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2025 (5) TMI 23
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....not allowing deduction worth Rs. 1,27,67,676/-claimed by assessee u/s 80G, without properly appreciating the directions of Hon'ble ITAT. Appellant prays that disallowance made is not in consonance with the specific directions of Hon'ble ITAT and deserves to be deleted. 1.1 That, Id.CIT(A) has further erred in confirming the disallowance of Donation made by assessee, by solely relying upon the observations of Id.AO and further by brushing aside the submission made and evidences adduced by assessee. Appellant prays that donation was actually made in monetary terms as the assessee has directly made the payment against the amount of donation to the suppliers of the donee societies thus the same cannot be termed as "Donation in kind" and therefore deduction has been rightly claimed by assessee, which deserves to be allowed as such. 2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 3. Brief facts of the case are that the assessee filed its E-return of income for the A.Y. 2013-14 on 06.09.2013 declaring total income at Rs. 88,15,430/-, Assessment was completed....
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.... being 100% of the donation made by it to Rajasthan Medicare Relief Society (PAN:AAATR5094F), S.M.S. Hospital, Jaipur at Rs. 27,24,590/- and to Rajasthan Medicare Relief Society, S.P.M.C.H.I., Jaipur (PAN:AAABR0418D) at Rs. 1,00,43,086/- both totaling to Rs. 1,27,67,676/- 6.2.1 In second appeal filed by the assessee before the hon'ble ITAT, the hon'ble ITAT, Jaipur Bench, Jaipur vide its order dated 01/10/2018 in IT appeal No.346/JP/2018 titled as Nash Fashion (India) Ltd. Vs. DCIT has set aside the matter. of claim of deduction u/s 80G to the file of the Relevant Para of the order of ITAT is reproduces as under.- Para 8 "The question for consideration is therefore the determination of the finer distinction between the cash donation and donation in kind. In both the cases, there is outflow of money from the assessee's hand. However, there could be various scenarios in particular facts and circumstances of each case. In one scenario, the money is going directly from the assessee to the donee which doesn't create any confusion and it will be clearly eligible for deduction. In another scenario, where the assessee has an existing asset/propert....
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....ever the second scenario will quality for deduction as what has been spent and transferred is sum of money and not property in kind. In our view, the facts of the present scenario thus needs to be analysed in detail to determine which of the above scenarios it fits in and bases the same, whether the assessee is eligible for deduction under section 80G of the Act." 6.2.2 In terms of the issue set aside by the Hon'ble ITAT, the AO was given directions to examine the transactions from the point of view of two scenarios. First being that whether the assessee purchased the equipment in its own right and then donated it to the societies, and the second being whether the societies acquired the equipment's in their own right and then asked the assessee to make payments to the suppliers. 6.3 The assessing has noted relevant points in the order: * According to AO it was apparent from the correspondence that Sh. Jai Singh Sethia would have discussed the requirement and technical specifications of the equipments required, with the office bearers of the respective societies and then placed the order for supply of the same. Thus the first scenario is applicable....
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.... tax department filed appeal before the Hon'ble Rajasthan High Court. The appeal number was DB Income tax Appeal No.54/2015. The appeal of the department was dismissed by the Hon'ble High Court and the order allowing the deduction u/s 80G by the learned ITAT was sustained by the Hon'ble High Court vide its judgment dated 11.8.2015. 6.5 The appellant did placed its reliance on the same judgement before the Hon'ble ITAT, Jaipur also but In para-11 of its order, the Hon'ble ITAT has clearly distinguished the decision of the coordinate bench in the case of the assessee for A.Y. 2009-10 and 2012-13. The Hon'ble ITAT has also specifically mentioned that the decision of the Hon'ble Rajasthan High court in the case of the assessee was distinguishable on facts and circumstances being related to exercise of powers of Ld. CIT u/s 263 of the I.T. Act. The Hon'ble ITAT also observed that apparently the decision of the Hon'ble Supreme Court in the case of H.H. Sri Rama Verma quoted at 1991 187 ITR 308 SC was not brought to the attention of the Hon'ble High Court. Thus appellant's reliance on the said judgement is not taken for consideration in....
