Judgment :- The Order of the Court is as follows: 1. An interesting question of law on the interpretation of section 8OG of the Income-tax Act, 1961 ('the Act') arises on the facts of the case. Section 8OG(1) provides that in computing total income of the assessee, there shall be deducted, in accordance with and subject to the provisions of section 8OG, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2). Sub-section (2) of section 8OG refers to funds of institutions to which the section applies. Sub-section (3) of section 8OG refers to the minimum amount eligible for deduction. Sub-section (3) of section 8OG prescribes the minimum amount and it should not be less than Rs. 250. Sub-section (4) of section 80G reads as under: "The deduction under sub-section (1) shall not be allowed in respect of such part of the aggregate of the sums ref erred to in sub-clauses (iv) and (v) of clause (a) and in clause (b) of sub-section (2) as exceeds ten per cent of the gross total income (as reduced by a portion thereof on which income-tax is not payable under any provision of this Act, and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), or two hundred thousand rupees, whichever is less. Provided that where such aggregate includes any donations referred to in clause (b) of sub-section (2) and such aggregate exceeds that limit of two hundred thousand rupees specified in this sub-section, then such limit shall be raised to cover that portion of the donations aforesaid which is equal to the difference between such aggregate and the said limit, so however, that the limit so raised shall not exceed ten per cent of the assessee's gross total income as reduced as aforesaid, or five hundred thousand rupees, whichever is less." 2. The assessee made donations to two institutions which are admittedly recognised under section 8OG amounting in all to Rs. 3, 00, 500 during the previous year relevant to the assessment year 1980-81 and claimed 50 per cent deduction thereof amounting to Rs. 1, 50, 250. The assessee made donations to two institutions which are admittedly recognised under section 8OG amounting in all to Rs. 3, 00, 500 during the previous year relevant to the assessment year 1980-81 and claimed 50 per cent deduction thereof amounting to Rs. 1, 50, 250. The contention of the assessee was that under sub-section (1) of section 8OG, 50 per cent of the donation should first be deducted and thereafter it should be restricted to 10 per cent of the total income. The ITO as well as the Commissioner (Appeals) held that the eligible amount of deduction should first be restricted to 10 per cent of the total income and thereafter 50 per cent of the same should be allowed as deduction under section 8OG(4). The Tribunal also upheld the view of the authorities and held that sub-section (4) limits the eligible quantum of donation provided under section 8OG(1) and sub-section (4) applies with reference to the aggregate amount of donation and not with reference to the quantum of donation admissible thereunder. 3. The assessee has come by way of the reference challenging the order of the Tribunal on the following question of law, "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deduction under section 80G should be allowed first restricting it to 10 per cent of the total income and then allowing a deduction of 50 per cent of the same instead of allowing it as claimed by the applicant ?" 4. Mr. Janarthanaraja, the learned counsel for the assessee, reiterated the contentions urged before the authorities. He submitted that under the provisions of section 8OG(4), 50 per cent of the donation was eligible for deduction and thereafter, the eligible amount should be restricted to 10 per cent of the total amount. He relied upon a decision of the Andhra Pradesh High Court in Hyderabad Race Club v. AddL CIT and a decision of the Calcutta High Court in the case of CIT v. Lukwah Tea Co. Ltd. 5. Mr. C. V. Rajan, the learned counsel for the revenue, on the otherhand, submitted that the computation of deduction has to be made in respect of the aggregate of the sums prescribed under sub-section (2) read with sub-section (4) of section 8OG. Ltd. 5. Mr. C. V. Rajan, the learned counsel for the revenue, on the otherhand, submitted that the computation of deduction has to be made in respect of the aggregate of the sums prescribed under sub-section (2) read with sub-section (4) of section 8OG. He relied upon a decision of the Karnataka High Court in the case of CIT v. Canara Bank and the decision of the Bombay High Court in the case of CIT v. New Shorrock Spg. & Mfg. Co. Ltd. 6. It is clear that there is more than one way of interpretating section 8OG(1). The Act has also been subsequently amended. It was substituted. by the Finance (No. 2) Act, 1980 with effect from 1-4-1981 which was further amended by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1-4-1989. The law amended makes it clear that the ceiling must be determined at 10 per cent of the gross total income and then the same shall be brought into for the purpose of computing the aggregate of sums in respect of deduction claimed under sub-section (1) of section 80G. However, we are concerned with the assessment year 1980-81 and we are to construe the law as it stood then. The Andhra Pradesh High Court in the case of Hyderabad Race Club (supra) as well as the Calcutta High Court in the case of Lukwah Tea Co. Ltd. (supra) held that an amount equal to 50 per cent of the aggregate sums should be determined under sub-section (1) of section 8OG initially and thereafter, it should be further limited to 10 per cent of the gross total income. In other words, according to both the High Courts, limit of 10 per cent of gross total income would come into reckoning only while finding out the maximum amount of deduction permissible under sub-section (1) and not at the starting point for computing deduction. 