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TMI Blog1977 (11) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80G(2)(b) of the Income-tax Act, 1961, was disallowed on the ground that there is no cash donation to the temple. The Income-tax Officer treated the amount as income in assessing the assessee to tax. On appeal before the Appellate Assistant Commissioner the assessee contended that the donation, under the circumstances of the case, does not cease to be so merely because a building was erected with the assessee's money. The assessee further contended that the entire agreement must be taken note of and that in substance there was donation of money with which the building was erected and rebate ought to have been allowed. Section 80G(1) of the Income-tax Act, 1961, lays down that: "In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,- (i) in a case where the aggregate of the sums specified in sub-section (2) includes any sum specified in sub-clause (vii) of clause (a) thereof, an amount equal to the whole of such sum plus fifty per cent. of the balance of such aggregate ; and (ii) in any other case, an amount equal to fifty per cent. of the aggregate of the sums specified in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the building and handed it over to the temple on November 30, 1968, and had requested the temple to give them a letter acknowledging donation of the building for production before the income-tax authorities, evidently to claim rebate under section 80G(2)(b) of the Act. Explanation 5 to section 80G(2) of the Act was inserted by the Finance Act, 1976, with effect from 1st April, 1976, probably with the object of getting over the effect of decisions such as the one rendered by the Bombay High Court in the aforesaid Commissioner of Income-tax v. Associated Cement Co. Ltd. [1968] 68 ITR 478. The Explanation reads thus: "For the removal of doubts, it is hereby declared that no deduction shall be allowed under this section in respect of any donation unless such donation is of a sum of money." The learned counsel for the revenue relied upon the decision in Jogendra Nath Naskar v. Commissioner of Income-tax [1969] 74 ITR 33 (SC), where at page 41, the Supreme Court has extracted the following observation of Lord Sterndale M. R. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 2 KB 403 (CA): "I think it is clearly established in Attorney-General v. Clarkson [1900] 1 Q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the substituted section are to be dealt with by the new procedure. If the procedural alteration is closely and inextricably linked with the changes simultaneously introduced in another part of the statute dealing with substantive rights and liabilities, it is not possible to give retrospective operation to the amendment regarding procedure unless the legislature has indicated such an intention either by express words or by necessary implication. It appears to us to be clear that the two changes introduced in section 271(1) of the Act by the Finance Act, 1964, consisting of the deletion of the word 'deliberately' which occurred in clause (c) and the insertion of the Explanation at the end of the said sub-section are very closely inter-connected and they form integral parts of one scheme. This is manifest from the fact that the deeming provision contained in the Explanation obviously proceeds on the basis that for the purposes of the latter part of clause (c) of section 271 (1)(c) the mere furnishing of inaccurate particulars of income by an assessee is sufficient and that it is not necessary to establish for the purposes of section 271(1)(c) that the assessee has 'deliberately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees constructed the building at their cost and handed it over to the temple on November 30, 1968. When the assessees did so, they clearly intended that they should have the benefit of section 80G(2)(b) of the Act for they had requested the temple to give them a letter acknowledging the donation of the building for being produced before the income-tax authorities, evidently to claim the rebate. In Commissioner of Income-tax v. Associated Cement Co Ltd. [1968] 68 ITR 478 (Bom), referred to, the University of Bombay wrote to the chairman of the board of directors of the assessee-company to persuade the directors of the company to arrange for the fabrication of a small rotary experimental furnace for the department of chemical technology. The assessee put up a kiln at a total cost of Rs. 6,600 for which they passed two resolutions. The Income-tax Officer held that the rebate under section 15B of the old Act was not admissible. But the Appellate Assistant Commissioner differed from him and directed rebate being allowed, and that order was confirmed by the Tribunal on appeal. What was urged in the High Court on behalf of the revenue was that the donation was of immovable property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the total amount under section 88 of the Act, as it stood before its omission. The Income-tax Officer and the Appellate Assistant Commissioner disallowed the claim on the ground that the donation was not made in cash. But the Income-tax Appellate Tribunal differed from them and allowed the claim holding that the donation was made in cash. The Tribunal also found that the donation in kind was not precluded for the purpose of allowance of rebate under section 88 of the Act. The High Court held that the Tribunal's view that donation in kind was not precluded for the purpose of allowance in rebate in terms of section 88 of the Act cannot be said to be correct. Referring to the decision of the High Court of Bombay in Commissioner of Income-tax v. Associated Cement Co. Ltd. [1968] 68 ITR 478 mentioned above, the learned judges have observed in that judgment that they fail to see from the judgment in that case how one can deduce that a donation in kind can also earn rebate under section 88 of the Act and that, on the other hand, the finding of the Bombay High Court was that in substance it was the amount that was donated and not the kiln. The learned judges, however, agreed with the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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