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....t of tax on the income derived by an assessee during the assessment years; the income relates to the amount of money earned or received by an assessee. Therefore, for purposes of claiming deduction from income-tax under section BOG(2)(a), the donation must be a sum of money paid by the assessee. The plain meaning of the words used in the section does contemplate donations in kind. Since the expression and language used in section 80G(2)(a) is plain and clear, it is not open to the courts to enlarge the scope by its interpretative process founded on the basis of the object and purpose underlying the provisions for granting relief to an assessee. Further, in 9 Standards & Norms, Legal Series Vol. XV, Issue 11 NPO TAXATION-CONTRIBUTION IN KIND view of the conflicting opinions expressed by the various High Courts, the Parliament intervened and added Explanation 5 to section 80G by the Finance Act, 1976. After the insertion of the aforesaid Explanation, there cannot be any doubt that, for purposes of claiming deduction, only cash amounts which may have been donated would be taken into account. No doubt this provision is not retrospective in nature, none the less it indicates the legisla....
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....owever no relief was granted by the CIT(A) in respect of claim of deduction u/s. 80G of the IT Act at Rs. 1,27,67,676/- on above mentioned donations as per details mentioned above. In second appeal the hon'ble ITAT sent back the matters relating to both the issues, one u/s. 40(a)(ia) and the other u/s. 80G, to the file of the A.O., who vide the assessment order u/s. 143(3) r.w.s 254 dated 30/11/2019 allowed deduction of Rs. 36,00,008/- u/s. 40(a)(ia) but maintained balance addition of Rs. 22,81,215/- u/s. 40(a)(ia) of the Act. The assessee is not in appeal against maintenance of remaining addition of Rs. 22,81,215/-. But as regards assessee's claim of deduction u/s. 80G at Rs. 1,27,67,676/-, the same was not allowed and he again made the addition of Rs. 1,27,67,676/-. Against this addition the assessee filed appeal before the ld. CIT (A) who vide the impugned order dismissed assessee's appeal. Against this dismissal order of the ld. CIT (A) the assessee is in appeal before the hon'ble ITAT. 1.2 That the observations of the learned CIT[A] that the donation given is otherwise than by way of money is not correct. The factual position is that on the request of M/s. Rajasthan M....
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.... supplier nor does he carry on business of medical equipments etc which were installed in the above mentioned government owned Hospitals in Jaipur. The factual position is that at the instance of Hospital authorities the money for purchase of the equipment/items for both the hospitals was paid by the appellant assessee to the suppliers of those medical eqipments by way of account payee cheques. Meaning thereby what the appellant assessee donated was money i.e. cash and not donation in kind. Besides the medical equipment were directly sent by the suppliers to the above mentioned Hospitals and the same were installed at the Hospitals with the prior consent of the Hospital authorities and the medical equipment and machineries were installed in the hospital to provide medical assistance to the poor people. 1.6 That the AO failed to note that in this case on the advice of the hospital authorities the money was sent directly by the assessee to the suppliers of the medical equipment and machineries for and on behalf of both the Hospitals and there was a due confirmation by hospital authorities in regard to medical equipment and machineries being installed at the above mentioned H....
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....at the learned Commissioner (Appeals) should have taken into consideration the substance of the entire transaction and other facts and circumstances of the case. 1.9 That both the lower authorities failed to appreciate that Explanation-5 of Section 80G do not mandate that the payment should be made directly to the donee. The factual position as given above is that the assessee had made the payments by cheques to the suppliers of equipments on behalf of donee which tantamount to donation made as a sum of money. That the AO should have seen the substance and not the form of the donation. After viewing the totality of facts your honour will please find that the transaction in substance is a money transaction and the donation is in fact a donation in cash and it is prayed that assessee's claim of deduction u/s. 80G should be allowed. 1.10 It is further submitted that the assessee had made payments by cheque to suppliers of equipments/items and goods were supplied/installed at SMS Hospital as well as Sir Padampat Matri Avam Shishu Swasthya Sansthan (S.P.M.C.H.I) JLN Marg, Jaipur. The assessee filed two Certificates both dated 17.08.2013 of Medical Superintendent Sir Pa....
