CSR donations can still qualify for section 80G deduction where the donee is approved and statutory conditions are met.

CSR-related donations do not lose eligibility for deduction under section 80G of the Income-tax Act, 1961 merely because section 37 bars deduction of CSR expenditure as business expenditure. Where the assessee claims deduction only under section 80G, and the payment is made to an approved institution satisfying the statutory conditions of that provision, the section 37 restriction does not override the independent deduction available under section 80G. On the facts recorded, no defect in compliance with section 80G was shown, so the deduction was allowable and the disallowance was not sustainable.

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Issues: Whether a deduction under section 80G of the Income-tax Act, 1961 is allowable in respect of a CSR contribution when section 37 of the Income-tax Act, 1961 bars deduction of CSR expenditure under the business head.

Analysis: The assessee had made a payment to an institution approved under section 80G and claimed deduction only under section 80G, not under section 37. The bar contained in section 37 applies to allowance of CSR expenditure as business expenditure, but it does not extend to a deduction otherwise admissible under section 80G where the payment is to an approved institution and the statutory conditions of that provision are satisfied. No violation of the requirements of section 80G was shown on the record.

Conclusion: The deduction under section 80G was allowable and the disallowance was not sustainable.

Final Conclusion: CSR-related donations do not lose eligibility for deduction under section 80G merely because section 37 denies business deduction of CSR expenditure, provided the statutory conditions for section 80G are met.

Ratio Decidendi: A payment made as part of CSR expenditure can still qualify for deduction under section 80G of the Income-tax Act, 1961 if the donee is approved and the conditions of that provision are satisfied, since the prohibition in section 37 does not override section 80G.

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