TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 691
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said amount was transferred to Special Reserve under statutory compulsion and therefore, the amount is to be excluded in computing the total income under the normal provision of the Act, as well as in computing the book profit under section 115JB of the Act. However, the ld. AO did not find reply of the assessee to be cogent and convincing and added the same to the income of the assessee by holding that it is a appropriation of profit of funds which were available to the books of accounts. 3.2. In the appellate proceedings, the ld. CIT (A) also dismissed the appeal of the assessee by holding that the issue decided against the assessee by the decision of the coordinate bench in assessee's own case for A.Y. 2008-09 in ITA No. 424/KOL/2011 vide order dated 12.09.2014. 3.3. After hearing the rival contentions and perusing the materials available on record, we find that the issue is squarely covered against the assessee by the decision of the coordinate bench in assessee's own case in ITA No. 424/KOL/2011 for A.Y. 2008-09 and also for assessment year 2011-12, wherein it has been held that transferring of amount to special reserve pursuant to provision of section 45 IC of the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion made to CSR Foundation is eligible for 50% deduction under section 80G of the Act but according to the AO, there is no correlation between the provision of section 37(1) and 80G of the Act. In our opinion, the assessee is entitled to the deduction under section 80G of the Act even if the amount is donated under CSR expenses. It is specifically mentioned in section 80G of the Act that no deduction is allowable in two instances namely; contribution towards the Swachh Bharat Kosh (Clean India Fund) and the Clean Ganga Fund respectively, where CSR expenditure is not allowable under section 80G(2)(a)(iiihk) and (Iiihl) of the Act. Therefore, provisions are not applicable to other CSR expenditure. The case of the assessee is clearly covered by the decision of the co- ordinate Bench in the case of DCIT v. M/s The Peerless General Finance & Investment & co. Ltd. in ITA No. 1469 & 1470/KOL/2019, wherein it has been held that the assessee is entitled to deduction of donation under section 80G of the Act where the assessee has donated the amount to eligible institutions even the amount is paid under CSR activities. 4.5. Similarly, the case of the assessee also find support from the dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f CSR expenses u/s. 80G of the Income Tax Act,1961.But the assessing officer has rejected the assesses claim without verifying the nature of contributions and observed that it is not a donation, and was not spent voluntarily for the eligibility of claim u/s.80G of the Act but due to legal obligation prescribed u/s. 135 r.w. Schedule VII of Companies Act, 2013.We find that the A.O has allowed deduction u/s.80G of the Act in respect of contribution made to PM Relief Fund which is not disputed. We are of the opinion that the A.O. has not made his observations clear that no CSR expenses are eligible for deduction u/s. 80G of the Act. We consider it appropriate to refer to the Clauses (iiihk) & (iiihl) of sub- section 2 of Section 80G of the Act which are read as under : "(iiihk) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of Section 135 of the Companies Act, 2013 (18 of 2013); or (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....puting the book profit under section 115JB of the Act, which was replied by the assessee on 9-03-2021.However, reply of the assessee did not find favor and the AO added the amount transferred to income tax special reserve on the ground that it is a reserve under clause (b) of explanation 1 to section 115JB of the Act. 5.2. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO. 5.3. After hearing the rival contentions and perusing the materials available on record, we find that the provisions of section 36(1)(viii) of the Act provided for creation of special reserve and deduction of the same. Section 36(1)(viii) of the Act provides for taxability of the amount withdrawn from the special reserve under section 36(1)(viii) of the Act under the head, profit and gains from the business and profession. Therefore, the amount transferred to special reserve as per section 36(1)(viii) of the Act is taxable in the year in which the amount is withdrawn from such reserve. Therefore, in our opinion, the said amount transferred to reserve under section 36(1)(viii) shall not be included in the book profit under section 115JB of the Act. If we allow the grant of reser....