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Issues involved: The judgment addresses two main issues: 1. Whether the Tribunal was justified in allowing the donation of a machine as publicity and advertisement expenses under section 80G of the Income-tax Act, 1961. 2. Whether the Tribunal was justified in granting interest to the assessee for assessment year 1972-73 on the excess amount paid which was not in accordance with the provisions of sections 207 to 213 of the Income-tax Act, 1961.
Issue 1 - Donation of Machine under Section 80G: The assessee, a company, donated a lathe to a technical institute for advertisement and publicity purposes. The Income Tax Officer (ITO) disallowed the deduction under section 80G, stating that "sums paid" cannot include donation in kind. The Appellate Authority directed the ITO to allow the cost of the machine as advertising expenses. The Tribunal, relying on a previous case, held that the donation in kind was entitled to deduction under section 80G. The High Court referred to the case of Associated Cement Co. Ltd., where a similar donation in kind was allowed as a deduction under a different section. The Court concluded that the substance of the transaction should be considered, and since the donation was equivalent to a cash donation, the assessee was entitled to the deduction under section 80G. Issue 2 - Granting of Interest: The Commissioner contended that the assessee was not entitled to interest on the excess advance tax paid due to a slight delay in payment. However, the Tribunal found that the payment was accepted by the department as an advance tax installment, fulfilling all requirements for interest under section 214. The Court agreed with the Tribunal's factual finding and held that the delay did not disentitle the assessee from receiving interest. Therefore, the Court concluded that the question of law did not arise, and no reference was required. In conclusion, the High Court dismissed the need for a reference on both issues, upholding the Tribunal's decisions.
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