Transfusion tissue is the substitute of lateral veins as it helps in the conduction of water.

Answer

### Step-by-Step Solution:

1. **Understanding Transfusion Tissue**:
- Transfusion tissue is a specialized type of tissue found in certain plants, particularly gymnosperms. It serves a similar function to lateral veins in angiosperms by aiding in the conduction of water and nutrients.

2. **Location of Transfusion Tissue**:
- This tissue is typically found surrounding vascular bundles in the leaves of gymnosperms. An example of a gymnosperm that contains transfusion tissue is Pinus (pine trees).

3. **Composition of Transfusion Tissue**:
- Transfusion tissue is primarily composed of two types of cells:
- **Transfusion Tracheids**: These are elongated cells that facilitate the movement of water.
- **Transfusion Parenchyma**: This type of cell often contains substances like tannins and starch, which can serve various functions, including storage and support.

4. **Function of Transfusion Tissue**:
- The main function of transfusion tissue is to transport materials between mesophyll cells (the palisade and spongy parenchyma) and the vascular bundles. This transport is crucial for the overall functioning of the plant, especially in the leaves where photosynthesis occurs.

5. **Conclusion**:
- Therefore, the statement that "transfusion tissue is the substitute of lateral veins as it helps in the conduction of water" is true. Transfusion tissues play a significant role in the water conduction system of gymnosperms, similar to how lateral veins function in other plants.