on such a loan is a legitimate revenue expenditure. During the F.Y.2021-22, the assessee has claimed repayment of loan and interest payments, amounting to Rs.75,14,899/- as application of income.