TaxTMI 
TaxTMI 
2025 (7) TMI 1228
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....lowance of donation claimed u/s 80G of the Income Tax Act amounting to Rs. 12,49,000/-) which was passed u/s 143(3) after due application of mind and proper inquiries. 2. The learned PCIT failed to appreciate that the issue regarding deduction under section 80G in respect of donations made by the appellant, including those forming part of CSR obligation, was specifically raised by the Assessing Officer during assessment proceedings and was duly responded to and examined before finalizing the assessment. 3. On the facts and circumstances of the case and in law the learned PCIT erred on facts and in law in exercising revisionary powers under section 263 of the Acton various issues in the impugned order, without satisfying the twin jurisdictional conditions of the assessment order being: (a) erroneous; and (b) prejudicial to the interests of the Revenue and consequently, the impugned order is illegal, bad in law and liable to be quashed. 4. The learned PCIT erred in facts and in law by enhancing/ setting aside the assessment order by exercising powers undersection 263 of the Act, without appreciating that: a. It was not a case of lack of enquiry as ....
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....lowable for donations made in fulfillment of CSR obligations under section 135 of the Companies Act, 2013, thereby ignoring various judicial precedents wherein such deduction has been upheld, inter alia: a. Naik Seafoods Pvt. Ltd. (ITA No. 490/Mum/2021) b. Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019) c. Goldman Sachs Services Pvt. Ltd. (ITA No. 2355/Bang/2019) d. Ericsson India Global Services Pvt. Ltd. (160 taxmann.com 599 7. The learned PCIT erred in holding that the nature of the CSR obligation ipso facto disqualifies the assessee from claiming deduction under section 80G, despite absence of any express bar in the statutory text, other than the two exclusions under Section 80G(2)(a)(iiihk) and (iiihl). 8. On the facts and circumstances of the case and in law the learned PCIT erred in law by claiming that Circular issued by Central Board of Direct Tax is binding on taxpayer. 9. Your Appellant prays that the disallowance made in the impugned order is invalid and bad in law and facts and hence the same may please be deleted. 2. Briefly stated, facts of the case are that during the relevant year, the asse....
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....sion of the Delhi Bench of the Tribunal in the case of Agilent Technologies (International) (P.) Ltd. v. ACIT (2024) 160 taxmann.com 238 (Delhi-Trib.). The Ld. PCIT also drew attention to the specific exclusions contained in section 80G in respect of contributions to certain CSR-related funds such as the 'Swachh Bharat Kosh' and the 'Clean Ganga Fund', to bolster his conclusion that CSR expenses are not deductible under the said provision. Accordingly, the ld. PCIT, held the assessment order as erroneous insofar as prejudicial to the interest of the revenue observing as under: 6.5 The decision of the Assessing Officer in the instant case is erroneous on merits as well as the fact that he has not conducted further enquiries, when facts on record. per se justified and mandated further inquiry or investigation. Furthermore, the submissions of the assessee are not acceptable in view of the Finance Bill, 2014 vide which the concept of Corporate Social Responsibility was introduced. The intent of the legislature itself was that the Corporates share the burden of the Government in providing social services, the extract of which is reproduced here under; "Under the Compan....
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....the Assessing Officer is set-aside on the issue of claim of deduction under section 80G of the Act of CSR expense amounting to Rs. 12,49,000/-. The AO is directed to make an enquiry in this matter and re-assess the income after giving an opportunity of being heard to the assessee." 3. Before us, the Ld. counsel for the assessee placed reliance on the Paper Book comprising pages 1 to 82 drawing our attention to page No. 51 of the Paper Book. He submitted that the Assessing Officer had raised a specific query in respect of claim of deduction of CSR expenditure u/s 80G of the Act. The relevant query raised by the Assessing Officer is reproduced as under: "अनुलनक ANNEXURE 1. आयकर अधनयम, 1961 क धारा 142 (1) के तहत निम्नलिखित खाते या दतावेज या जानकार मांगी गई है: 1. The following ac....
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.... AABTS9310C 30,000 Daar-ul-rehmat Trust AAATD0376Q 6,000 ST. MICHAEL charitable trust AAKTS7117G 15,000 SHETH DHANJI DEVSHI KVO KELAVANI FUND AAATS1495D 100,000 Karnataka Holy cross sisters AAATK1214E 16,000 Shri K.V.O. Seva Samaj AAATS0288A 55,000 Shri Bhojay Sarvodaya Trust AABTS8782J 1,00,000 Srimad Rajchandra Adhyatmik Satsang Sadhna Kendra AABTS2637Q 5,00,000 SWAMI VIVEKANAND SHIKSHAN AAAAS1296H 10,00,000 Laxmiben Lalji Furia Charitable AAATL0063C 2,00,000 Total Donation 24,98,000 Qualifying Amount 24,98,000 Deductible amount under section 80 G @ 50% 12,49,000 Donation receipts issued by all the above charitable institutions along with 80G certificate and bank statement highlighting payments made by the assessee company is already submitted during the ongoing course of assessment proceedings. Contemporaneously, the above donations of Rs. 24,98,000/- also gets covered as a contribution made towards CSR activities and hence such expenditure was also classified as a CSR expenditure in the financial statements and hence the same was disallowed in accordance wit....
