Desai, J.:— This is an application by the Commissioner under s. 256(2) of the I.T Act, 1961, and the Commissioner wants us to make an order in respect of the following two questions
“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the donation of machine worth Rs. 17,150 by the assessee-company as publicity and advertisement expenses under section 80G of the Income-tax Act, 1961?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in granting interest under section 214(1) to the assessee for assessment year 1972-73 on the excess amount paid which was not in accordance with the provisions of sections 207 to 213 of the Income-tax Act, 1961?”
2. We propose to deal with question No. 2 first. Pursuant to notice issued by the ITO under s. 210 of the Act, the assessee had made diverse payments by way of advance tax on June 29, 1971, September 20, 1971, December 21, 1971, and March 17, 1972. According to counsel for the Commissioner, the last mentioned payment, viz., the one made on March 17, 1972, was beyond the prescribed date which was March 15, 1972. According to his submission in order to be entitled to interest under the provisions of s. 214 of the Act, the payment of advance tax must have been made in accordance with the Schedule prescribed under ss. 207 to 213 and since the Schedule has not been adhered to, but there has been a default (though only of a period of two days) the assessee would not be entitled to interest under s. 214.
3. The question whether this is a proper reading of s. 214 is debatable. In any case, there is a clear finding by the Tribunal in para. 17 of its appellate order that the payment made by the assessee on March 17, 1972, has been accepted by the department as payment of advance tax instalment. All the other requirements of s. 214 having been satisfied, the Tribunal held that the assessee was entitled to interest in respect of the excess of advance tax so paid by it. In view of this factual finding that the payment, though belated by two days, was accepted by the department as payment of advance tax instalment, the conclusion that the assessee was entitled to interest does not give rise to any question of law and, accordingly, in our opinion, question No. 2 is not required to be referred to this court.
4. This brings us to a consideration of question No. 1. The assessee is Messrs. Traub India Pvt. Ltd. During the year, the assessee was likely to manufacture its 1,000th Traub Automat Lathe. In order to secure advertisement and publicity for its products the assessee decided to donate the 1000th lathe to the Government Poly Technical-Institute at Aundh which it did by arranging a function at its premises. In its assessment for the year under consideration the assessee claimed that deduction under s. 80G of the Act be allowed to it in respect of the said machine donated by it to the said institute. The ITO disallowed the claim of the assessee by observing that s. 80G refers to sums paid and the expression “sums paid” cannot include donation in kind. Being aggrieved by this disallowance the assessee went in appeal to the AAC. The AAC was of the view that the entire cost of the machine donated to the Poly Technical Institute at Aundh should be allowed as publicity aud advertising expenses and accordingly he directed the ITO to allow the cost of the said machine amounting to Rs. 17,150 to be deducted. In further appeal by the department to the Tribunal, the assessee relied on the contention which had prevailed with the AAC and in the alternative submitted that the decision of the Bombay High Court in the case of CIT v. Associated Cement Co. Ltd., [1968] 68 ITR 478 would also justify its contention that the fact that the assessee had donated the machine in kind and not in cash would not make any difference in claiming the said deduction. The departmental representative, on the other hand, relied on the plain language of s. 80G to meet the aforesaid contention. The Tribunal considered the aforesaid decision which was under s. 15B of the Indian I.T Act, 1922, and applying the same held that the donation in kind by the present assessee was also entitled to deduction under s. 80G of the said Act. It is this decision of the Tribunal which is sought to be assailed by the counsel for the Commissioner and for that purpose he has proposed a reference to this court on question No. 1.
5. In Associated Cement Company's case, [1968] 68 ITR 478 (Bom), the University of Bombay, through its department of chemical technology, requested the assessee-company for the fabrication of a small rotary experimental furnace for the department which would enable that department to complete an investigation of national importance. Two resolutions were subsequently passed by the directors of the assessee-company permitting expenditure of the aggregate amount of Rs. 6,600 for manufacturing the ‘pilot kiln’ and in the second resolution it was clearly indicated that it was this pilot kiln which was to be presented after manufacture to the University, Department of Chemical Technology (see page 485 of the report). Before the High Court the counsel on behalf of the revenue had contended that the language of s. 15B of the Indian I.T Act, 1922, was clear and that it only permitted deduction of the sums (i.e, cash) paid by the assessee as donations. The court held that such a submission was tech-. nical in the extreme and that if one were to look to the substance of the transaction, there would be no doubt that what the assessee-company gave to the University of Bombay was ultimately a sum of Rs. 6,600. The court found that the assessee had spent the amount of Rs. 6,600, fabricated the kiln and handed over the same to the University, Department of Chemical Technology. According to the court, in substance this was equivalent to handing over Rs. 6,600 to the University which entitled the assessee to claim deduction under s. 15B. It is clear from the report (see page 486) that the court found as a matter of fact that it was the kiln which was handed over to the University but, in the view of the court, in substance, the handing over of the kiln (after fabrication at the aggregate cost of Rs. 6,600) was equivalent to handing over of the amount of Rs. 6,600. It is in this context that the headnote has been prepared and it, inter alia, reads as follows:
“Held also, that in order that an assessee may be entitled to the rebate under section 15B in respect of ‘sums paid as donations’ the donations need not be in the shape of actual cash.”
