ITAT allows section 80G deduction on CSR expenses, rejects claim that CSR is mere statutory obligation

ITAT Mumbai dismissed the assessee's challenge to section 143(1) intimation, ruling that proper appeal should have been filed before CIT(A) under section 246A. However, ITAT allowed the assessee's claim for section 80G deduction on CSR expenses, rejecting AO's contention that CSR expenditure is merely statutory obligation. The tribunal held that CSR donations qualify for section 80G deduction unless specifically excluded under sub-clauses (iiihk) and (iiihl), directing AO to allow the deduction subject to fulfilling other section 80G requirements.

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Issues:
1. Disallowance of addition to income assessed under section 143(1) of the Income Tax Act.
2. Disallowance of deduction claimed under section 80G of the Income Tax Act for CSR expenses.

Detailed Analysis:

Issue 1: Disallowance of addition to income assessed under section 143(1) of the Income Tax Act
The appeal challenged the order of the Commissioner of Income Tax (Appeals) regarding the addition to income assessed under section 143(1) for the Assessment Year 2020-21. The assessee contended that the Commissioner did not address the specific ground raised against the Assessing Officer's actions. However, it was noted that the assessee only challenged the assessment order passed under section 143(3) and not the intimation under section 143(1) before the first appellate authority. The Tribunal found no merit in the ground raised by the assessee and dismissed it.

Issue 2: Disallowance of deduction claimed under section 80G of the Income Tax Act for CSR expenses
The Assessing Officer disallowed a deduction of Rs. 15 lakhs claimed by the assessee under section 80G towards CSR expenses, stating that CSR expenses are a statutory obligation and not voluntary donations. The Commissioner upheld this decision, citing relevant legal provisions and a Supreme Court case. The assessee argued that various decisions supported the deduction of CSR expenses under section 80G and highlighted specific provisions excluding only certain donations. The Tribunal considered the legislative intent, provisions of the Companies Act, and the specific conditions under section 80G. It concluded that the assessee was entitled to the deduction claimed under section 80G for CSR expenses, directing the Assessing Officer to allow the claim subject to other requirements under the Act.

In conclusion, the Tribunal partly allowed the appeal, dismissing the first ground related to the addition to income assessed under section 143(1) and allowing the second ground concerning the deduction claimed under section 80G for CSR expenses.

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