CSR donations and Section 80G deduction: Tribunal view treats eligibility dispute as a legal interpretation issue, not a rectifiable mistake.

CSR-related donations to charitable organisations may still qualify for deduction under Section 80G of the Income-tax Act, 1961 if the donation is otherwise eligible. The ITAT Mumbai followed its earlier coordinate-bench view that CSR expenditure does not, by itself, bar Section 80G relief. It also noted the interaction of Section 135(5) of the Companies Act, 2013 and Explanation 2 to Section 37(1) of the Income-tax Act, and treated the Revenue's objection as a legal interpretation dispute rather than a patent mistake. On that basis, denial of the deduction could not be corrected under Section 154 as a mistake apparent from the record.

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Issues: Whether donations made as part of Corporate Social Responsibility expenditure to charitable organisations are eligible for deduction under Section 80G of the Income-tax Act, 1961, and whether denial of such deduction can be rectified under Section 154 of the Income-tax Act, 1961 as a mistake apparent from record.

Analysis: The donation claims were made towards a relief fund and a society engaged in promoting children's education. The Tribunal followed its earlier coordinate-bench view that CSR expenditure does not, by itself, disentitle an assessee from deduction under Section 80G where the donation is otherwise eligible. It also noticed the scheme of Section 135(5) of the Companies Act, 2013 and the effect of Explanation 2 to Section 37(1) of the Income-tax Act, 1961, and held that the Revenue's objection rested on a legal interpretation issue rather than a patent and obvious error. Such a controversy could not be treated as a mistake apparent from the record for the purpose of rectification.

Conclusion: The assessee was entitled to deduction under Section 80G of the Income-tax Act, 1961 for the CSR-related donations, and the rectification under Section 154 of the Income-tax Act, 1961 was unsustainable.

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