1982 (10) TMI 61 - AT - Income Tax

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) related to the assessment year 1975-76.
- Allowance of deduction under section 80G of the Income-tax Act on a donation made in kind.

Analysis:
The appeal before the Appellate Tribunal ITAT Bombay-D was filed by the department challenging the order of the Commissioner (Appeals) concerning the assessment year 1975-76. The sole ground of appeal was that the Commissioner (Appeals) erred in allowing the deduction under section 80G of the Income-tax Act on a donation made in kind. The assessee, a limited company, had donated premises during the relevant previous year, and the Income Tax Officer (ITO) disallowed the deduction under section 80G on the basis that the donation was not in cash. The Commissioner (Appeals) disagreed with the ITO's decision, stating that there was no legal requirement during the assessment year 1975-76 that donations must be in cash to qualify for relief under section 80G.

The department's representative argued that relief under section 80G could only be allowed if the donation came from the income assessed during the relevant year and if the donation was made in cash. On the contrary, the assessee's representative supported the Commissioner (Appeals)'s order, highlighting that there was no legal stipulation for donations to be in cash for the assessment year in question. The Appellate Tribunal analyzed the contentions of both parties and the relevant legal provisions. It noted that section 80G(2) did not mandate that the donation must come from the assessed income of the year. Additionally, Explanation 5 to section 80G, which required donations to be in cash, was not applicable to the assessment year 1975-76.

The Tribunal referred to the Supreme Court decision in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192, emphasizing that in case of doubt, the benefit should favor the assessee. As there was no explicit prohibition on allowing relief under section 80G for donations made in kind during the relevant assessment year, the Tribunal upheld the Commissioner (Appeals)'s direction to allow the deduction under section 80G for the donation made in kind by the assessee. Consequently, the appeal by the department was dismissed, affirming the decision of the Commissioner (Appeals) in favor of the assessee.