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....see allowed the assessee's claim of deduction u/s. 80G of the Income tax Act as claimed by the appellant company. Subsequently, Commissioner of Income tax by taking action u/s. 263 of the Income tax Act took a contrary view and disallowed the assessee's claim of deduction u/s. 80G. Against this disallowance of deduction u/s. 80G by the learned CIT assessee preferred an appeal before the Income Tax Appellate Tribunal which by order dated 5th Nov., 2014 allowed the claim of the assessee u/s. 80G of I.T. Act by holding that the order passed by Commissioner of Income tax u/s. 263 is not valid in law. Against this judgment of Hon'ble ITAT, Income tax department filed appeal before the Hon'ble Rajasthan High Court. The appeal number was DB Income tax Appeal No.54/2015. The appeal of the department was dismissed by the Hon'ble High Court and the order allowing the deduction u/s. 80G by the learned ITAT was sustained by the Hon'ble High Court vide its judgment dated 11.8.2015. 1.13 In regard to binding force of a High Court judgment the humble appellant craves leave to submit that a decision of a High Court would have binding force in the state in which the court has jurisdiction,....
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....arly visiting to S.M.S. Hospital he is very popular with the S.M.S. Hospital doctors and managing body. On account of his philanthropic nature, the S.M.S Hospital doctors and managing body, as and when they realized the necessity of some medical equipments for the treatment and other bare necessities of indoor as well as outdoor patients of S.M.S. Hospital or in S.P.M.C.H.I., they immediately contact persons like Mr. Jai Singh Sethia and put their immediate requirement of items like medical equipment, related items and/or bare necessities of the patients and their attendants/relatives. Such was the fact and circumstance in the previous year relevant to A.Y. 2013-14,which is year under appeal, when there arose necessity/requirement of medical equipment/machinery with Rajasthan Medicare Relief Society at SMS Hospital as well as at S.P.M.C.H.I, Jaipur, their management authorities approached the donor company Nash Fashion (India) limited (through its managing director Mr. Jai Singh Sethia) and put its requirement of medical equipment/machinery before the assessee company through its managing director Mr. Jai Singh Sethia and requested to fund for such acquisition/ purchase and in turn....
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....the assessee also filed another written submissions on 11.03.2025 which reads as under:- "In continuation to part hearing which took place on 05/03/2025 and with reference to the observations/query made by the hon'ble Bench in the course of part hearing on 05/03/2025 in regard to different scenarios visualized by the hon'ble co-ordinate Bench of the Jaipur Tribunal in its appellate order dated 01/10/2018 at Para 8 of page no. 20 & 21 setting-aside this issue of section 80G in ITA No. 346/JP/2018 for AY 2013-14 in the case of Nash Fashion (India) Limited versus The DCIT, Circle 2, Jaipur to the file of the AO to examine this issue afresh, it is humbly submitted as under: 1. In the above mentioned appellate order passed by the co-ordinate Bench in ITA No. 346/JP/2018 for AY 2013-14 in the case of Nash Fashion (India) Limited versus The DCIT, Circle 2, Jaipur, the co-ordinate Bench visualized various scenarios of donations on the facts and circumstances of each such case of donation in Para 8 at page no. 20 & 21 of the above mentioned order. Last of such scenarios is visualized by the co-ordinate Bench in last eleven lines of Para 8, which reads, "Another scenario is....
