TaxTMI 
TaxTMI 
2021 (3) TMI 257
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....r the purpose of business and in accordance with provisions of section 37 of the Act. (iii) That even otherwise, there being no dispute about genuineness of the expenses and same being incurred for the purpose of business, the impugned disallowance is on illegal and arbitrary basis without appreciating the facts of the case. 2.(i) That on the facts and circumstances of the case, the CIT(A) was not justified in confirming addition of Rs. 201.66 crores as deemed income on mobilization advance even though no such income had accrued or received. (ii) That in the absence of any legal or statutory right or acceptance of claim by other party, there is no case of any such income in the light of principle laid down by Supreme Court in the case of Excel Industries Ltd.(2013)358 ITR 295. (iii) That alleged claims is of contingent nature and there is no justification for any addition on factual or legal basis. (iv) That in any case, the impugned addition is in total disregard to decision of Hon'ble Delhi High Court in appellant's own case for AY 2008-09 wherein deletion of identical addition by Hon'ble ITAT has been upheld by High Court. 3(i). That on the facts and circumstances of....
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....ove that AO has mechanically disallowed the claim of expenditure made by the assessee company towards Corporate Social Responsibility (CSR) and sustainable development without analyzing the fact that assessee company being a Government undertaking is required to incur such expenses as per guidelines issued by the Department of Public Enterprises by undertaking social welfare activities under the social security scheme. Assessee company has however claimed these expenses as business expenditure permissible under the Act. 16. It is contended by the ld. AR for the assessee that identical claim of CSR expenses has been duly accepted by the Revenue in the earlier years and there is no change in the facts and circumstances of case. Neither AO nor ld. DR for the Revenue has controverted this fact. 17. AO has disallowed claim of the assessee company qua CSR expenditure by misinterpreting the provisions contained under section 37(1) of the Act by observing that since CSR expenditure is not incurred for the purpose of carrying on the business, such expenditure cannot be allowed under the existing provisions of section 37 of the Act. Even Explanation 2 to section 37(1) of the Act is prosp....
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....defaulter to the Government. 9.6 The ITAT Mumbai bench in the case of Hindustan Petroleum Corporation Ltd. (96 ITD 186) had held CSR expenditure incurred by Government Undertaking is an allowable deduction. The relevant finding of the ITAT Mumbai Benches reads as follows:- "Expenditure incurred by assessee, a company owned by the Government of India and working under its control and directions, towards implementation of 20 point programme as per specific directions of the Government though voluntary in nature and not forced by any statutory obligation, is allowable as business expenditure. Merely because an expenditure is in the nature of donation, it does not cease to be an expenditure deductible under s. 37(1)." 9.7 The Commissioner of Income tax had mentioned in his order that "the Apex Court (313 ITR 334 SC) CIT Vs Madras Refineries Ltd., while hearing the allowability of CSR expenses observed that neither the High Court nor the Tribunal concerned had given specific finding to the effect that the said CSR expenditure is allowable as business expenditure ". In the above mentioned case, the Apex court has not given any decision on merits of the case. It had only given an ob....
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....he expenditure incurred for the implementation of 20- Point Programme was solely for the welfare of the oppressed classes of society, for which even the Constitution of India sanctions positive discrimination and for contribution to all around development of villages, which has always been the central theme of Government's development initiatives. An expenditure of such a nature cannot but be, 'a concrete expression of care and concern for the society at large and an expenditure to discharge the responsibilities of a 'good corporate citizen which brings goodwill of with the regulatory agencies and society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill'. [Para 9] Just because the expenditure was voluntary in nature and was not forced on the assessee by a statutory obligation, it could not cease to be a business expenditure. Therefore, the authorities below indeed erred in law in declining deduction of the expenditure incurred on 20-Point Programme which was, beyond dispute or controversy, at the instance of the Government, and was to discharge the assessee s obligations towards society as ....
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....by competent authority. This system has been followed consistently in respect of both income and expenditure items which has not been disputed by the Revenue in any of the preceding years. Therefore, we are of the considered opinion that the addition confirmed by the ld. CIT(A) is without any basis and needs to be deleted. Accordingly, this ground of the assessee is allowed." 3. It is urged by the revenue that the ITAT's reasoning is flawed. The learned counsel contends that rights of the assessee to receive the amount from RPCL had accrued which meant that appropriate recognition of the revenue had to be reflected. It was submitted that arbitrability of the dispute was questioned as there could be no doubt that under the contract, the mobilization advance was given by the assessee and therefore it was entitled to the interest. 4. It is evident from the above discussion that the entire matter is contentious in the sense that the third party - RPCL - which was awarded the contract claimed that it had performed it in accordance with the agreement with the parties. The assessee, however, felt otherwise and terminated the contract. There could be several likely outcomes in thes....
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....amount of Rs. 17,80,998/- being the expenditure incurred for earning the tax free income of Rs. 1,02,89,859/-. We find the Ld. CIT(A) sustained the disallowance so made by the Assessing Officer. It is the submission by the Ld. Counsel for the assessee that the Assessing Officer has not recorded his satisfaction for making the disallowance. We find identical issue had come up before the Tribunal in assessee's own case for A.Y.2009-10. We find the Tribunal vide ITA No.2826/Del/2014 order dated 24.04.2017 while deleting the disallowance has observed as under :- 13. "We have carefully considered the rival contention and also perused the orders of the lower authorities. During the course of assessment proceedings the assessee was asked that why provisions of Rule 8D should not be applied for disallowing some under section 14 A of the income tax act, despite the claim of the assessee that it has not incurred any expenditure for earning exempt income. According to the provisions of section 14A(2), the Ld. assessing officer before invoking the applicability of Rule 8D should have explained as to why the voluntary disallowances or no disallowances made by the assessee was unreasonable and....