2021 (3) TMI 779

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....ss of Rs. 1,89,90,55,165/- under the normal provisions of Income Tax Act, 1961 (hereinafter called 'the Act'). The assessee company paid taxes under the provisions of Minimum Alternate Tax (MAT) on declared book profit of Rs. 66,18,51,561/-. The case of the assessee was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee has created a provision for Corporate Social Responsibility (CSR) in the books of account. The AO was of the view that the said provision was an unascertained liability as the assessee had only created the provision but where the amount was to be spent was unascertained. It was the assessee's contention that the provision had been created on the basis ....

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....d Representative (AR) submitted that the assessee was a company incorporated under the provisions of Indian Companies Act, 1956 and was bound to incur expenditure towards Corporate Social Responsibility. It was submitted that it being a Public Sector Entity, the assessee company was also governed by the guidelines laid down by the Department of Public Enterprises. It was submitted that accordingly the assessee had created the impugned provision of Rs. 35,09,480/- on account of Corporate Social Responsibility Expenditure. It was further submitted that the amount was calculated as laid down by the Indian Companies Act, 1956 read with the guidelines laid down by the Department of Public Enterprises and, that the assessee could not have deviate....

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....res Ltd. vs. CIT [2002] 122 Taxman 562 (SC) (ii) Bharat Earth Movers vs. CIT, Civil Appeal No.9271 of 1995 (SC) (iii) Tata Communications Ltd. vs. JCIT, ITA No.3438/Mum/2003 (iv) DCIT vs. Central Coal Fields Limited, ITA No.235/Ran/2016 (v) Housing And Urban Development Corporation Ltd. vs. Add. CIT, ITA 541/2019, (Delhi HC) (vi) PCIT vs. NHPC Ltd., ITA 356, 2015, P&H High Court (v) DCIT vs. Inox Leisure Ltd., 351 ITR 314, Gujarat HC (vi) Bharat Earth Movers vs. CIT, 245 ITR 428 (SC), (vii) CIT v. Echjay Forgings (P) Ltd., 251 ITR 15, Bombay HC (viii) M/s. Rotork Controls India (P.) Ltd. v. CIT, 314 ITR 62 (SC) (ix) Ircon International Limited, v. Add. CIT, ITA Nos. 1825/Del/2005, ITAT DELHI (x) Asahi India ....

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....ount or amounts set aside to provision made for meeting liabilities, other than ascertained liabilities for arriving at the book profit in terms of Section 115JB of the Act. It is seen that, admittedly, the assessee has made the impugned provision in terms of the calculation provided by the guidelines issued by the Department of Public Enterprises. However, although, the amount to be provided towards meeting the liability of the CSR expenditure has been quantified in accordance with the guidelines provided by the Department of Enterprises, how the amount is to be spent has neither been determined nor has been specified by the assessee. Thus, although the assessee has set-aside an amount ear-marked for spending towards the CSR obligation, ho....