High Court: No Deductions for In-Kind Donations Under Section 80G

The High Court ruled against the assessee, stating that deductions under section 80G of the Income-tax Act are not applicable to donations made in kind, such as shares. The court emphasized that only cash donations qualify for the deduction, as per the legislative intent of the section. The decision overturned the Income-tax Appellate Tribunal's view and concluded that the assessee could not claim a deduction for the shares donated to the charitable trust.

---

---

Issues Involved:
The judgment involves the interpretation of whether a taxpayer can claim a deduction under section 80G of the Income-tax Act for shares donated to a charitable trust when the donation is made in kind and not in cash.

Summary:

The dispute in this case pertains to the assessment year 1974-75, where the assessee donated 6,000 equity shares to a charitable trust and claimed a deduction under section 80G of the Income-tax Act. The Income-tax Officer initially denied the claim, stating that the trust's income was not exempt under relevant sections. The Commissioner of Income-tax (Appeals) upheld the disallowance on the grounds that the donation was made in kind, not in cash. The matter was taken to the Income-tax Appellate Tribunal, which disagreed with the Commissioner's view, citing precedents from the Bombay and Madras High Courts.

In considering whether the assessee could claim the benefit under section 80G for a donation made in kind, the High Court referred to previous decisions. It noted that donations of movable and immovable properties are not covered under section 80G, and only cash donations qualify for the deduction. The Supreme Court also clarified that the legislative intent behind section 80G refers to the amount of money paid as a donation, excluding donations in kind. The Court emphasized that the plain language of the section does not include donations in kind, such as shares of a company.

Based on the Supreme Court and High Court decisions, the High Court concluded that the Income-tax Appellate Tribunal's view was not justified. It held that the assessee was not entitled to claim a deduction under section 80G for the shares donated to the charitable trust. Therefore, the question was answered in the negative, in favor of the Revenue and against the assessee.

---