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income-tax Officer Vs. K.P. Goenka and Sons Ltd. - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Mumbai
Decided On
Judge
Reported in(1983)3ITD343(Mum.)
Appellantincome-tax Officer
RespondentK.P. Goenka and Sons Ltd.
Excerpt:
.....during the year. section 80g(2) merely says that any sum paid by the assessee in the previous year, as donation would qualify for relief if the other conditions are satisfied. it does not further say that the amount should come out of the assessed income of the year. similarly, we find that explanation 5 says that for the removal of the doubts, it is hereby declared that no deduction shall be allowed in respect of any donation if it is not in cash. this explanation came into force with effect from 1-4-1976 and so, it was not applicable to the assessment year under consideration. during the assessment year 1975-76, there was no express prohibition for allowance of relief under section 80g on donations paid in kind. in any case, there was definitely a doubt as is clearly recognised by.....
Judgment:
1. This appeal has been filed by the department against the order dated 13-11-1980 of the Commissioner (Appeals), relating to the assessment year 1975-76, the previous year of which ended on 31-3-1975.

2. The only ground taken in this appeal states that the Commissioner (Appeals) erred in allowing the deduction under Section 80G of the Income-tax Act, 1961 ('the Act'), on a donation made in kind.

3. The assessee is a limited company. During the previous year under consideration, it made a donation of the premises situated at No. 53, Sir Hariram Goenka Street, Calcutta. The value of the premises was admittedly Rs. 44,124. The ITO refused to allow the deduction under Section 80G on the ground that the donation was in kind. According to him, unless the donation was in cash, it is not eligible for relief under Section 80G. Hence, he declined to give any deduction under Section 80G on the aforesaid donation.

4. The assessee appealed to the Commissioner (Appeals) and contended that the action of the ITO was erroneous. The Commissioner (Appeals) observed that the assessment year under consideration was 1975-76 during which there was no legal stipulation that the donation should be in cash in order to be entitled for deduction under Section 80G. He also observed that the donation need not have come out of income assessed during the relevant assessment year. Under the circumstances, he directed the ITO to allow the relief under Section 80G after proper verification.

5. Shri D.R. Chawla, the learned representative for the department, urged that the learned Commissioner (Appeals) erred in his decision. He stated that relief under Section 80G could be allowed only if the donation came out of the income assessed during the year under consideration and also only if the amount was donated in cash. Shri G.B. Doshi, the learned representative for the assessee, on the other hand, supported the order of the Commissioner (Appeals). He pointed out that there is no legal requirement (unlike that under Section 80G) for the donation to come out of the assessed income of the year. Further, he pointed out that Explanation 5 to Section 80G was introduced with effect from 1-4-1976 and so the legal requirement that the donation should be in cash as enacted by the said Explanation was not applicable to the assessment year under consideration.

6. We have considered the contentions of both the parties as well as the facts on record. We find force in the contentions raised for the assessee. We do not find any condition in Section 80G to the effect that the donation must have come out of the income assessed during the year. Section 80G(2) merely says that any sum paid by the assessee in the previous year, as donation would qualify for relief if the other conditions are satisfied. It does not further say that the amount should come out of the assessed income of the year. Similarly, we find that Explanation 5 says that for the removal of the doubts, it is hereby declared that no deduction shall be allowed in respect of any donation if it is not in cash. This Explanation came into force with effect from 1-4-1976 and so, it was not applicable to the assessment year under consideration. During the assessment year 1975-76, there was no express prohibition for allowance of relief under Section 80G on donations paid in kind. In any case, there was definitely a doubt as is clearly recognised by the opening words of Explanation 5. Whenever there is a doubt, the benefit thereof should go to the assessee vide the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. Hence, we agree with the Commissioner (Appeals) that the assessee was entitled to relief under Section 80G on the donation made in kind in the year under consideration, if the other conditions stated in that section are satisfied. We, therefore, uphold the direction of the Commissioner (Appeals).


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