9911796707
TMI Blog2025 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by assessee u/s 80G, without properly appreciating the directions of Hon'ble ITAT. Appellant prays that disallowance made is not in consonance with the specific directions of Hon'ble ITAT and deserves to be deleted. 1.1 That, Id.CIT(A) has further erred in confirming the disallowance of Donation made by assessee, by solely relying upon the observations of Id.AO and further by brushing aside the submission made and evidences adduced by assessee. Appellant prays that donation was actually made in monetary terms as the assessee has directly made the payment against the amount of donation to the suppliers of the donee societies thus the same cannot be termed as "Donation in kind" and therefore deduction has been rightly claimed by assessee, which deserves to be allowed as such. 2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 3. Brief facts of the case are that the assessee filed its E-return of income for the A.Y. 2013-14 on 06.09.2013 declaring total income at Rs. 88,15,430/-, Assessment was completed vide order 143(3) of the Act dated 20.03.2016 at total income of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AN:AAATR5094F), S.M.S. Hospital, Jaipur at Rs. 27,24,590/- and to Rajasthan Medicare Relief Society, S.P.M.C.H.I., Jaipur (PAN:AAABR0418D) at Rs. 1,00,43,086/- both totaling to Rs. 1,27,67,676/- 6.2.1 In second appeal filed by the assessee before the hon'ble ITAT, the hon'ble ITAT, Jaipur Bench, Jaipur vide its order dated 01/10/2018 in IT appeal No.346/JP/2018 titled as Nash Fashion (India) Ltd. Vs. DCIT has set aside the matter. of claim of deduction u/s 80G to the file of the Relevant Para of the order of ITAT is reproduces as under.- Para 8 "The question for consideration is therefore the determination of the finer distinction between the cash donation and donation in kind. In both the cases, there is outflow of money from the assessee's hand. However, there could be various scenarios in particular facts and circumstances of each case. In one scenario, the money is going directly from the assessee to the donee which doesn't create any confusion and it will be clearly eligible for deduction. In another scenario, where the assessee has an existing asset/property/stock-in-trade in its possession/control and the same is thereafter transferred by way of donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t property in kind. In our view, the facts of the present scenario thus needs to be analysed in detail to determine which of the above scenarios it fits in and bases the same, whether the assessee is eligible for deduction under section 80G of the Act." 6.2.2 In terms of the issue set aside by the Hon'ble ITAT, the AO was given directions to examine the transactions from the point of view of two scenarios. First being that whether the assessee purchased the equipment in its own right and then donated it to the societies, and the second being whether the societies acquired the equipment's in their own right and then asked the assessee to make payments to the suppliers. 6.3 The assessing has noted relevant points in the order: * According to AO it was apparent from the correspondence that Sh. Jai Singh Sethia would have discussed the requirement and technical specifications of the equipments required, with the office bearers of the respective societies and then placed the order for supply of the same. Thus the first scenario is applicable in this case. * The Assessing officer has also pointed that from the perusal of stock register entries of the societies is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon'ble High Court and the order allowing the deduction u/s 80G by the learned ITAT was sustained by the Hon'ble High Court vide its judgment dated 11.8.2015. 6.5 The appellant did placed its reliance on the same judgement before the Hon'ble ITAT, Jaipur also but In para-11 of its order, the Hon'ble ITAT has clearly distinguished the decision of the coordinate bench in the case of the assessee for A.Y. 2009-10 and 2012-13. The Hon'ble ITAT has also specifically mentioned that the decision of the Hon'ble Rajasthan High court in the case of the assessee was distinguishable on facts and circumstances being related to exercise of powers of Ld. CIT u/s 263 of the I.T. Act. The Hon'ble ITAT also observed that apparently the decision of the Hon'ble Supreme Court in the case of H.H. Sri Rama Verma quoted at 1991 187 ITR 308 SC was not brought to the attention of the Hon'ble High Court. Thus appellant's reliance on the said judgement is not taken for consideration in view of tribunal's observation. 