Commissioner of Income Tax vs Madura Mills Co. Ltd.

N.V. Balasubramanian, J.—The Tribunal has stated a case u/s 256(1) of the IT Act, 1961, and referred the following two questions of law

in relation to the assessment of the assesses for the asst. yrs. 1971-72, 1972-73 and 1973-74:

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that only a portion of the expenditure,

which was incurred by the assessee on its motor cars which were placed at the disposal of its employees/directors should be taken as hit by the

provisions of Sections 40(a)(v)/40A(5) and 40(c), respectively, and not the total amount of the expenditure incurred on the vehicles which resulted

in the provision of perquisite to the employees/directors of the assessee-company?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to relief u/s 80G in

respect of the donations made in kind?

Regarding the first question of law referred to us, it is submitted that the decision of this Court in Commissioner of Income Tax Vs. Madura

Coats Ltd., would squarely apply to this case and on the basis of the said decision, the view of the Tribunal is not sustainable in law. Following the

aforesaid decision in CIT v. Madura Coats Ltd., the first question is answered in favour of the Revenue and against the assessee.

As far as the second question is concerned, the said issue is covered by the decision in H.H. Sri Rama Verma Vs. Commissioner of Income

Tax, Ernakulam, . In the said decision, the Supreme Court has held that even prior insertion of Expln. 5 to Section 80G of the IT Act, 1961, the

donation must be a sum of money paid by the assessee and not of kind to qualify for deduction u/s 80G of the Act. Hence, the donations in kind

do not qualify for deduction u/s 80G of the Act. Therefore, the assessee is not entitled to deduction u/s 80G of the Act for the donation made in

kind and the view of the Tribunal holding that the assessee would be entitled to deduction of donations made in kind is patently erroneous in point

of law. Accordingly, the second question is also answered in favour of the Revenue and against the assessee.

However, there will be no order as to costs.