TaxTMI 
TaxTMI 
2024 (6) TMI 8
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....for present AY, under section 139(1) of the Act on 12.02.2021 declaring income of Rs. 24,43,74,310. Assessment was completed by the assessing officer vide order dated 22.09.2022 passed under section 143(3) r.w.s 144B, assessing income of the appellant at Rs. 24,91,76,860, after making two disallowances. 2.1 The first disallowance was with regard denial of deduction claimed under section 80G of the Act 2.2 The second disallowance related to not allowing credit of TDS 3. The appeal filed by the appellant was partly allowed by the NFAC, aggrieved, the appellant is in appeal before this Tribunal raising following grounds of appeal: "1. That on the facts and circumstances of the case and in law, the impugned order dated 30.11.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeals Centre ['CIT(A)'] is erroneous and bad-in-law. 1.1. That the CTT(A) erred in passing the impugned order without granting personal hearing (either physically or virtually) to the appellant which is not only violative of settled principles of natural justice but also express provisions of section 250 of the Income Tax Act, 1961 (the Act') and the faceless appeal sche....
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....allowable in terms of section 199 of the Act read with Rule 37BA of the Income Tax Rules, 1962 dehors the fact that the same was reflected in the Form 26AS for subsequent year. Re: Interest under section 234A/B/C 4. That the CIT(A) erred on facts and in law in not deleting interest under sections 234A, 234B and 234C of the Act levied/ computed by the assessing officer." 4. Heard and perused the material before us. During the course of hearing nothing was submitted with regard to ground no. 1. As with regard to ground No. 2 to 2.3, the relevant facts are that during the year under consideration, the appellant claimed deduction under section 80G of the Act in respect of the following donations made by it till 30th July, 2020: S. No. Date of Donation Party Amount donated Deduction allowable u/s 80G (50%) Whether part of CSR expense 1. 15.04.2019 Interglobe Foundation PAN-ACCI2495N 55,00,000 27,50,000 Yes 2. 27.08.2019 55,00,000 27,50,000 Yes 3. 18.03.2020 20,00,000 1,00,000 Yes 4. 17.06.2020 1,10,00,000 55,00,000 No 5. 20.12.2019 Uththaan PAN-AAJU0183G 13,12,500 6,65,250 Yes 6. 14.05.2020 12,89,400 6,44,700 Yes 7. 07.05.2020 End Poverty PA....
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..... Ld. Counsel submitted that disallowance of deduction claimed under section 80G of the Act will result in double disallowance, which is not provided for by the Legislature. He has placed reliance on Bangalore Bench of the Tribunal judgment in the case of Allegis services (India) Pvt Ltd vs ACIT Bangalore: ITA No.1693/Bang/2019. Relevant extracts of the decision, as relied by him, are reproduced hereunder: "14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head 'Income from Business or Profession", whereas monies spend under section 80G are claimed while computing "Total Taxable Income" in the hands of appellant. The point of claim under these provisions are different 15. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head "Income from Bus....
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....oluntarily for the eligibility of claim u/s. 80G of the Act but due to legal obligation prescribed u/s. 135 r.w. Schedule VII of Companies Act, 2013. We find that the A.O has allowed eduction u/s. 80G of the Act in respect of contribution made to PM Relief Fund which is not disputed. We are of the opinion that the A.O. has not made his observations clear that no CSR expenses are eligible for deduction u/s. 80G of the Act. We consider it appropriate to refer to the Clauses (link) & (d) of sub section 2 of Section 80G of the Act which are read as under: "(link) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the appellant in pursuance of Corporate Social Responsibility under sub-section (3) of Section 135 of the Companies Act, 2013 (18 of 2013): or (iihl) the Clean Ganga Fund, set up by the Central Government, where such appellant is a resident and such sum is other than the sum spent by the appellant in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013) (18 of 2013)" Where these two exceptions are provided in Section 80G of the Act, it can be inferred that the other contributions ....
