TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 253
X X X X Extracts X X X X
X X X X Extracts X X X X
....0/-. 3. The brief facts relevant to the controversy are that the assessee filed its return of income for the year under consideration on 24/12/2021 declaring a total income of Rs. 25,68,44,440/-. In the said return, the assessee claimed deduction under section 80G of Rs. 10,50,000/- in respect of donations aggregating to Rs. 10,00,000/- to KK Birla Memorial, Rs. 6,00,000/- to St. Krishna Public Charitable Trust, and Rs. 5,00,000/- to Udbhav School. During the scrutiny assessment proceedings under section 143(3), the Assessing Officer, upon examination of the documents placed on record, accepted and allowed the claim of deduction under section 80G. 4. The learned PCIT, however, in exercise of his revisionary powers, observed that the expenditure for which deduction was claimed was nothing but CSR expenditure, and in terms of the statutory mandate of the Companies Act, 2013, such CSR expenses were not allowable as deduction under section 80G. He was of the view that allowing deduction under section 80G would amount to subsidising statutory CSR obligations of corporates, which was never the intention of the Legislature. He therefore issued a show cause notice to the assessee. In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s no issue of mutual exclusiveness of the claim found in this regard. Ld. PCIT has not brought on record any law or judicial precedence that such an observation and finding of the ld. AO is incorrect in law. Once the ld. AO has taken a possible view and there is no contrary law, then to take a different view in a revisionary jurisdiction u/s. 263, cannot be held that the order of the ld. AO is erroneous and prejudicial to the interest of the Revenue. There is no case of invoking Explanation 2 to Section 263 which ld. PCIT has done, because ld. AO has made his enquiry and verification on the same issue. Ld. PCIT cannot cancel the assessment order to re-examine the same issue without finding any defect in such order that how the claim made u/s. 80G is unsustainable in law. 10. On merits also, we find that view of ld. AO is correct in law. Claiming a deduction from computation of business income as provided from sections 28 to 44DB is different from claiming a deduction under chapter VIA of the Act which is allowed from Total Income. As per Explanation 2 to Section 37, CSR expenditure is not allowable as deduction while computing the business income under the provision of Sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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." 11. This clarification being issued by the Ministry of Corporate Affairs, Government of India clarifies that donation covered under CSR Expenses which not are eligible for the deduction under section 80G of the Income-tax Act, 1961, but are allowed under different sections. Ergo, there is nothing that if any expenditure is disallowable u/s 37 the same cannot be allowed under other provisions of Act, if the conditions of allowability are satisfied. Thus, allowing the claim of deduction u/s. 80G by the ld. AO cannot be held to be unsustainable in law or amounts to erroneous and prejudicial to the interest of the Revenue. Thus order of the Ld. PCIT is reversed on this point. 12. Thus, we hold that ld. PCIT is not correct in law in cancelling the assessment order by the ld. AO on this issue. Accordingly, the order of the ld. PCIT is quashed. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xamine whether the donations given by the assessee to Rellance Foundation and Shyam Kothari Foundation without any material return and without any consideration and whether it was a grant for quid pro quo. It is not the case of the revenue that the assessee has made contributions to these institutions with an Intention get something in return. The only contention of the revenue is that the contributions are made as part of a mandate and not voluntary. However, the Supreme Court in the above case has laid down the basic principle that a payment made without any material return and without any consideration and not for quid pro quo is a donation. Therefore, the payment made whether voluntarily or as part of a mandate does not negate the intention of the contribution made. • Now coming to the intention of legislature while amending the provisions of section 37 whereby the CSR spend are not allowed to be claimed as a deduction under the said section. Finance (No.2) Act, 2014 brought in the amendment to section 37 by inserting Explanation 2 to the said section with effect from 1-4-2015. • The "Explanatory Notes to the provisions of Finance (No.2) Act, 2014" iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the deduction under section 80G are fulfilled then there should not be any restriction for the assessee to claim the deduction. Before holding so the contention of the revenue that the payments made towards CSR spend are monitored and controlled by the assessee and are not voluntary is addressed section 135 of Companies Act 2013, there are many prescribed modes and activities under Schedule VII In this regard it is relevant to note that though there is a statutory obligation of CSR expenditure under CSR expenditure, (the list is not exhaustive but other section 135 of the Companies Act nor Schedule VII to the Companies Act nor the CSR Rules, mandates donations to the institutes/funds prescribed under section 80G. Therefore, there is merit in the submission of the assessee that though the quantum of CSR spend is mandatory there is no mandate on how amount is to be spent or to whom the contribution is to be made. Accordingly the act of the assessee to choose to Reliance Foundation and Shyam Kothari Foundation which are eligible to accept donations under section 80G is voluntary and is not mandated by section 135 of the Companies Act 2013. Further from the perusal of CSR Rules as appl....