TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1694
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....vertical spindle mill spares, etc. primarily used in grinding mills by cement, mining and thermal power industries. During the Asst. Year 2017-18, the assessee incurred donation expenses of Rs. 41,06,704/- and Corporate Social Responsibility (herein after referred as CSR) expenses of Rs. 6,18,62,624/-. The assessee company filed its Return of Income on 29-11-2017, wherein disallowed the above donation and CSR expenses while calculating its business income. The assessee claimed deduction of Rs. 2,87,80,500/- in respect of CSR expenses of Rs. 5,65,61,000/- under section 80G of the Act, which is the only claim made under Chapter VI-A. The return was taken up for scrutiny assessment and the claim of deduction u/s. 80G was fully examined by the A.O. by issuing notices u/s. 142(1) and after considering the detailed replies the Ld. AO allowed claim of deduction u/s. 80G of the Act. 3. Perusal of the above assessment order, Ld. PCIT found that the AO is erred in allowing the claim of deduction u/s. 80G in respect of CSR expenses thereby passed erroneous assessment order which is prejudicial to the interest of Revenue. Therefore PCIT issued a show cause noti....
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...., the action of Id. PCIT is to be deleted. 6. Ld. PCIT has erred in not considering various facts, submissions, explanations and clarifications as given by the appellant and further erred in not appreciating the facts and law in their proper perspective. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 5. Ld. Senior Counsel Shri Tushar Hemani appearing for the assessee submitted that the assessment orders passed by the Ld. AO are neither erroneous nor prejudicial to the interest of Revenue. Since the Ld. AO considered facts of the case in its entirety, raised queries in respect of deduction claimed under section 80G (Chapter VI-A) of the Act. Further the Ld. AO 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. Hence, there is no loss to the revenue on account of allowing such claim. Thus, AO's order is neither prejudicial to the interest of the revenue nor erroneous, but the AO's view was duly supported by the then existing propo....
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....nd Welfare Trust 20,00,000 80G 50% 10,00,000 3 School For Deaf Mutes Society 15,00,000 80G 50% 7,50,000 4 Andh Kanya Prakash Gruh 5,00,000 80G 50% 2,50,000 5 Samvedana 5,00,000 80G 50% 2,50,000 6 Family Planning Association of India 5,00,000 80G 100% 5,00,000 9 Samvedna Trust 51,000 80G 50% 25,500 10 Flat Day 10,000 80G 50% 5,000 Total 57061000 28780500 7.1. The Assessing Officer issued further notice u/s. 142(1) dated 10-02-2021 since large deduction under Chapter-VIA from total income is claimed by the assessee, requested the assessee to provide (i) Section/Sub-Section wise details of deduction claimed under Chapter-VIA, (ii) details of earnings under the relevant heads against which deduction claimed, (iii) note on eligibility criteria claimed different sections of Chapter-VIA, (iv) details of bank accounts along with bank statements in support of the claim and (v) documentary evidence in respect of investment/expenditure /payment etc. made to claim the deductions. 7.2. In reply, vide assessee letter dated 18-02-2021 submitted as follows: 17. With respect to deduction under Chapter VI-A ....
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....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 considered view following Apex Court ruling the Revision orders passed by Ld. PCIT are not sustainable in law. 8. On merits of the case, whether the CSR expenditure is allowable u/s. 80G of the Act is also no more res integra by a series of decisions by various Co-ordinate Benches of the Tribunal. 8.1. The Delhi Tribunal in the case of Interglobe Technology Quotient (P.) Ltd. (cited supra) held that mandatory nature of CSR expenditure does not justify disallowance of same u/s. 80G, if other conditions of Section 80G are fulfilled by observing as follows: "7.3 As we take notice of the fact that Parliament legislat....
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....arious heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no correlation between suomoto 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." 8.2. The Mumbai Bench of the Tribunal in the case of Alubond Dacs India (P.) Ltd. (cited supra) cons....
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....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 proving the voluntariness of the donation contributed by the assessee for claiming deduction u/s. 80G of the Act. The amendment brought about by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses (iiihk) and (iiihl) to be the exception for qualifying a donation for claiming us. 80G of the Act could also be an evidencing factor to substantiate that CSR expenditures which falls under the nature specified in section 30 to 36 of the Act are an allowable deduction u/s 80G of the Act. 12. On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s. 80G ....