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....s/suppliers directly supplied the same i.e. the medical equipment/machinery on the premises of both the institutions and also installed these medical equipment/machinery at the premises of the S.M.S. Hospital and S.P.M.C.H.I. Jaipur. The fact of delivery/installation of the medical equipment/machinery at the premises of both the institutions, namely S.P.M.C.H.I. (i.e JK Loan Hospital, JLN Marg, Jaipur) Jaipur and SMS Hospital, Jaipur is even mentioned in the invoice issued by the suppliers, which are of Jaipur city itself. The copy of invoices, installation and commissioning reports, etc., forms part of the paper book. The assessee company made the payment to the manufactures/suppliers on behalf of the donee institution through account payee cheques/banking channel. All the above mentioned facts of the modus operandi of the donation are duly mentioned in an affidavit duly signed and sworn by the managing director of the appellant company and it forms part of the paper book. 4. That from the perusal of modus operandi and facts & circumstances given above and the supporting documents forming part of paper book your honors will very kindly find that all the ingredients of the....
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....led u/s 138(1) of the Act. 1-4 2. Copy of notice dated 30.10.2019 issued u/s 133(6) of the Act./ 5-6 3. Copy of replies filed by Donee in response to notice u/s 133(6) of the Act 7-8 4. Copy of donation bills made to the Denee Hopsital 9-37 5. Copy of confirmation of Donee Hospital in respect of the donation made by the assessee company 38-39 6. Copy of 80G certificate of done Hospital 40-45 7. Copy of Affidavit of Shri Jai Singh Sethia 46-47 8. Copy of written submission filed before ld. CIT(A) 48-63 9. The ld. AR of the assessee submitted that the assessee has is big corporation and has given similar type of donation in past and the same has been considered so. Even in the set aside proceeding the citeria given by the ITAT to be checked was met and for that he relied upon the following finding of the ITAT in ITA no. 346/JP/2018 dated 01.10.2018 wherein the ITAT held that [page 21 of ITAT order] Another scenario is where there is a necessity/requirement of certain asset/property/equipment by the donee institution and it reaches out to the donor to fund such acquisition/purchase of asset/property....
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....different sources and providing opportunity to the assessee and assessed total income at Rs. 2,38,04,320. The AD Tas found that the donation made by the appellate, were supplied made to Rajasthan Medicare Relief Society, SMS Hospital, Jaipur etc. Penalty u/s 271(1)(c) for furnishing of inaccurate particulars of Income was initiated in the assessment order dated 30.11.2019. Penalty order u/s 271(1)(c) of the L. T. Act, 1961 was passed on 10.02.2022 and imposed penalty of Rs. 1,46,47,830/-. The appellant filed appeal before the Hon'ble CIT(A) against the penalty order dated 10.02.2022 passed under section 271(1)(c) of the Income Tax Act, 1961 by the NFAC, Delhi for A.Y. 2013-14. The Hon'ble CIT(A), vide order dated 28.12.2023 partly allowed appellant appeal on ground No.4 and reduced penalty to 100% from 300%. 3. In the grounds of appeal before the Hon'ble ITAT the appellant has taken grounds that the CIT(A) has erred in confirming the penalty to the tune of 100% out of penalty levied by Ld AO u/s 271(1)(c) of the Income Tax Act, 1961. Further, the assessee claimed that the donation was made in monetary terms and deduction u/s 80G was genuinely claimed. ....
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....d given to society (donee). It was therefore held that the donation made by the appellant were made in kind. 3.1 The AO has discussed the relevant para of memorandum explaining the provision of Finance Bill, 1976 which reads as under:- "Donations in kind not to qualify for tax concession: Donations made to certain funds, charitable institutions, etc., qualify for tax concession under section 80G of the Income-tax Act. The deduction under this section is available in respect of "sums" paid by the taxpayer to funds charitable Institutions, etc., referred to in that section and not to donations in kind. The existing provisions is section 800 of the Income tax Act have, however, been interpreted in certain judicial pronouncements to include even donations in kind. As donations in kind were not intended to qualify for this concession, it is proposed to make a provision for the removal of doubts clarifying that no deductions will be allowed under section 80G unless the donation is a sum of money, that is to say, it is made in case (or by cheque, bank draft, etc.) and not in kind." 4. Moreover, the AD has also noticed that the appellant has also failed to furnis....