6. It was urged by counsel for the revenue that the decision given by the Bombay High Court in Associated Cement Company's case, [1968] 68 ITR 478 was under s. 15B of the Act of 1922, whereas we are concerned with s. 80G (original s. 88) of the Act of 1961. On going through the statutory provisions in the new Act, it is true that there is a slight change in the language. However, the basic phrase which was required to be construed in Associated Cement Company's case, [1968] 68 ITR 478 (Bom) was “sums paid” and under the appropriate clauses of section 80G also this phrase occurs at various places, and to that extent there is no change in the language as far as the basic expression “sums paid” which arises for consideration.
7. Mr. Joshi then very strenuously urged that the Tribunal had not properly understood the decision of the Bombay High Court in Associated Cement Company's case, [1968] 68 ITR 478. According to him, in Associated Cement Company's case, the High Court had given a finding that what the assessee had handed over to the University, Department of Chemical Technology, was the aggregate amount of Rs. 6,600 and it was because of this finding that the claim for deduction under s; 15B was upheld. He referred us to a decision of the Andhra Pradesh High Court in CIT v. Amonbolu Rajiah, [1976] 102 ITR 403, where this view appears to have found favour. The Andhra Pradesh High Court has observed (p. 406):
“We fail to see from this judgment how one can deduce that a donation in kind can also earn rebate under section 88 of the Act.”
8. A little later on the Andhra Pradesh High Court referred to the portion of the headnote in Associated Cement Company's case, [1968] 68 ITR 478 (Bom) which we have extracted earlier and in reference to the same observed (p. 406);
“With due respect to the author who gave that heading to that judgment, we are bound to say that it is misleading. The learned judges have not said anything of that kind. The judgment, on the other hand, on facts, found that it was cash which was donated and not a kiln.”
9. Accordingly, the Division Bench of the Andhra Pradesh High Court held that, under s. 88 of the I.T Act, 1961 (now section 80G), in order to claim the benefit of the section, the donation to the Government or local authority must be given in cash and not in kind. It may be mentioned that the reference was from the decision of the Income-tax Appellate Tribunal which had applied Associated Cement Company's case, [1968] 68 ITR 478 (Bom) and observed that donation in kind was not precluded for the purpose of allowance of rebate under s. 88 of the Act. With respect to the learned judges of the Andhra Pradesh High Court which constituted the Division Bench, it would appear to us that it was not the Tribunal or the person who prepared the headnote who had misread the decision of the Bombay High Court in Associated Cement Company's case, [1968] 68 ITR 478, but the learned judges of the Andhra Pradesh High Court. In Associated Cement Company's case, [1968] 68 ITR 478 (Bom), the Division Bench of the Bombay High Court had expressly observed at a number of places in the judgment and found that the assessee had spent Rs. 6,600 out of its own coffers, prepared the kiln and then handed over the kiln to the university pursuant to the earlier request made by the university for the donation of the kiln. It is impossible to read Associated Cement Company's case, [1968] 68 ITR 478 (Bom) and to hold that it was found as a fact that Rs. 6,600 were handed over to the university. The court, however, observed that the substance of the transaction was that Rs. 6,600 were given to the university inasmuch as a kiln costing Rs. 6,600 was donated. Inter alia, it observed that if earlier Rs. 6,600 had been handed over to the university, received back, the kiln prepared from the amount and given to the university, deduction would have been allowable. In its view although these steps had not been taken, the substance of the transaction was required to be borne in mind and the substance of the transaction was equivalent to the assessee handing over Rs. 6,600. It may be pointed out that in CIT v. Bangalore Woollen, Cotton and Silk Mills Co. Ltd., [1973] 91 ITR 166 (Mys), the decision in Associated Cement Company's case, [1968] 68 ITR 478 (Bom) was followed in case of a claim under s. 88 of the I.T Act, 1961 (now s. 80G). Counsel for the department before the Mysore High Court (as it then was) submitted that the decision in Associated Cement Company's case, [1968] 68 ITR 478 (Bom) did not lay down the correct law as the view expressed therein was contrary to the specific language employed by the legislature. It was observed that the literal construction of the statutory provision undoubtedly supported the contention of the department, but in considering the claim for such a deduction the court must look to the substance of the transaction and the purpose underlying s. 88(1) (now sec. 80G). For these observations the Mysore High Court relied on the decision of the Bombay High Court in Associated Cement Company's case, [1968] 68 ITR 478 (Bom). In the course of the judgment, it was observed that the decision in Associated Cement Company's case has held the field all these years and the department did not take up the matter in appeal to the Supreme Court.
10. In this view of the matter, we are of the opinion that, as far as this court is concerned, the matter is concluded by the aforesaid decision in CIT v. Associated Cement Co. Ltd., [1968] 68 ITR 478 (Bom) and, accordingly, the question No. 1 need not be called for by way of a reference from the Tribunal.
11. In the result, the rule will stand discharged but with no order as to costs.