TMI Blog1986 (6) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard is not admissible. Under Explanation 5 to section 80G, it is laid down that no deduction is allowable under section 80G in respect of any donation unless such donation is of a sum of money. The donation of fixed deposit receipt cannot be said to be of a sum of money. Moreover, the assessee has not produced any evidence to show that the Shreyas Foundation was recognised for the purpose of deduction under section 80G for the assessment year 1977-78. In the circumstances, the assessee's claim for deduction under section 80G is rejected." 4. In appeal before the Commissioner (Appeals) the assessee once again pressed for obtaining deduction as contemplated under section 80G in respect of the donation of Rs. 7 lakhs made to Shreyas Foundation. Referring to Explanation 5 inserted in section 80G with effect from 1-4-1976, the Commissioner (Appeals) confirmed the action of the ITO in the following manner : "The Explanation is specific and has been inserted with effect from 1-4-1976 with a view to prohibiting claims of deductions under section 80G on donations made otherwise than in cash. The requirement now is that the donation should be in a 'sum of money' before it can qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act ...." Further, the learned counsel for the assessee stated that in the said decision the Hon'ble High Court has also considered Explanation 5 inserted in section 80G with effect from 1-4-1976 in the following manner : "... However, it does appear from para 61 of the memorandum explaining the provisions of the Finance Bill, 1976, that an impression was created that the judicial pronouncements went to the length of saying that even donations in kind would fall within the purview of section 80G of the Act. According to the observations of the Andhra Pradesh High Court we are of the opinion that none of the Judicial pronouncements, referred to earlier, have laid down in categorical terms that donations in kind fall within the purview of section 80G of the Act. All that the decisions have stated is that the Courts must examine the substance of the donation and if on an examination of the relevant evidence if finds that the donation is of a sum of money, it may grant rebate sought by the assessee. The insertion of Explanation 5 by the Finance Act, 1976, with effect from 1st April, 1976, was merely the clarify this doubt which had arisen on account of an erroneous reading of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this connection, he further submitted that after the insertion of Explanation 5 in section 80G, with effect from 1-4-1976, only donations made in cash would qualify for deduction under section 80G. Inviting our attention to the Law Laxicon by Venkataraman, Vol. II, pp. 929 and 930, he further submitted that fixed deposit receipts cannot by any stretch of imagination be termed as money. He further submitted that fixed deposit receipts are not generally transferable and are not treated as legal tender. They are simply actionable claim which cannot be reduced to money equivalent to their fact value. In the instant case, the fixed deposit receipts are in fact 'members loan receipt' of a private limited company, viz., Shahibag Entrepreneurs (P.) Ltd. and, therefore, till the day of maturity of such receipt its value in money may go down if the said company is in a bad financial shape. In other words, the learned departmental representative wanted to impress upon us that since the assessee had donated Rs. 7 lakhs in kind, she was not entitled to deduction as contemplated under section 80G. In support of his submission, the learned departmental representative relied on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and we find considerable force in the stand taken on behalf of the revenue. Reading closely the decision in the case of Smt. Dhirajben R. Amin, we are of the view that the Hon'ble High Court has not given its decision on the implication of the insertion of Explanation 5 in section 80G. In the extract quoted above the Hon'ble High Court has observed thus that 'we, therefore, do not consider it necessary to examine in detail the contention of the learned counsel for the revenue that Explanation 5 inserted by the Finance Act, 1976, has retrospective application. Further, in that very paragraph the Hon'ble High Court has clearly observed that section 80G is attracted only if the donation is in cash and not in kind. Since, the provisions of Explanation 5 were not examined in detail, the Hon'ble High Court had observed that one has to see the substance of the matter and not the form. It is pertinent to note that in the said decision the Hon'ble High Court was concerned with the assessment year prior to the assessment year 1976-77 when Explanation 5 to section 80G was not brought on the statute. However, in the instant case, we are concerned with the assessment year 1977-78 and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Rs. 1,71,225 made by her by cheque on 15-3-1977. Here also, the Commissioner (Appeals) upheld the action of the ITO as under : "In my view this contention of the appellant's representative cannot be accepted, when the letters of the law are clear and unambiguous, the interpretation as put according to the letters of the law prevails and nothing can be read in or inserted into such letters to give them any wider or different meaning. The amendment has been done to remove hardship and is not clarificatory but extends the date for filing the estimate to a date which is same as the date of the last installment