Section 80G deduction cannot be denied merely because a donation was funded from CSR expenditure disallowed under business income rules.

Deduction under section 80G could not be denied merely because the donation to the Prime Minister's National Relief Fund was made out of corporate social responsibility expenditure disallowed under section 37(1). Section 37(1) and section 80G operate in different fields: the former governs computation of business income, while the latter allows deduction from gross total income under Chapter VI-A. The statutory bar on CSR expenditure in section 37(1) does not extend to section 80G, and the donation did not fall within any express exclusion in section 80G. The disallowance was deleted in favour of the assessee.

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Issues: Whether deduction under section 80G could be denied merely because the donation to the Prime Minister's National Relief Fund was made out of Corporate Social Responsibility expenditure that had already been disallowed under section 37(1).

Analysis: The claim related to a donation made to an institution approved under section 80G, with the CSR expenditure having already been excluded from business deduction under Explanation 2 to section 37(1). The statutory bar inserted for CSR expenditure in section 37(1) does not extend to section 80G, and the two provisions operate in different fields: section 37(1) governs computation of business income, while section 80G grants deduction from gross total income under Chapter VI-A. The relevant exceptions barring deduction are expressly provided in section 80G itself, and the donation in question did not fall within those specified exclusions.

Conclusion: The deduction under section 80G could not be denied on the ground that the donation formed part of CSR spend; the disallowance was deleted and the issue was decided in favour of the assessee.

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