TaxTMI 
TaxTMI 
2023 (8) TMI 636
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....Y 2010-11 as lead case. Grounds of appeal filed by the assessee in ITA No.47/RPR/2023 are as under: 1. On the facts and circumstances of the case whether the ld. CIT(A), NFAC erred in law in deleting the disallowance of CSR expenses of Rs. 5,39,76,720/- made by the AO for calculating book profit to arrive at MAT u/s 115JB, since CSR expenses is as per the Company Act and the same is not wholly and exclusively for the purpose of business within the explanation 2 of Section 37(1) of the Income Tax Act, 1961 2. On the facts and circumstances of the Id. CIT(A), NFAC has erred in law by holding the decision in favour of assessee and against the revenue, though there is no nexus between the conclusion of the fact and primary fact upon which that conclusion is based? 3. On the facts and circumstances of the Id. CIT(A), NFAC has erred in law in drawing a conclusion which cannot be drawn by any reasonable person or authority, on the material and facts placed before it? 4. The order of the Id. CIT(A), NFAC is erroneous both in law and on facts. 5. Any other ground that may be adduced at the time of hearing. 2. The brief facts of the case are th....
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....he "Book Profit" and AO has to accept the "Book Profit" without any modification for computing tax liability under the provisions of MAT." The contention of the assessee is not acceptable as CSR was not expended wholly and exclusively for the purpose of business of the assessee. Further the explanation 2 to section 37(1) of the IT Act is clarificatory and not amendatory as it was inserted to remove the doubts. As the mistake is apparent from record, therefore, the same is rectified and the Impugned amount is added back to the assessed Book Profit of the assesses. Income as assessed u/s 143(3) Rs. 123,42,91,452/- Assessed Book Profit vide order dated 01/03/2013 Rs. 2823,43,92,054/- Add: On account of Corporate Social Responsibility (for determination of book profit) (as discussed above) Rs. 5,39,76,720/- Total assessed Book Profit after rectification Rs. 2828,83,68,774/- Revise the book profit accordingly. Give credit to the prepaid taxes. Charge interest as per law. Issue demand notice. 3. Aggrieved by the aforesaid order u/s. 154 of the Act, the assessee preferred an appeal before the Ld.CIT(A), NFAC, wherein, the Ld.CIT(A) ....
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....ith effect from 1.4.2015. Without entering into further discussion whether CSR expenditure shall be subject to disallowance under section 37(1) or in the absence of any specific provision given in section 115JB, whether CSR expenditure can be added back for computing the Book Profit, it is apparent that the addition of Rs 5,39,76,720/- to book profit on account of disallowance on Community Welfare Expense/ CSR is bad in law. Respectfully following the decision of the Tribunal on this issue in assessee's own case and CBDT circular no. 1/2015, the ground of appeal raised by the appellant is hereby allowed. Since, the relief was granted by the Ld.CIT(A), now the Revenue is in appeals with the contention that Ld.CIT(A), NFAC, has erred in law in deleting the disallowance of CSR expenses of Rs. 5,39,76,720/- made by the AO for calculating book profit to arrive at MAT u/s. 115JB of the Act. 4. At the outset, the Ld.CIT-DR vehemently and strongly supported the order of the AO passed u/s. 154 of the Act and has prayed to set aside the order of the Ld.CIT(A), NFAC and restore the disallowance made by the AO. 5. On the contrary, The Ld.AR of the assessee while representing the c....
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....dance with the Companies Act. The Assessing Officer thereafter has the limited power of making increase and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J........". 8. On the contrary to the submissions of the Ld.AR, the CIT-DR vehemently supported the order of the AO and requested to decide the issue on its merits. 9. After hearing the rival contentions and on perusal of materials available on records, case laws placed before us to be considered while deciding the issue. The sole ground of the controversy raised by the Revenue in the present appeals pertains to deleting the disallowance of CSR expenses by Ld CIT(A), made by the AO for calculating book profit to arrive at MAT u/s. 115JB of the Act, alleging that CSR expenses as per the Companies Act, when the same has not wholly and exclusively for the purpose of business of the assessee should be added to assessable income under the scheme of working of book profit u/s 115JB. Further, in the present app....
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....vidends paid or proposed ; or (f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply; or (fa) the amount or amounts of expenditure relatable to income, being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86; or (fb) the amount or amounts of expenditure relatable to income accruing or arising to an assessee, being a foreign company, from,- (A) the capital gains arising on transactions in securities; or (B) the interest, royalty, or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII, if the income-tax payable thereon in accordance with the provisions of this Act, other than the provisions of this Chapter, is at a rate less than the rate specified in sub-section (1); or (fc) the amount representing notional loss on transfer of a capital asset, being share of a special purpose vehicle, to a business trust in exchange of units allotted by the....
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....mount of depreciation debited to the statement of profit and loss (excluding the depreciation on account of revaluation of assets); or (iib) the amount withdrawn from revaluation reserve and credited to the statement of profit and loss, to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia); or (iic) the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any, such amount is credited to the statement of profit and loss; or (iid) the amount of income accruing or arising to an assessee, being a foreign company, from,- (A) the capital gains arising on transactions in securities; or (B) the interest, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII, if such income is credited to the statement of profit and loss and the income-tax payable thereon in accordance with the provisions of this Act, other than the provisions of this Chapter, is at a rate less than the rat....
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....ed by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016). Explanation.-For the purposes of this clause,- (i) "Adjudicating Authority" shall have the meaning assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016); (ii) "Tribunal" shall have the meaning assigned to it in clause (90) of section 2 of the Companies Act, 2013 (18 of 2013); (iii) a company shall be a subsidiary of another company, if such other company holds more than half in the nominal value of equity share capital of the company; (iv) "loss" shall not include depreciation; or (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account in case of a company other than the company referred to in clause (iih). Explanation.-For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or (iv) to (vi) [***] (vii) the amoun....
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....red by the assessee on CST on voluntarily basis such as construction of school building, drainage, barbed wire fencing etc., was to be allowed as deduction u/s. 37(1) - Held, Yes. 13. The impugned issue was carried to the Hon'ble jurisdictional High Court by the Revenue, wherein, the Hon'ble High Courts has held that - "we are of the view that the decision has been rendered by the Tribunal clearly on question of facts and it does not involve any question of law much less in substantial question of law and then dismissed the appeal filed by the Revenue." The same was taken note of by the Ld.CIT(A) while deciding the issue for year under consideration and has decided that the additions to book profit on account of disallowance on community welfare expenses/CSR is bad in law. Also, in terms of provisions of sec. sec. 115JB of the Act and explanation thereto CSR expenses is not specific items which has to be added back while determining the book profit. 14. In view of the aforesaid binding judicial pronouncements and our observations hereinabove since the department has not raised any argument with respect to preparation of account of the company or doubted on audited ac....