TaxTMI 
TaxTMI 
2021 (9) TMI 1405
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....on law and facts. 2. That the learned Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of a sum of Rs. 3,55,43,004/-, debited under the expense head "Corporate Social Responsibilities" under the mistaken belief that the above expenditure is incurred by the appellant under any statue which is non-existence, in complete disregard of the details provided regarding the nature and justification of such expenditure incurred by the appellant. It has been reiterated time and again in the submissions made to the learned authority that the appellant is a Public Sector Enterprise and is governed by the guidelines passed by the Department of Public Enterprises (DPE). As per DPE guideline no. O.M. No.3(10)/2008-DPE(MOU) dated 26/12/2008, it is mandatory for every Central Public Sector Enterprise (CPSE) to sign Memorandum of understanding (MoU) with its respective Ministry/Department of Govt, of India. The MoU guidelines define Corporate Social Responsibility (CSR) as a philosophy wherein organizations serve the interest of the society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities....
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....s (IGM) at Mumbai (Maharashtra). Hyderabad (Telangana). Kolkata (West Bengal) and Noida (Uttar Pradesh) • Security Printing Press (SPP). Hyderabad. Telangana • India Security Press (ISP). Nashik. Maharashtra • Security Paper Mill (SPM). Hoshangabad. Madhya Pradesh • The Ink Factory. Dew as. Madhya Pradesh 5. Ld. AO noted that the assessee has shown expenses on account of corporate social responsibility of Rs. 4.36 crore which otherwise is incorrect figure because the actual amount of CSR expenditure debited to the profit and loss account is Rs. 3.55 crore whereas it was in the assessment year 2012-13, the assessee has debited sum of Rs. 4,36 crore. Thus, it appears to be a typographical mistake. The details of CSR expenditure as given by the assessee before the authorities below are as under :- Sr. No. Project Amount 1. Construction of 10 Nos Primary School at Murshidabad (WB). 102.25 2. Beautification and widening of the road leading from ISP, main gate to U.S. Gymkhana, Nashik Road (Additional work). 19.00 3. Proposal for Providing Mobile VAN for rendering of 1 lea 1 th Service in the rural ar....
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.... the expenditure on account of social responsibilities is being treated as capital expenditure and added back to the total income of the assessee. It is noted here that in the earlier years similar disallowance have been confirmed by the Appellate Authorities." 7. Ld. CIT(A) has confirmed the disallowance after observing and holding as under :- "5.6 During the course of hearing the appellant dwelt on the said expenditure as under the Corporate Social Responsibility as per the guidelines laid down by DFE, MCA GOI. While at the assessment stage it had given details of the CSR expenditure which were held to be capital expenditure, on the decision of ITAT Raipur relied upon by the appellant for its expenditure on CSR, it is important to note that the facts of the case there is different In that case, the expenditure was voluntary while in the present case, it is not so. Secondly, the Tribunal observed .- at disabling provisions of Explanation 2 are not triggered as long as the discharge of CSR on voluntary basis can be said to be wholly and exclusively for the purpose of business. Thirdly, the principle behind the CSR expenditure in India is application of profits and not o....
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....cide whether the same are allowable u/s 37(1) of the Income-tax Act. 1961 [Refer Paper Book Page No. xx|. • The Ld. AO vide remand assessment order dated 30-12-2019, has allowed expenses of Rs. 53,29,551/- u/s 37(1) against total CSR expenses of Rs. 72,28,051/-. The appellant has filed appeal before CIT (A) with respect to CSR expenses of Rs. I8,9,500 disallowed by the ld. AO |Refer Paper Book Page No. xx1 9. Thus, he submitted that issue is squarely covered by the order of the Tribunal in assessee's own case for the earlier assessment years 2010-11 & 2011-12. 10. On the other hand, Ld. DR relied upon the order of the AO and Ld. CIT (A). 11. After considering the aforesaid submissions and on perusal of the impugned order as well as the order of the Tribunal, we find that this Tribunal vide order dated 21.3.2018 for the assessment year 2010-11 had remanded the case to the AO with specific direction to examine the nature of expenses to decide whether the same is allowable u/s 37(1) of the Income Tax Act 1961. The relevant observation and the finding of the Tribunal is as under :- "According to us these expenditure are required to be examined firstly fro....
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....hat assessee has made substantial investment in mutual fund dividend on which income is exempt. In response to the show cause notice, it was submitted that the dividend income earned during the year was Rs.4,31,79,170/- from the investment in the units of mutual fund and no specific or any special effort was made nor any direct or indirect expenditure was incurred. Further assessee has not taken any loan for making any investment as same has been made out of surplus fund. Ld. AO without examining the assessee's explanation having regard to the nature of expenditure debited has simply proceeded to make the disallowance u/s 14A read with Rule 8D of Rs. 49,82,310/- which was worked out under rule 8D by deducting 0.5% of the average investment. Ld. CIT (A) after detailed reasoning and analysis has confirmed the said disallowance. 13. After hearing both the parties, we find that while invoking the disallowance u/s 14A read with Rule 8D, nowhere the AO has recorded his satisfaction as to why the assessee 's explanation is not tenable, The relevant observation of the Ld. AO reads as under :- "The assessee's contention is not acceptable, section 14A is very clear that no deduct....