TaxTMI 
TaxTMI 
2014 (11) TMI 396
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.... Medical Relief Society, S.M.S. Hospital, Jaipur. In view of Explanation-5 of Section 80G, no deduction U/s 80G is allowable in respect of any donation unless such donation is a sum of money. Since the assessee made donation in the form of equipments and not as a sum of money. He further held that the learned Assessing Officer allowed 80G deduction without verifying the facts and without considering the provisions of Income Tax law. He found assessment of the Assessing Officer erroneous and prejudice to the interest of the revenue, therefore, he issued notice U/s 263 of the Act, which was replied by the assessee on various dates. It was submitted by the assessee before him that the assessee made donation of money through cheque of Rs. 86,41,387/-. On the request of M/s Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur, the cheques were issued in favour of supplier of medical equipments, who directly supplied and installed the equipments at ICU of SMS hospital, it was not a donation in kind. In support of his claim, the company submitted certificate issued by Medical Superintendent of SMS Hospital, Jaipur by stating that M/s Nash Fashions (India) Ltd. had donated Rs. 86,41,3....
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....de to the suppliers of the equipments on behalf of the donee. He had not also accepted the alternative contention of the assessee of business expenditure U/s 37 of the Act. The expenses incurred on purchase of equipments were not wholly and exclusively for the purpose of business. He further cited number of cases for not allowing donation as business expenditure. Finally he directed to the Assessing Officer to withdraw the deduction allowed by her and recomputed the total income and taxed thereon. 4. Now the assessee is in appeal before us. 5. The learned A.R. for the assessee has submitted that there is no dispute as to the fact that deduction for donation u/s 80G is available only when donation is of a sum of money. But to consider whether the donation is of a sum of money or not, one has to look to the substance of the transaction and if the substance of the transaction reveals that what is donated is the sum of money the rebate must be granted to the assessee. The Gujarat High Court in case of CIT Vs. Smt. Dhirja Ben R. Amin 141 ITR 875 where the donation was of shares held that since donation is in kind deduction under section 80G is not available. However, in this decision ....
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....a Pradesh High Court we are of the opinion that none of the judicial pronouncements, referred to earlier, have laid down in categorical terms that donations in kind fall within the purview of s. 80G of the Act. All that the decisions have stated is that the Courts must examine the substance of the donations and if on an examination of the relevant evidence it finds that the donation is of a sum of money, it may grant rebate sought by the assessee. The insertion of Expln. 5 by the Finance Act, 1976, w.e.f. 1st April, 1976, was merely to clarify this doubt which had arisen on account of an erroneous reading of the judicial pronouncements on the point. Assuming for the sake of argument that Expln. 5 is retrospective in effect, as contended by the learned counsel for the Revenue, it does not alter the position inasmuch as even before the insertion of the Explanation the view was that only donations in cash would qualify for rebate under s. 80G of the Act. We therefore, do not consider it necessary to examine in detail the contention of the learned counsel for the Revenue that Expln. 5 inserted by the Finance Act, 1976, has retrospective application. Even without the insertion of Expln.....
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....be granted to the assessee. Again in case of CIT Vs. Amonbolu Rajiah 102 ITR 403 (AP) where the assessee agreed to donate necessary funds for construction of school building for Zila Parishad and advanced various amounts from time to time to the contractor for the purpose of construction of school building on a site belonging to Zila Parishad it was held that arrangement itself indicates that the intention was to donate the money earmarked for the purpose of constructing a school building and therefore the Tribunal is right in reaching the conclusion that it was a donation of money and not in kind and once it is found that it was a donation of a sum of money the case would squarely fall u/s 88 of the Income Tax Act (now section 80G). In case of Saurashtra Cement and Chemical Industries Ltd. Vs. CIT 123 ITR 669 assessee donated cement bags manufactured by it and it was held that transaction in substance was a money transaction and the donation was virtually a donation in cash. In the above backdrop, if the facts of the assessee's case are analysed it can be noted that the assessee made payment by cheque to the various supplier of the equipment and thereafter the suppliers supplied ....