6.6 Donation in kind are not subject to benefit of Sec. 80G and therefore, the donor are not eligible to claim any deduction u/s 80G if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax under section BOG(2)(a), the donation must be a sum of money paid by the assessee. The plain meaning of the words used in the section does contemplate donations in kind. Since the expression and language used in section 80G(2)(a) is plain and clear, it is not open to the courts to enlarge the scope by its interpretative process founded on the basis of the object and purpose underlying the provisions for granting relief to an assessee. Further, in 9 Standards & Norms, Legal Series Vol. XV, Issue 11 NPO TAXATION-CONTRIBUTION IN KIND view of the conflicting opinions expressed by the various High Courts, the Parliament intervened and added Explanation 5 to section 80G by the Finance Act, 1976. After the insertion of the aforesaid Explanation, there cannot be any doubt that, for purposes of claiming deduction, only cash amounts which may have been donated would be taken into account. No doubt this provision is not retrospective in nature, none the less it indicates the legislative intent behind section 80G(2)(a) even prior to its amendment. Therefore, the assessee's claim was rightly rejected" 6.6.3 Considering the facts of the case and respectfully following the judgement of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, one u/s. 40(a)(ia) and the other u/s. 80G, to the file of the A.O., who vide the assessment order u/s. 143(3) r.w.s 254 dated 30/11/2019 allowed deduction of Rs. 36,00,008/- u/s. 40(a)(ia) but maintained balance addition of Rs. 22,81,215/- u/s. 40(a)(ia) of the Act. The assessee is not in appeal against maintenance of remaining addition of Rs. 22,81,215/-. But as regards assessee's claim of deduction u/s. 80G at Rs. 1,27,67,676/-, the same was not allowed and he again made the addition of Rs. 1,27,67,676/-. Against this addition the assessee filed appeal before the ld. CIT (A) who vide the impugned order dismissed assessee's appeal. Against this dismissal order of the ld. CIT (A) the assessee is in appeal before the hon'ble ITAT. 1.2 That the observations of the learned CIT[A] that the donation given is otherwise than by way of money is not correct. The factual position is that on the request of M/s. Rajasthan Medicare Relief Society, S.M.S. Hospital, Jaipur as well as SPMCHI, Jaipur, the cheques were issued by the assessee for total amount of Rs. 1,27,67,676/- in favor of supplier's of medical equipment, who directly supplied and installed the equipment in both the hospitals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the appellant assessee to the suppliers of those medical eqipments by way of account payee cheques. Meaning thereby what the appellant assessee donated was money i.e. cash and not donation in kind. Besides the medical equipment were directly sent by the suppliers to the above mentioned Hospitals and the same were installed at the Hospitals with the prior consent of the Hospital authorities and the medical equipment and machineries were installed in the hospital to provide medical assistance to the poor people. 1.6 That the AO failed to note that in this case on the advice of the hospital authorities the money was sent directly by the assessee to the suppliers of the medical equipment and machineries for and on behalf of both the Hospitals and there was a due confirmation by hospital authorities in regard to medical equipment and machineries being installed at the above mentioned Hospitals and amount having been paid by account payee cheque by the assessee to the suppliers. It is further submitted that the AO should have appreciated that after installation of the medical equipments in Hospitals there was a counter check by the government authorities i.e. medical superinten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the donee. The factual position as given above is that the assessee had made the payments by cheques to the suppliers of equipments on behalf of donee which tantamount to donation made as a sum of money. That the AO should have seen the substance and not the form of the donation. After viewing the totality of facts your honour will please find that the transaction in substance is a money transaction and the donation is in fact a donation in cash and it is prayed that assessee's claim of deduction u/s. 80G should be allowed. 