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.... any confusion and it will be clearly eligible for deduction. In another scenario, where the assessee has an existing asset/property/stock-in-trade in its possession/control and the same is thereafter transferred by way of donation, it will be a clear case of donation in kind and the same will not be eligible for deduction. There could be a third scenario where the assessee purchases any asset/property/equipments etc from a third party and thereafter, the same is donated. In this case, even though the money has been spent by the assessee in purchasing the asset/property/equipment, what has been actually donated is the asset/property/equipment. The act of donation is subsequent to purchase/acquisition by the assessee in its own right. purchased/acquired the Once the assessee has asset/property/equipment, the title/ownership in such asset/property/equipment has been transferred by way of gift. The gift in such cases is thus gift in kind and the same won't be eligible for deduction. Another scenario is where there is a necessity/requirement of certain asset/property/equipment by the donee institution and it reaches out to the donor to fund such acquisition/purchase of asset/property/e....
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..... It was submitted that all works including placing of order of medical equipments required by hospital authorities, taking of delivery of goods, checking of quality and quantity of the medical equipments and getting installed these medical equipments in the hospitals are under direct supervision of the medical superintendent and at no stage assessee comes into picture nor it has any say in the supply of the equipments and installation thereof. It was submitted that so far as assessee is concerned, it has paid the donation in money i.e. by way of issuing cheque from his bank account in favour of suppliers of medical equipments and in such a situation by no canon of law, can it be said that donation is in kind or nor in cash. The above contentions of the ld AR need to be tested in terms of actual verifiable documentation right from placing the order by the Hospital authorities, raising of invoices by the supplier on the hospital authorities, delivery/supply/installation at the hospital premises and payment by cheque by the assessee equivalent to the invoice value directly to the suppliers. However, we find that there is nothing on record in terms of verifiable evidence/documentation....
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.... allowed for statistical purposes. 12. As is evident from the above direction of the ITAT in first round wherein the bench already held that in case of another scenario wherein there is a necessity of the certain equipment by the donee institution place the order directly on the supplier, thereafter supplier of the equipment supplied the equipment directly and install the same at the premises of the done institution wherein the limited role of the done is to fund such acquisition which is met with in the case and therefore, when the order, installation and delivery is directly at the done premises and the role of the assessee is to finance that equipment cannot be considered merely donation in kind. Here in this case order was direct, installation and delivery of the equipment was not with the premises of the assessee and the assessee has not recorded the purchase and merely recorded the donation in their books of account cannot be termed as donation in kind and it is purely a donation of cash. Even this issue has already been decided by the co-ordinate bench of this tribunal in past for other year we do not see no reason to hold that the donation was in kind. Since the evidence....
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....f the Act.] After hearing counsel for the parties, we do not find any substantial question of law emerges in the instant appeal for our consideration. Consequently, the appeal stands dismissed." Thus, respectfully following the earlier decision of the co-ordinate bench in the case of the assessee, order of the High Court dismissing the appeal which has been decided against the revenue and considering the evidence advanced before us the appeal clearly show it was case of donation in cash and not of kind. Thus, appeal of the assessee in ITA no. 159/JPR/2024 is allowed. 13. Now coming to the cross appeal of the assessee and that of the revenue wherein the ground raised are as under: Assessee's appeal in ITA No. 160/JPR/2024 In this appeal the assessee has taken following grounds of appeal:- "1. The facts and in the circumstances of the case and in law, Ld. CIT(A) has grossly erred in confirming the penalty to the tune of 100% out of penalty levied by Id.AO u/s 271(1)(c) of the Income Tax Act. 1.1 That, Id. CIT(A) has further erred in not considering the submission of made by assessee that the assessee actually made donation in monetary t....