TaxTMI 
TaxTMI 
2024 (9) TMI 1764
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....ofit of Rs.212,88,18,000/-. The case was selected for scrutiny under CASS and assessment was completed by NFAC u/s.143(3) vide order dated 28/12/2019 assessing the total income at Rs.213,41,84,745/- under normal provisions of the Act. Thereafter, the assessee's case was reopened u/s.147 and assessment was completed vide order dated 29/03/2022 passed u/s.147 r.w.s. 144B assessing total income at Rs.2,13,57,77,867/-. Later on, the ld. PCIT on examination of records noted that the reason for scrutiny selection was to examine the business income of the assessee and one of the reason was CSR expenses by the assessee. The assessee has debited Rs.5,47,00,000/- towards CSR shown in other expenses in the profit and loss statement and the same was added back in the computation of income of the assessee as same was not allowable u/s.37(1). However, assessee has claimed deduction u/s.80G of a sum of Rs.1,37,85,334/- and the Faceless Assessing Officer has allowed the claim of the assessee. Accordingly, show-cause notice was issued by the ld. PCIT holding that if CSR expenses is not allowable u/s.37(1) r.w. Explanation (2), then same expenses cannot be allowed u/s.80G because what is prohibited ....
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....im of deduction of Rs. 1.37.85.334 under Section BOG of the Act [refer Para 2.3 of Annexure to the captioned notice] 2.17.During the captioned AY, the Assessee debited Rs. 5,47,00,000 towards corporate social responsibility (CSR). Refer Note (1) under Note 32-Other Expenses in the financial statements of the captioned AY in this regard. 2.18.At Para 2.3 of the Annexure to the captioned notice, your goodself has provided that CSR expense is added back by the Assessee in the computation of Income and again claimed deduction of Rs. 1,37,85,334 under Chapter VIA as donation. In this regard, your goodself has provided that such CSR expense is not allowable as a business expenditure in light of the amendment made vide Finance Act, 2014, and accordingly, the said expense is required to be disallowed. 2.19.At the outset, it is submitted that the Assessee had furnished the following documents before your goodself during the course of assessment proceedings: a. Financial statements for the year ended March 31, 2017 (refer Annexure A to assessment submission dated April 15, 2019). b. Tax audit report in Form 3CA-3CD for the captioned AY (refer Anne....
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....334, however, the allowability of the said deduction has not been questioned in the reassessment notice. Without prejudice to this, as submitted above, the Assessee has already furnished relevant submission/documents during the course of assessment to justify such claim of deduction. 2.25. In light of the above, it appears that your goodself is uncertain on the reason for concluding that the Assessee's income has escaped assessment, and hence, has therefore, contended to disallow CSR expenses which are already disallowed by the Assessee in its ROI. In light of such uncertainty also, the re-opening is unwarranted and merits to be dropped. 6. After considering this reply, the ld. AO had accepted the assessee's claim. He further drew our attention to the relevant observation of the ld. AO in the assessment order from pages 11-14. The ld. AO had accepted the contention of the assessee after observing as under:- "Above reply of the assessee and the documents enclosed as per annexure 9 have been gone through. From the computation of the assessee, it is seen that the assessee has disallowed CSR expenses u/s 37(i) but that does not put any bar for claiming deductio....
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...., CSR expenditure is not allowable as deduction while computing the business income under the provision of Section 28-44DB, whereas deduction u/s.80G is allowed while computing the total income under Chapter VIA. There is no pre-condition that claim for deduction u/s.80G on a donation should be voluntary. It is independent of computation of business income as it is allowed from Gross Total Income. The assessee had disallowed the CSR expenses while computing business income. Further, there is no dispute that the assessee has filed complete details of donation and also filed the certificate u/s.80G which was enclosed before the AO. Section 80G (1) of the Act provides that in computing total income of the assessee, they shall be deducted in accordance with the provision of Section, such sum paid by the assessee in the previous year as a donation. Deduction under Chapter VIA provides deduction from the gross total income which is computed after making necessary allowances / disallowances in accordance with Section 28-44BB of the Act including Explanation to Section 37(1). Thus, Section 37(1) and Section 80G of the Act are independent and the principles governing what is not allowable u....