CSR Expenses (to a section 8 Company) having common directors

[CABIJENDERKUMAR BANSAL]

Dear All

X(Assessee company)'s management incorporated a section 8 Company which is duly registered under section 80G as well as Section 12A of Income Tax Act.

Now X co.is discharging its CSR liability by contributing to this section 8 Company which is then contributing donations received to third parties such as hospitals, schools etc.

X co. and Section 8 Co. has common directors and shareholders.

Will it be covered under CSR / deduction for section 80G ?

Regards

[DR.MARIAPPAN GOVINDARAJAN]

In my view it will not come under CSR and also it is not eligible for section 80G.

[deepak gulati]

In my opinion it should be allowed if it not for benefit of employees or promoters.

AI Summary

CSR payments to related nonprofit entities may not qualify unless made without benefit to promoters or employees.
Contributions by a company to a registered not for profit entity that shares directors and shareholders are contested: one view holds they do not qualify as CSR spending nor as tax deductible donations when routed through the related entity; an alternative view allows them only if the transfers are bona fide charitable disbursements and do not confer private benefit on promoters, directors or employees.