7. On the other hand, the Karnataka High Court in the case of Canara Bank (supra) as the Bombay High Court in the case of New Shorrock Spg. & Mfg. Co. 7. On the other hand, the Karnataka High Court in the case of Canara Bank (supra) as the Bombay High Court in the case of New Shorrock Spg. & Mfg. Co. Ltd. (supra) held that sub-section (4) of section 8OG puts a ceiling on the part of the aggregate of the sums specified in sub-section (2) in respect of the deduction as claimed under sub-section (1) and the ceiling specified in sub-section (4) applies to the aggregate of the sums in respect of which the deduction is claimed and not to the amount of deduction allowed under sub-section (1) which has to be computed in the manner specified therein. 8. A Bench of this Court had an occasion to consider the method of computing the ceiling under section 8OG(4) in the context of deduction to be granted under sub-clause (viii) of rule 1 of the First Schedule to the Companies (Profits) Surtax Act, 1964 in CIT v. Carborandum Universal Ltd. and this Court, after referring to the decision of the Bombay High Court in the case of CIT v. Echjay Industries and the decision of the Andhra Pradesh High Court in CIT v. Vazir Sultan Tobacco Co. Ltd., agreed with the decision of the Bombay High Court and held that the deduction under section 8OG(1) should be granted on the sum equal to 50 per cent of the sum specified in section 8OG(2), subject to the restrictions contained in section 8OG(4). In other words, this Court has taken a view that deduction under section 8OG should be on the sum specified in sub-section (2) subject to the ceiling specified in sub-section (4) and on the 50 per cent of the amount arrived at deduction shall be granted. 9. In other words, this Court has taken a view that deduction under section 8OG should be on the sum specified in sub-section (2) subject to the ceiling specified in sub-section (4) and on the 50 per cent of the amount arrived at deduction shall be granted. 9. Though at first glance it appears that under sub-section (1), 50 per cent of the sums specified under sub-section (2) shall be granted as deduction and the amount to be deducted would be subject to over all ceiling limit of 10 per cent of the total income, however, a careful reading would indicate that the deduction to be granted under sub-section (1) shall be in accordance with and subject to the provisions of section 8OG which would take in section 8OG(4) and section 8OG(4) provides a ceiling limit of 10 per cent of the total income or two hundred thousand rupees, whichever is less and it also refer's sums referred to in sub-clauses (iv) and (v) of clause (a) and clause (b) of sub-section (2) of section 8OG. Therefore, section 8OG makes it clear that the aggregate of the sums shall be ascertained as referred to in sub-section (4) which does not exceed 10 per cent of the gross total income or two hundred thousand rupees whichever is less, and then, on that amount, deduction under sub-section (1) shall be granted. The legislative intention is manifest from the subsequent amendment that the aggregate of the sums should first be ascertained in accordance with section 8OG(4) and on that amount, the deduction under section 8OG(1) has to be granted. On careful reading of the section, we are in respectful agreement with the view expressed by the Karnataka High Court in Canara Bank's case (supra) and the Bombay High Court in New Shorrock Spg. & Mfg. Co. Ltd.'s case (supra). We are also in agreement with the earlier view of the Bench of this Court in the case of Carborandum Universal Ltd. (supra) and we are expressing our respectful disagreement with the view expressed by the Andhra Pradesh High Court and the Calcutta High Court in the cases cited above. & Mfg. Co. Ltd.'s case (supra). We are also in agreement with the earlier view of the Bench of this Court in the case of Carborandum Universal Ltd. (supra) and we are expressing our respectful disagreement with the view expressed by the Andhra Pradesh High Court and the Calcutta High Court in the cases cited above. Accordingly, we are of the view that the Tribunal has come to the correct conclusion in holding that the deduction under section 8OG should be allowed first restricting it to 10 per cent of the total income and then allowing a deduction of 5 0 per cent of the same. 10. Accordingly, our answer to the question of law referred to us is in the affirmative and against the assessee and in favour of the department. The revenue will be entitled to the cost of the reference of a sum of Rs. 750.