1.10 It is further submitted that the assessee had made payments by cheque to suppliers of equipments/items and goods were supplied/installed at SMS Hospital as well as Sir Padampat Matri Avam Shishu Swasthya Sansthan (S.P.M.C.H.I) JLN Marg, Jaipur. The assessee filed two Certificates both dated 17.08.2013 of Medical Superintendent Sir Padampat Matri Avam Shishu Swasthya Sansthan (S.P.M.C.H.I) JLN Marg, Jaipur and Chief Accounts Officer, SMS Hospital Jaipur regarding receipt of the equipments/items. On similar facts the ITAT Jaipur Bench in assessment year 2009-10, in assessee's own case, in ITA NO.298/JP/2014 assessment year 2009-10, relying on judgments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT assessee preferred an appeal before the Income Tax Appellate Tribunal which by order dated 5th Nov., 2014 allowed the claim of the assessee u/s. 80G of I.T. Act by holding that the order passed by Commissioner of Income tax u/s. 263 is not valid in law. Against this judgment of Hon'ble ITAT, Income tax department filed appeal before the Hon'ble Rajasthan High Court. The appeal number was DB Income tax Appeal No.54/2015. The appeal of the department was dismissed by the Hon'ble High Court and the order allowing the deduction u/s. 80G by the learned ITAT was sustained by the Hon'ble High Court vide its judgment dated 11.8.2015. 1.13 In regard to binding force of a High Court judgment the humble appellant craves leave to submit that a decision of a High Court would have binding force in the state in which the court has jurisdiction, but not outside that state. Decisions of the High Court are binding on the subordinate courts, authorities and Tribunal situated within its jurisdictional territory. 1.14 That in support of the above submissions the humble appellant craves leave to refer to and rely upon various judicial pronouncements mentioned in the enclosed sheet. If in the bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .I., they immediately contact persons like Mr. Jai Singh Sethia and put their immediate requirement of items like medical equipment, related items and/or bare necessities of the patients and their attendants/relatives. Such was the fact and circumstance in the previous year relevant to A.Y. 2013-14,which is year under appeal, when there arose necessity/requirement of medical equipment/machinery with Rajasthan Medicare Relief Society at SMS Hospital as well as at S.P.M.C.H.I, Jaipur, their management authorities approached the donor company Nash Fashion (India) limited (through its managing director Mr. Jai Singh Sethia) and put its requirement of medical equipment/machinery before the assessee company through its managing director Mr. Jai Singh Sethia and requested to fund for such acquisition/ purchase and in turn the assessee company agreed to bear the cost of such medical equipment. On assessee company's assurance, donee institution, namely, Rajasthan Medicare Relief Society contacted the manufactures/suppliers of such medical equipment and placed the order directly on the manufactures/suppliers of the medical equipment and thereafter the manufactures/suppliers directly supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Para 8 of page no. 20 & 21 setting-aside this issue of section 80G in ITA No. 346/JP/2018 for AY 2013-14 in the case of Nash Fashion (India) Limited versus The DCIT, Circle 2, Jaipur to the file of the AO to examine this issue afresh, it is humbly submitted as under: 1. In the above mentioned appellate order passed by the co-ordinate Bench in ITA No. 346/JP/2018 for AY 2013-14 in the case of Nash Fashion (India) Limited versus The DCIT, Circle 2, Jaipur, the co-ordinate Bench visualized various scenarios of donations on the facts and circumstances of each such case of donation in Para 8 at page no. 20 & 21 of the above mentioned order. Last of such scenarios is visualized by the co-ordinate Bench in last eleven lines of Para 8, which reads, "Another scenario is where there is a necessity/requirement of certain asset/property/equipment by the donee institution and it reaches out to the donor to fund such acquisition/purchase of asset/property/equipment. In this case, the donee institution places the order directly on the supplier of the asset/property/equipment, thereafter, the supplier supplies the equipment directly to the donee and they install the same at the premises of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s even mentioned in the invoice issued by the suppliers, which are of Jaipur city itself. The copy of invoices, installation and commissioning reports, etc., forms part of the paper book. The assessee company made the payment to the manufactures/suppliers on behalf of the donee institution through account payee cheques/banking channel. All the above mentioned facts of the modus operandi of the