Law: Income Tax Act, 1961

Section: 261

(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…

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