2023 (6) TMI 927 - AT - Income Tax

Tribunal grants appeal for deduction under Section 80G, emphasizes CSR eligibility, avoids double disallowance

Synergia Lifesciences Pvt. Ltd. Versus Dy. Commissioner of Income Tax Assessment Unit

The Tribunal allowed the assessee's appeal for statistical purposes, setting aside the decision denying the deduction under Section 80G. The Tribunal ... Deduction u/s 80G - CSR expenditure - assessee has not claimed the CSR expenditure u/s 37(1) and its claim is only restricted to section 80G - HELD THAT:- The claim for deduction u/s 80G of the Act in respect of CSR expenses cannot be denied. In the present case, the lower authorities denied the deduction claimed by the assessee under section 80G of the Act without verifying the conditions as laid down in the said section. As relying on Allegis Services (India) Private [2020 (5) TMI 378 - ITAT BANGALORE] we remit this issue to the file of the AO to verify the conditions necessary for claiming deduction under the said section. Assessee as directed to file all the details for the purpose of claiming deduction under section 80G - direct that if the conditions as laid down in section 80G are found to be satisfied then deduction be granted to the assessee to that extent. Decided in favour of assessee for statistical purposes. Issues Involved:1. Denial of Deduction under Section 80G.2. General grounds.Summary:Denial of Deduction under Section 80G:The assessee challenged the impugned order dated 21/02/2023, passed under section 250 of the Income Tax Act, 1961, by the learned Commissioner of Income Tax (Appeals), confirming the rejection of the assessee's claim for deduction under section 80G. The assessee argued that the deduction for items covered under Part A & B of Chapter VIA was allowed in AY 2020-21 under the then-existing provision of Section 115BAA and that the amendment disallowing such deductions was applicable from AY 2021-22. The assessee contended that the words of the statute were unambiguous and indicated the intention of the legislature to disallow the deduction only from the specified date.The assessee, a private limited company engaged in manufacturing and research in biotechnology, had incurred CSR expenditure amounting to Rs. 10,98,80,555, out of which Rs. 54,85,278 was claimed as a donation under section 80G. The Assessing Officer (AO) disallowed the deduction on the grounds that the payment was mandatory under section 135 of the Companies Act, 2013, and lacked the voluntary element required for a donation under section 80G.The learned CIT(A) upheld the AO's decision. The assessee appealed, citing various decisions of the Tribunal where CSR expenditure was allowed under section 80G. The Tribunal noted that the lower authorities denied the deduction without verifying the conditions laid down in section 80G. The Tribunal referred to the decision in Allegis Services (India) Private Ltd. v/s ACIT, where it was held that CSR expenditure could be claimed under section 80G while computing total taxable income, provided the necessary conditions were met.The Tribunal remitted the issue back to the AO to verify the conditions necessary for claiming the deduction under section 80G and directed the assessee to file all requisite details. The Tribunal emphasized that denying the deduction merely because the payment formed part of CSR would lead to double disallowance, which was not the intention of the legislature. Accordingly, the Tribunal allowed the appeal for statistical purposes.General Grounds:Ground no.B raised by the assessee was general in nature and required no separate adjudication. Conclusion:The appeal by the assessee was allowed for statistical purposes, with the Tribunal setting aside the impugned order and remitting the issue back to the AO for verification of conditions necessary for claiming the deduction under section 80G. The Tribunal directed that if the conditions were satisfied, the deduction should be granted to the assessee.