donation are duly mentioned in an affidavit duly signed and sworn by the managing director of the appellant company and it forms part of the paper book. 4. That from the perusal of modus operandi and facts & circumstances given above and the supporting documents forming part of paper book your honors will very kindly find that all the ingredients of the scenario mentioned in last 12 lines of Para 8 at page 20 & 21 of the order of the co-ordinate Bench mentioned above are present in this case which duly confirms that donation is by way of sum of money and not in kind." 7. The ld. AR for the assessee also further filed written submissions on 11.03.205 which reads as under:- "In continuation to part hearing which took place on 06/03/2025 and with reference to the observations/query made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) 48-63 9. The ld. AR of the assessee submitted that the assessee has is big corporation and has given similar type of donation in past and the same has been considered so. Even in the set aside proceeding the citeria given by the ITAT to be checked was met and for that he relied upon the following finding of the ITAT in ITA no. 346/JP/2018 dated 01.10.2018 wherein the ITAT held that [page 21 of ITAT order] Another scenario is where there is a necessity/requirement of certain asset/property/equipment by the donee institution and it reaches out to the donor to fund such acquisition/purchase of asset/property/equipment. In this case, the donee institution places the order directly on the supplier of the asset/property/equipment, thereafter, the supplier supplies the equipment directly to the donee and the install the same at the premises of the donee institution. The limited role of the donor in such a scenario is to fund such acquisition/purchase and make the payment to the supplier on behalf of the donee institution. The assessee situation is same what is settled by the ITAT and therefore, the denial of deduction was not correct. The assessee placed on record delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 271(1)(c) of the Income Tax Act, 1961 by the NFAC, Delhi for A.Y. 2013-14. The Hon'ble CIT(A), vide order dated 28.12.2023 partly allowed appellant appeal on ground No.4 and reduced penalty to 100% from 300%. 3. In the grounds of appeal before the Hon'ble ITAT the appellant has taken grounds that the CIT(A) has erred in confirming the penalty to the tune of 100% out of penalty levied by Ld AO u/s 271(1)(c) of the Income Tax Act, 1961. Further, the assessee claimed that the donation was made in monetary terms and deduction u/s 80G was genuinely claimed. The grounds of appeal taken by the appellant is not acceptable. The assessee was asked vide notice u/s 274 r.w.s 271(1)(c) of the IT Act dated 30.11.2019 followed by show cause notice dated 09.09.2021 and reminder letter dated 30.11.2021, as to why an order imposing a penalty u/s 271(1)(c) of the Income Tax Act, 1961 should not be made. Further, a show cause notice u/s. 271(1)(c) of the Income Tax Act, 1961 was sent to the designated verification unit through speed post and the same was delivered. In response to the notices, no reply was received from the assessee. Even after, the ample opportunities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, been interpreted in certain judicial pronouncements to include even donations in kind. As donations in kind were not intended to qualify for this concession, it is proposed to make a provision for the removal of doubts clarifying that no deductions will be allowed under section 80G unless the donation is a sum of money, that is to say, it is made in case (or by cheque, bank draft, etc.) and not in kind." 4. Moreover, the AD has also noticed that the appellant has also failed to furnish any evidence to the effect that the donee institutions are eligible for claim of 100% deduction out of gross total income. The AO has also made remarks that the amount of deduction claimed by the assessee is also not qualified for deduction as per provisions of section 80G(4). Section 80G(4) says that:- (4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi), (via) and (vii) of clause (a) and in clauses (b) and (c) of sub-section (2) exceeds ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in its own right. purchased/acquired the Once the assessee has asset/property/equipment, the title/ownership in such asset/property/equipment has been transferred by way of gift. The gift in such cases is thus gift in kind and the same won't be eligible for deduction. Another scenario is where there is a necessity/requirement of certain asset/property/equipment by the donee institution and it reaches out to the donor to fund such acquisition/purchase of asset/property/equipment. In this case, the donee institution places the order directly on the supplier of the asset/property/equipment, thereafter, the supplier supplies the equipment directly to the donee and the install the same at the premises of the donee institution. The limited role of the donor in such a scenario is to fund such acquisition/purchase and make the payment to the supplier on behalf of the donee institution. 