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2024 (6) TMI 8
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....lia, engaged in the business of rendering data processing services and export thereof. The appellant filed return of income, 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....
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....,028. 3.1. That the CIT(A) erred in not appreciating that the income corresponding to the aforesaid TDS credit of Rs. 3,87,50,028 was offered to tax in the year under consideration and hence the credit was 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. 27.0....
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....ant suo-motu disallowed the expenditure incurred as part of CSR Activities in accordance with provisions of section 37(1) of the Act. However, for the purpose of claiming deduction under section 80G of the Act, the donations made as part of CSR expenditure were considered. It was submitted that law in this regard is now quite settled. 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 ....
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....015-16 as per the Explanation 2 to Section 37(1) of the Act inserted by the Finance Act No.2. 2014. Whereas, the appellant company has made a claim for deduction of CSR expenses u/s. 80G of the Income Tax Act, 1961. But the assessing officer has rejected the assesses claim without verifying the nature of contributions and observed that it is not a donation, and was not spent voluntarily 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) t....
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....upra) has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction's 80G of the Act ITA No. 1523/Del./2022 subject to satisfying the requisite conditions prescribed for deduction w/s 80G of the Act. For this purpose, the issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of donation's 80G of the Act. 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 ....
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.... Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards Swatch Bharath Kosh and Clean Ganga Fund spent as apart of CSR are not qualified for deduction under section 80G of the Act. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The 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....
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....in percentage of profits of last three years on activities pertaining to Corporate Social Responsibility (CSR). The expenditure on CSR, could be by way of expenditure on projects directly undertaken by said companies, such as setting up and running schools, social business projects, etc. Such expenditure would include expenditure otherwise falling for consideration under section 37(1) of the Act. On the other hand, companies, instead of undertaking or participating directly in a project, may choose to give donations to institutions 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 expenditu....
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.... 2 to section 37(1) of the Act. Thus, there is no correlation between suo-moto disallowance in section 37(1) and claim of deduction under section 80G of the Act. 7.5 As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of donee. The CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. 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 accountin....
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.... this regard was invited to the following documents for establishing that income from TravelPort was offered to tax during the year: (a) Copy of invoice dated 30.04.2020 raised on TravelPort for services rendered in the month of February 2020-refer page 127 of PB: (b) Copy of the ledger of 'TravelPort' and 'Data Processing Services' duly evidencing that the income of Rs. 38.75 crore was offered to tax in the year under consideration and not in subsequent year-refer pages 128-136 of PB: (c) Copy of financial statements for 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 T....