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2014 (11) TMI 396 - AT - Income TaxRevision u/s 263 - Allowability of deduction u/s 80G Expenses incurred for the welfare of general public, which included the employees, suppliers and buyers - The donation was made under the company s policy on corporate social responsibility - Held that - The assessee had submitted letter issued by the M/s Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur dated 24/3/2009 before the AO during the assessment proceedings vide its letter dated 30/6/2011 AO had applied her mind and allowed the deduction u/s 80G of the Act as claimed by the assessee in computation of income - The facts that the assessee had made payment to the supplier directly on behalf of M/s Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur, were before the AO - No new facts were furnished before the CIT - CIT had different opinion on deduction u/s 80G of the Act - CIT is not empowered to set aside the order of the AO u/s 263 of the Act - the genuineness of this donation has not been doubted by the Revenue - The payments was made on behalf of the donee to make available equipment without going to the technical formalities of the State Government for purchasing the equipments, had made available these equipments directly - It has been certified by the Medical superintendent of M/s Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur, that the appellant had made payment on behalf of the society following the decision in Saurashtra Cement and Chemical Industries Ltd. Vs. CIT 1979 (2) TMI 21 - GUJARAT High Court - the order of the CIT-I, Jaipur passed U/s 263 of the Act is upheld Decided in favour of assessee.
Issues Involved:
1. Deduction under Section 80G of the Income Tax Act. 2. Nature of donation (cash vs. kind). 3. Validity of the order under Section 263 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Deduction under Section 80G of the Income Tax Act: The primary issue is whether the deduction of Rs. 86,41,387/- under Section 80G of the Income Tax Act was rightly allowed by the Assessing Officer (AO). The assessee claimed this deduction for donations made to the Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur, in the form of medical equipment. The AO allowed this deduction during the scrutiny of the assessee's return for the A.Y. 2009-10. However, the Commissioner of Income Tax (CIT) held that Section 80G allows deductions only for donations made in the form of money, not in kind. The CIT found that the AO had not verified the facts properly and considered the assessment erroneous and prejudicial to the interests of the revenue, issuing a notice under Section 263 of the Act. 2. Nature of Donation (Cash vs. Kind): The assessee contended that although the donation was made in the form of equipment, the payment was made by cheque directly to the suppliers on behalf of the donee, which should be considered as a donation in cash. The assessee supported this claim with a certificate from the Medical Superintendent of the hospital, confirming the donation was utilized for purchasing ICU equipment. The CIT, however, maintained that the donation was in kind, as the invoices were issued in the name of the assessee and not the donee. The CIT cited various judicial precedents, including the Hon'ble Supreme Court and Gujarat High Court decisions, to support the view that only donations in cash qualify for deduction under Section 80G. 3. Validity of the Order under Section 263 of the Income Tax Act: The assessee argued that the AO had applied her mind and allowed the deduction after considering all relevant facts, including the letter from the hospital. The CIT's action was deemed a change of opinion rather than a correction of an erroneous order. The assessee cited several judicial decisions to argue that if the substance of the transaction is a money transaction, the deduction under Section 80G should be allowed. The Tribunal found that the AO had indeed considered the facts and allowed the deduction appropriately. The Tribunal also noted that the genuineness of the donation was not in question, and the payments were made directly to suppliers on behalf of the donee to expedite the procurement of medical equipment. Conclusion: The Tribunal concluded that the CIT's order under Section 263 was based on a change of opinion and not on new facts. The Tribunal found that the AO had correctly allowed the deduction under Section 80G, as the substance of the transaction was a money donation. The Tribunal set aside the CIT's order and upheld the AO's decision to allow the deduction. Final Judgment: The appeal of the assessee was allowed, and the order passed by the CIT under Section 263 was set aside. The AO's decision to allow the deduction under Section 80G was upheld.
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