9. If we look at the last two scenarios as discussed above, the finer distinction between these two scenarios is that in the first scenario, the assessee donor has purchased/acquired the asset/property/equipment in its own right and thereafter, the title/ownership in such asset/property/equipment has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above contentions of the ld AR need to be tested in terms of actual verifiable documentation right from placing the order by the Hospital authorities, raising of invoices by the supplier on the hospital authorities, delivery/supply/installation at the hospital premises and payment by cheque by the assessee equivalent to the invoice value directly to the suppliers. However, we find that there is nothing on record in terms of verifiable evidence/documentation in support of aforesaid contentions so raised by the ld AR. Further, we find that there is no finding recorded by the AO or the ld CIT(A) examining the aforesaid contentions so raised by the ld AR. In absence of the same, we are unable to take a view in the matter and the matter deserves to be set-aside. 11. Regarding reliance placed by the ld AR on the findings of the Coordinate Benches in earlier years which has been decided in favour of the assessee, we find that the decision of the Coordinate Bench in AY 2009-10 was rendered in the context of exercise of powers by the ld CIT u/s 263 where the AO has already examined the matter in the course of assessment proceedings u/s 143(3) and which has been followed subsequently by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation and delivery of the equipment was not with the premises of the assessee and the assessee has not recorded the purchase and merely recorded the donation in their books of account cannot be termed as donation in kind and it is purely a donation of cash. Even this issue has already been decided by the co-ordinate bench of this tribunal in past for other year we do not see no reason to hold that the donation was in kind. Since the evidence advanced before us clearly shows that the donation of was money and therefore the decision cited of having paid the donation in kind are not applicable and therefore, the appeal of the assessee is allowed. Even when the matter challenged by revenue before our High Court for earlier year allowance of donation that appeal was dismissed wherein the High Court has noted as under:- "Instant appeal u/s 260A of the Income Tax Act, 1961 ("Act") has been preferred against order of the Income Tax Appellate Tribunal ("Tribunal") dt. 05.11.20214 and the controversy confined to the deduction claimed by the assessee respondent of Rs. 86,41,387/- u/s 80G of the Act. The case as set up by the assessee before the Assessing Authority was that be being engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as taken following grounds of appeal:- "1. The facts and in the circumstances of the case and in law, Ld. CIT(A) has grossly erred in confirming the penalty to the tune of 100% out of penalty levied by Id.AO u/s 271(1)(c) of the Income Tax Act. 1.1 That, Id. CIT(A) has further erred in not considering the submission of made by assessee that the assessee actually made donation in monetary terms and deduction u/s 80G was genuinely claimed, which stood disallowed and this does not tantamount to concealment/furnishing of inaccurate particulars in any manner. It is therefore prayed that penalty confirmed by Id.CIT(A) deserves to be deleted. 1.2 That, Id.CIT(A) has further erred in confirming penalty imposed by Id.AO without recording independent satisfaction during penalty proceedings. Appellant prays that both Quantum and penalty proceedings are independent proceedings and conclusion drawn in quantum proceedings though relevant, cannot be solely relied upon for imposing penalty, and therefore penalty confirmed by ld.CIT(A) deserves to be deleted. 1.3 That, Id. CIT(A) has further erred in confirming the penalty ignoring the fact that donation was disallowed for the sole allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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