due. Since the estimate filed on 15-3-1977 was on the date the last instalment was due and was not filed before the date who the last installment was due, it cannot be called as an estimate in accordance with section 212 and the payment in question cannot thus be classified as 'advance tax'. It is a payment made otherwise than by way of advance tax. Under section 139(8), this amount would have been deductible if it had been paid as advance tax but was not deductible when it was paid otherwise than by way of advance tax or TDS. In this view of the legal position, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent had not chosen to carry the matter in appeal to the Supreme Court. From this it becomes evident that even the department endorsed the view of the Bombay High Court regarding theory of substance vis-a-vis donation in cash actually. However, the Andhra Pradesh High Court held that donation has to be on the basis of payment in cash. But then the controversy was more complicated on the reading of the decision of the Bombay High Court and the Andhra Pradesh High Court as to what was required to be considered whether actual cash or cash in substance or what was required to be denied, for the purpose of benefit of deduction, was actually donation in kind. From the amendment carried out it appears that what is intended is, to achieve that donation, not made in cash (either actual or in substance), should be disqualified for the purpose of deduction. Because even before the amendment inserting 'sum of money', the 'sum' was always treated as meaning quantity of money. Therefore, literally, there does not appear to be any change in the language with regard to the term 'donation in cash.' 1.2 In clause 61 explains the relevant change. After dealing with the aspect of 'donations in kind' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust and the letter of guarantee issued by the guarantor was also assigned in favour of the trustees. All these factual data only lead to the inference that the transaction of donation was, in substance the donation in cash, and not in kind. The ratio of decision of the Gujarat High Court in the case of Smt. Dhirajben R. Amin clearly applies to the facts of the case in support of the assessee's stand, and, therefore, the matter is required to be decided in favour of the assessee. Incidentally, a question was put to the learned departmental representative as to what can be the intention behind denying the benefit of section 80G, to donation in kind ? No convincing reasons came to be advanced except that of difficulty in put in the value in money terms of the donation in kind. I have tried to find out convincing reasons for same but in vain. Even no light could be drawn from judicial pronouncements or notes on clauses of amending Act. This further fortifies the views that substance theory of donation in cash still holds good. To put simply, if the donation is convertible into money or is required to be converted into money at future date because of characteristic of donation as put i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 1977-78. The learned Judicial Member, who has rejected the assessee's claim and confirmed the order of the Commissioner (Appeals) has confined himself to only one aspect of the matter, namely, whether the fixed deposit receipt is or is not 'a sum of money. However, while accepting the assessee's claim for deduction, the learned Accountant Member has not only held that in circumstances of the case the fixed deposit receipt could be treated as 'a sum of money' but has also observed that the income of donee-trust is exempt under section 11 in view of the Tribunal's decision in that case. 3. Though the point of difference is stated in broad terms, the point in dispute is whether the fixed deposit receipt is 'a sum of money', there being no dispute about the proposition that after the insertion of Explanation 5 in section 80G, the donation to qualify for deduction under section 80G, has to be 'a sum of money. In this context, it may be desirable to mention that the fixed deposit was in the name of the assessee with Shahibag Entrepreneurs (P.) Ltd. Shahibag Entrepreneurs (P.) Ltd. a family concern. The fixed deposit was sufficiently secured and on maturity, on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender. According to him, fixed deposit receipt is at best, an actionable claim which cannot be reduced to money equivalent of its face value. Reliance in this behalf is placed on the Gujarat High Court's decision in the case of Bhagwandas Narayandas and another decision of the same High Court in the case of Sadiqali Samsuddin. 7. Having heard the parties and after going through the orders of the learned members carefully, I am of the view that, ordinarily, fixed deposit receipt cannot be equated with 'a sum of money'. In order to consider whether the decision relied upon by the counsel for the assessee support his claim. I have carefully gone through those decisions. The section involved in the Bombay Higha Court's decision in the case of Associated Cement Co. Ltd. was section 15B of the Indian Income-tax Act, 1922. No doubt, section 15B had also used the expression 'in respect of any sums paid as donations. The provision like Explanation 5 of section 80G, which in terms provides that 'no deduction shall be allowed unless the donation is of a sum of money, was not there in section 15B. Therefore, on the face of it, the Bombay High Court's decision is not applicable in this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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