TaxTMI 
TaxTMI 
2024 (10) TMI 1686
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.... information and evidences and assessment order was passed on 07-06-2021 accepting the returned income. 3. Perusal of the above assessment order, Ld. PCIT found that the assessee had claimed expenditure of Rs. 32,51,000/- as Corporate Social Responsibility (CSR) expenditure in the P & L account. This amount was added back the in the computation of income but 50% of the same namely Rs. 16,25,500/- claimed as deduction u/s. 80G of the Act Since CSR expenditure being an application of income is not incurred wholly and exclusively for the purpose of carrying on business, is not allowable as deduction u/s. 80G of the Act. Thus the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. Hence a show cause notice was issued to the assessee as to why not to revise the assessment order to deny the claim of deduction u/s. 80G on the CSR expenses. 3.1. In reply the assessee made a detailed submission brining the fact that the A.O. during the assessment proceedings thoroughly considered the issue in detail and allowed the deduction u/s. 80G of the Act. Thus the assessment order is neither erroneous nor prejudicial to the interes....
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.... of the case in its entirety, raised queries in respect of the deduction claimed u/s. 80G (Chapter VI-A of the Act) on the CSR expenditure paid to H.N. Safal Foundation, which has valid exemption certificate from DIT(Exemption) and a recognized the Trust as an eligible entity for exemption u/s. 80G of the Act. Further the Ld. A.O. considered the submissions and evidences with respect to the claim and took a plausible view that the claim of deduction u/s. 80G in respect of CSR are allowable expenses. Thus there is no loss to the Revenue on account of allowing such claim. 5.1. On merits of the case, Ld. Counsel submitted that it is well settled law that deduction u/s. 80G in respect of CSR expenses is allowable and placed reliance on the following decisions: Sr. No. Case Title Relevant Paragraph Page No. 1. FNF India Private Limited Vs. Assistant Commissioner of Income Tax [(2021) SCC OnLine ITAT 1277] 16-19 1 to 5 2. Goldman Sachs Services Pvt. Ltd. Vs. Joint Commissioner of Income Tax [(2020) SCC OnLine ITAT 4373] 16 6 to 22 3. Honda Motorcycle and Scooter India Pvt. Ltd Vs. Assistant Commissioner of Income Tax, Circle 1(1) [(2023)....
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.... aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. 7.2. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd. (supra) held that this phrase i.e. "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue "unless the view taken by the Assessing Officer is unsustainable in law". Thus in our co....
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..../s 80G. As CSR expenditure is application of income of the assessee under the Income Tax Act, that means it continues to form part of the Total income of the assessee. Section 80G(1) of the Act provides that in computing the total income of an 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) lists down the suns 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) 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 commitmen....
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....statutory obligation on companies as per section 135 of the Companies Act, 2013. It is pertinent to point out that the intention of the legislature was clear when the same was clarified by the Finance (No.2) Act, 2014 that CSR expenses will not fall under the business expenditure and also there has been an express bar specified in sub clause (iiihk) and (iiihl) of section 80G(2)(a) of the Act that any sum paid by the assessee as donation to Swatch Bharat Kosh and Clean Ganga Fund will not come under the purview of deduction u's 80G of the Act subject to certain conditions. This justifies the fact that the other donations specified us 80G of the Act would be entitled to deduction provided the conditions stipulated u/s. 80G of the Act are satisfied. In the present case in hand, the contributions made by the assessee would not fall under the two exceptions specified above which clearly mandates that the assessee is entitled to claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju (supra) is distinguishable on the facts of the present case where there is no requirement of....