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....re, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for computing the taxable income of the company. Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one-third of such expenses by the Government by way of tax expenditure. The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under the existing provisions of section 37 of the Income-tax Act. Therefore, in order to pr....
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....emorandum to the Finance Bill, it has been clarified that no deduction will be allowed for CSR expenditure as a business expenditure, but there is no reference to ineligibility or restriction in claiming deduction under section 80G for donations made pursuant to Companies Act 2013 obligations. Also, in the Memorandum, it has been clarified that CSR expenses which fall for consideration under sections 30 to 36 of the IT Act are allowable. Thus, a position emerges that the intent of the Legislature was not to blankly disallow every CSR expenditure. * Section 80G(1) provides that in computing the total income of the assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Further, section 80G(2) list down the sums on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1). Thus, there is no correlation between section 37(1) and section 80G. Principles governing....
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....(FAQ No. 6) has clarified that as follows: "Question No. 6: What tax benefits can be availed under CSR? Answer: No specific tax exemptions have been extended to CSR expenditure per se. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemptions have been extended to expenditure incurred on CSR, spending on several activities like Prime Minister's Relief Fund, scientific research, rural development projects, skill development projects, agriculture extension projects etc, which fund place in Schedule VII, already enjoys exemptions under different sections of the Income-tax Act, 1961." This clarification issued by one arm of the Government, supports the view that deduction under section 80G is allowable on such contributions. Jurisprudence on allowability of donations (forming part of CSR expenditure) under section 80G of the IT Act * In Goldman Sachs Services Pvt. Ltd. v. JCIT [IT(TP)A No.2355/Bang/2019-Banglore ITAT ), the Assessing Officer ('AO'), disallowed deduction under section 80G on the basis that the donations were in the nature of CSR expend....
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....er reference has been duly accepted as a CSR expenditure under the Companies Act 2013. In view of the same, your goodself will appreciate that the claim made by the assessee company for the year under reference is correct and in accordance with the provisions of laws. In light of above facts, your goodself will appreciate that the donations made by the assessee company although forming part of CSR expenditure, is allowed as a deduction under section 80G of the IT Act and therefore no adverse inference is called for. Should your goodself require any further clarification, explanation or elaborations in respect of the above, we shall be glad to furnish the same. In case your goodself is inclined to deny the above claim, then a virtual hearing may please be fixed. Thanking you. Yours truly, For GBCA & Associates LLP Chartered Accountants" 3.2 The Assessing Officer has already referred to the said reply of the assessee in the assessment order. In light of the above, the learned counsel contended that a full-fledged enquiry was conducted by the Assessing Officer on the very issue now sought to be revised, and hence, the invocation of Expla....
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....assessee's claim of deduction under Section 80G of the Act in respect of expenditure incurred towards corporate social responsibility (CSR), the same being, according to the PCIT, of a non-voluntary nature. 5.2 On a careful consideration of the record, we find substantial force in the submission of the learned counsel for the assessee that the Assessing Officer did not proceed mechanically or in breach of the standard of enquiry contemplated under the Act. The assessment record clearly demonstrates that a specific query was raised under Section 142(1) of the Act, vide notice dated 28.07.2022, calling upon the assessee to justify its claim under Section 80G vis-à-vis donations which formed part of its CSR expenditure. The assessee, in response, furnished a detailed reply, setting out the names of the donee institutions, the amount of donation, the nature of their registration under the Act, and further relied upon judicial precedents in support of its claim. These facts, in our considered view, clearly establish that the Assessing Officer had applied his mind and examined the issue in depth. he Coordinate Bench of the Tribunal in NTT Global Networks Pvt. Ltd. v. PCIT [supr....
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....he view of Ld PCIT is that the said claim has been made by the assessee in respect of the expenses incurred on Corporate Social Responsibility (CSR), which is disallowable under section 37(1) of the Act and hence deduction under section 80G should not have been allowed. We notice that, in the following cases, it has been held that the disallowance of CSR expenses are required to be made u/s 37(1) of the Act, but there is no statutory bar in claiming the deduction u/s 80G of the Act if the said expenses are otherwise allowable as deduction under that section:- (a) Allegis Services (India) Pvt Ltd vs. ACIT (ITA No.1693/Bang/ 2019)(Bang.) (Trib.) (b) JMS Mining (P) Ltd vs. PCIT (130 taxmann.com 118) (c) First American (India) P Ltd vs. ACIT (ITA No. 1762/Bang/ 2019)(Bang) (Trib.) Thus, the view taken by Ld PCIT on this issue is a debatable one, meaning thereby, the action of the AO in allowing deduction u/s 80G results in a possible view. Accordingly, the Ld PCIT was not justified in initiating revision proceedings on this issue. Accordingly, we set aside his order on this issue." 5.4 In light of the foregoing discussion, it is evident that the A....