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..... We find that the case law is fully applicable to the facts of the case. There is no restriction in the Act that expenditure when disallowed for CSR cannot be considered w/s 80G of the Act, Hence, we remit the issue to the file of AO to verify whether these payments were qualified as donations u/s 80G of the Act or not, if they qualify as donation u/s 80G of the Act then the requisite amount deserves to be allowed." (emphasis supplied) 6.3 Ld. Counsel also relied judgment in case of Teradata India Pvt Ltd vs. DCIT: ITA 1248/Del/2022, the co-ordinate Delhi Bench of the Tribunal, where in the bench allowed the deduction claimed under section 80G of the Act in respect of donations made to eligible institutions as part of CSR Expenditure, holding as under; "16. It is not in dispute that contributions made by the assessee are made to eligible institutions which are enjoying exemption u/s 80G of the Act. The fact that those contributions were made only to eligible institutions are not in dispute before us. We find that all the institutions listed in the tabulation are enjoying exemption u/s 80G of the Act and accordingly, assessee would be entitled for deduction u/s 80G of the Act th....
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....e Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act. 15. This aspect has been dealt with by successive Co-ordinate Benches in the cases relied upon by the assessee. While elaborately discussing this issue in the case of JMS Mining (P.) Ltd.... 16. We are in agreement with such observations and findings of the Coordinate Bench of the Tribunal and while respectfully following the same, we hold that inasmuch as the assessee satisfied the conditions of section 80G of the Act, the assessee is entitled to claim deduction under section 80G of the Act in respect of such donations which formed part of the spend towards CSR. Accordingly, we hold Ground No. 2 in favour of the assessee." (emphasis supplied) 6.5 Reliance was al....
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....utions that are engaged in undertaking such projects, which is also a recognized way of compliance of CSR obligation. 7.2 The assessing officer and CIT(A) have relied upon General Circular 14/2021 dated 25.08.2021 issued by MCA and "Explanatory Notes to the provisions of the Finance (No.2) Act, 2014" to hold that donations made as part of CSR expenditure are not allowable as deduction. The foundation of their reasoning being that the donation is voluntary in nature, while CSR expenditures are under statutory obligations. 7.3 As we take notice of the fact that Parliament legislated that CSR expenses would not be eligible for deduction as business expenditure under section 37 of the Act by inserting Explanation 2 to section 37(1) vide the Finance (No.2) Act, 2014 (applicable from the assessment year 2015-16), which provided that any expenditure incurred by an assessee on the activities relating to CSR referred to in section 135 of the CA 2013, shall not be deemed to be an expenditure incurred by an assessee for the purpose of business or profession and shall not be allowed as deduction under section 37(1) of the IT Act. The intent of Parliament in bringing the aforesaid provision i....
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..... The Act permits deduction of donations as per Section 80G of the Act, even though, assessee is not gaining any benefit out of any reciprocity from donee. Similar is the case of CSR expenditure. Thus the reasoning of learned Tax Authority, the CSR expenditure is mandatory, does not justify disallowance of these expenditures u/s 80G, if other conditions of section 80G are fulfilled. There is no allegation of Revenue that other conditions of Section 80G are not fulfilled. We, thus sustain the ground. 8. Ground of Appeal No. 3 to 3.1:- Ld. Counsel has submitted that the appellant, as a consistent practice, follows an "accrual system of accounting" wherein the revenue is recognized once the service has been rendered and the bill is raised upon the service recipient. The service recipient is obligated to deduct applicable tax (TDS) under the relevant provisions of the Act while making the payment. However, in appellant's case, there is a gap in the recognition of revenue by the appellant and deduction of taxes by the receipt inasmuch as, for services provided by the appellant around year end, the revenue is recognized by the appellant in March, however, the TDS is deducted by the ....
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....r the year ended 31 March 2020-refer pages 4- 61 @ 44 of PB; (d) Copy of Form 26AS for AY 2020-21 and 2021-22-refer pages 137-148 and 149- 162 @ 154 of PB: (e) Copy of relevant extract of ITR for AY 2020-21 and 2021-22 duly evidencing that credit of TDS of Rs. 3,87,50,028 was claimed in the year under consideration and not the subsequent year refer pages 2-3, 166-167 of PB. 9. On a perusal of the aforesaid trail of documents, it can be concluded that there remains no doubt that both the income and TDS deducted thereon has duly been offered tax during the year under consideration and no credit for such TDS has been claimed in the subsequent assessment year. 9.1 Even otherwise, in the computation of income annexed to the assessment order, the assessing officer however did not allow the credit of Rs. 3,87,50,028 claimed by the applicant without granting any opportunity and without assigning any reason for the same. Similarly the CIT(A) dismissed the claim of the applicant for alleged want of reconciliation of TDS and the corresponding income shown, without providing the applicant with an opportunity to furnish the details. In the light of provisions of section 199 of the Act rea....