9911796707
TMI Blog2001 (6) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Rs. 6,00,000 ------------- Rs. 12,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheques were issued." Before us the learned counsel for the assessee Ms. B. Mala, Chartered Accountant, placed on record a small compilation consisting of 23 pages comprising therein the following materials: 1. Copy of accounts. 2. Copy of cheques dated 31-3-1992 issued to the trusts. 3. Copy of receipts from charitable trusts dated 31-3-1992. 4. Extract from Finance Bill, 1976 5. Copy of Circular No. 261 dated 8th August, 1979. 6. Copy of decision in Kangold (India) Ltd. v. CIT [1999] 239 ITR 842 (Guj.) It was certified that the above documents were filed with the Assessing Officer. She contended, to say in brief that: The assessee has been following the mercantile system of accounting, Once the cheque has been issued and receipt obtained from the donee-trusts, the date of payment is to be taken as the date of the cheque. In this connection section 43(2) may be referred to, wherein it has been mentioned as follows:-- "'paid' means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head 'profits and gains of business or profession'." Next we have to see what is the time of realisation. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasonable period of fifteen days (cheques issued on 31-3-1992 had been collected on 11-4-1992). Further the Circular No. 261 dated 8-8-1979 issued by the Central Board of Direct Taxes says that in terms of rule 80 of the Compilation of the Treasury Rules, if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule 79(ibid) is honoured on presentation the payment is deemed to have been made on the date on which it was handed over to the Government bankers. Applying the same proposition enunciated out of the above Circular, in this case on hand the date of payment of the donation is to be deemed to be 31-3-1992 and not 11-4-1992. The Hon'ble Gujarat High Court in the case of Kangold (India) Ltd., while dealing with the issue of payments by cheque, has held as under:-- "It is settled legal position that in case of payment by cheque, the payment is deemed to have been made on the date of delivery of the cheque and not on the date of encashment when the cheque was honoured." In the above case the Hon'ble Gujarat High Court has followed the decision of the Apex Court in the case of CIT v. Ogale Glass Works [1954] 25 ITR 529. In that case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it is also in a different context of deductions in respect of business activity. Those interpretations cannot help the assessee in the facts of this case. Similarly the Circular relied upon by the learned counsel for the assessee, namely, Circular No. 261 is regarding tax payment, i.e. payment of Government dues and not about payment of donation. The Gujarat High Court decision also is distinguishable on facts in the sense that it deals with payment of tax and not payment of donation. "Gross total income" means the total income computed in accordance with the provisions of this Act, before making any deductions under this Chapter. Deductions under Chapter VIA are to be allowed out of gross total income only. In other words it should be out of the income of the relevant assessment year in order to claim deduction under section 80G of the Income-tax Act. In this case on hand there was no bank balance at the Coonoor branch of the bank and only on 11-4-1992 the assessee had deposited funds into the Syndicate Bank at Coonoor on which date the cheques issued to the donee trusts were encashed. Therefore, these donations cannot be said to be made out of the gross total income of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the accounting year ending 31-3-1992 relevant to the assessment year 1992-93 or the same would fall in the accounting year 1992-93 relevant to the assessment year 1993-94; and (ii) for claiming deduction under section 80G whether the payment of donation should be out of the gross total income of the relevant accounting year only. 8.1 Let us take up first the point whether the cheques issued on 31-3-1992 are to be treated as donations made during the accounting year ended on 31-3-1992 relevant to the assessment year 1992-93 or not. In this connection reliance of the learned counsel for the assessee on section 43(2), section 43B, the Finance Bill, 1976, the CBDT Circular No. 261 dated 8-81979 and the decision of the Gujarat High Court in Kangold (India) Ltd's case, in which the decision of the Apex Court in Ogale Glass Works Ltd.'s case had been followed, are in our considered opinion more relevant to the point at issue in contrast to the contention of the learned departmental representative that they cannot be applied to the facts of the case. The Gujarat High Court in Kangold (India) Ltd.'s case following the Apex Court decision in Ogale Glass Works Ltd.'s case has held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "any sums paid in the previous year by the assessee out of his (its) income chargeable to tax." Similarly sections 80D(1) (operative upto assessment year 1984-85), 80E(1) (operative upto assessment year 1984-85) and 80F(1) (operative upto assessment year 1985-86) also expressly and specifically stated "out of his (its) income chargeable to tax". Section 80G does not state so expressly and specifically. On the other hand, section 80G(2)(a) and (b) states "any sums paid by the assessee in the previous year as donations". On a comparison of the provisions of section 80G with those of the then sections 80C, 80D, 80E and 80F, it emerges out that the donations eligible for deduction under section 80G, have not been riddled with the condition that the same must come out of the income chargeable to tax and that too of the previous year concerned. Even if the donations are made out of exempted income of the relevant previous year or out of chargeable income of earlier years or out of capital, the same may be eligible for deduction under section 80G on fulfilment of all the other conditions laid down in that regard. It may be that wider considerations of public benefit might have induced the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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