(Appeal from the judgment and order dated April 11, 1975, of the Kerala High Court in I.T.R. No.6 of 1974).

(a) Income-tax---

----Donations---Donations to charitable institutions, etc: -Deduction from total income available only where donation is by payment of an amount of money---Donations in kind do not qualify for deduction.

The language used in section 80G(2)(a) of the Indian Income-tax Act, 1961, is clear and unambiguous. On a plain reading of the section, it is apparent that an assessee is entitled to claim deduction from his income on the amount of money paid by him as donation to the authorities and for the causes specified therein. The context in which the expression "sums paid by the assessee" has been used makes the legislative intent clear that it refers to the amount of money paid by the assessee as donation. The Act provides for assessment of tax on the income derived by an assessee during the assessment year, and the income relates to the amount of money earned or received by an assessee. Therefore, for purposes of claiming deduction under section 80G(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 not contemplate donations in kind. Donations may be made by supplying goods of various kinds including building, vehicle or any other tangible property but such donations, though convertible in terms of money, do not fall within the scope of section 80G(2)(a) and will not entitle an assessee to deduction. Donation of shares of a company does not amount to payment of any amount though the shares, on their sale, may be converted into money, and the donation so made does not fall within the ambit of section 80G(2)(a). 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 provision for granting relief to an assessee.

Explanation 5 added to section 80G by the Indian Finance Act, 1976, is not retrospective in nature but indicates the legislative intent behind section 80G(2) prior to the addition of. the Explanation.

C.I.T. v. Amonbolu Rajiah (1976) 102 ITR 403 (AP), C.I.t. v. Gopal Krishna Singhania [1980] 121 ITR 260 (All.) and C.I.T. v. Dhirajben R. Amin (1983] 141 ITR 875 (Guj.) approved.

C.I.T. v. Associated Cement Co. Ltd. [1968] 68 ITR 478 (Bom.), C.I.T. (Addl.) v. Abhai Maligai (1978) 113 ITR 737 (Mad.) and C.I.T. v. Bangalore Woollen, Cotton and Silk Mills Co. Ltd. (1973) 91 ITR 166 (Mys.) not approved.

(b) Income-tax---

----"Expression any sums paid by the assessee"---Meaning.

Decision of the Kerala High Court affirmed.

S. Muralidhar and Mrs. Saroja Gopalakrishnan, Advocates, for Appellant.

B.B. Ahuja, Manoj Arora and Ms. A. Subhashini, Advocates, for Respondent.

JUDGMENT

This appeal by certificate under section 261 of the Income-tax Act, 1961, and under Article 133 of the Constitution is directed against the judgment of a Division Bench of the High Court of Kerala dated April 11, 1975, holding that the appellant was not entitled to the benefit of section 80G of the Income-tax Act, 1961, in respect of the donations made by him in the previous years.

The appellant is an assessee under the Income-tax Act. He donated equity shares of Nirlon Synthetic Fibres and Chemicals Ltd. having a face value of Rs.12,50,000 to each of two trusts, nrmely, H.H. Maharani Setu Parvati Bayi Trust and H.H. Princess Lakshmi Bayi Trust. The total donation, according to the assessee, amounted to Rs.25,00,000. For the assessment year 1968-69, the assessee claimed exemption under section 80G of the P.; t in respect of the aforesaid donations made by him to charitable trusts. The Income-tax Officer rejected the claim. On appeal, the Appellate Assistant Commissioner directed the Income-tax Officer to call for the relevant receipt and, if satisfied with the admissibility of the deduction claimed, to grant the deduction according to law. The Revenue preferred an appeal before the Appellate Tribunal. The Tribunal held that the expression "sums" occurring in section 80G did not include any donation made in kind in the shape of shares; it, therefore, set aside the order of the Appellate Assistant Commissioner. On a reference, the High Court agreed with the view taken by the Tribunal. Hence, this appeal.

The relevant provisions of section 80G, as applicable to the instant case (as it then existed), are as under:

"80G(1). In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, an amount equal to,---

(a) where the assessee is a company, fifty per cent; and

(b) in the case of any other assessee, fifty-five percent. of the aggregate of the sums specified in sub-section (2).

(2) The sums referred to in sub-section (1) shall be the following, namely--

(a) any sums paid by the assessee in the previous year as donations to...

(iv) any other fund or any institution to which this section applies, or"

The language used in section 80G(2)(a) is clear and unambiguous. On a plain reading of the section, it is apparent that an assessee is entitled to claim deduction from his income on the amount of money paid by him as donation to the authorities and for the causes specified therein. The use of the expression any sums paid" contemplates payment of an amount of money. One of the dictionary meanings of the expression "sum" means any indefinite amount of money. The context in which the expression "sums paid by the assessee" has been used makes the legislative intent clear that it refers to the amount of money paid by the assessee as donation. The Act provides for assessment of tax on the income derived by an assessee during the assessment year; the income relates to the amount of money earned or received by an assessee. Therefore, for purposes of claiming deduction from income-tax under section 80G(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 not contemplate donations in kind. Donations may be made by supplying goods of various kinds including building, vehicle or any other tangible property but such donations, though convertible in terms of money, do not fall within the scope of section 80G(2)(a) entitling an assessee to deduction. Donation of shares of a company does not amount to payment of any sum or amount though the shares, on their sale, may be converted into money. But the donation so made does not fall within the ambit of the aforesaid section. 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 provision for granting relief to an assessee.

There has been a conflict of opinion between the various High Courts on the interpretation of section 80G(2)(a). In C.I.T. v. Associated Cement Co. Ltd. (1968) 68 ITR 478 (Bon); Addl. C.I.T. v. Abhai Maligai (1978) 113 ITR 737 (Mad) and C.I.T. v. Bangalore Woollen, Cotton and Silk Mills Co. Ltd. (1973) 91 ITR 166 (Mys), Courts have taken the view that, while interpreting section 80G(2)(a), the substance of the nature of the transaction. should be taken into account and it is not necessary that the donation must be in cash. As against this view, other High Courts in C.I.T. v. Amonbolu Rajiah (1976) 102 ITR 403 (AP); C.I.T. v. Gopal Krishna Singhania (1980) 121 ITR 260 (All) and C.I.T. v. Smt. Dhirajben R. Amin, (1983) 141 ITR 875 (Guj), have held that section 80G(20(a) does not contemplate any donation in kind; instead, the expression "sums" relates to the cash amount of money which may have been I donated by the assessee. On a careful scrutiny of the two opinions in the aforesaid judgments, we are in agreement with the view taken by the High Courts of Andhra Pradesh, Allahabad and Gujarat in holding that section 80G(2)(a) contemplates only cash amount of money as donation, for claiming relief of deduction and it does not refer to any donation made in kind.

It appears that, in view of the conflicting opinions expressed by the various High Courts, Parliament intervened and added Explanation 5 to section 80G by the Finance Act, 1976. Explanation 5 reads as under:

"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."

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.

We, therefore, agree with the view taken by the Kerala High Court. The appeal fails and is, accordingly, dismissed. There would be no order as to costs.

1242/T Appeal dismissed.