TaxTMI 
TaxTMI 
2025 (12) TMI 262
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....unt of Rs. 26,00,000/- on account of CSR expenditure and added the same to the total income in its computation of income as the same was not allowable u/s 37(1) of the Act. However, the assessee had 50% i.e Rs. 13,00,000/- of the CSR Expenditure claimed as deduction u/s 80G of the Act. However, according to Ld. PCIT the AO had allowed assessee's claim of deduction u/s 80G of the Act and has failed to examine the issue of allowability of deduction u/s 80G on the donation made out of CSR expenditure, thus invoking the jurisdiction u/s 263 of the Act. 4. Whereas, Ld. AR while placing reliance upon the order passed by the AO submitted that the issue in question was looked into in detail and in this regard placed on record the copy of notice issued u/s 142(1) of the Act along with questionnaire dated 07.03.2022 the same is at paper book page No. 27 to 28 and the query raised by the AO u/s 142(1) of the Act are reproduced herein below: 5. The assessee has also filed detailed submissions before AO dated 11.03.2022 along with annexure and the same is at paper book page No. 29 to 35 and the same is reproduced herein below: 6. We further noticed that the copy of computation of incom....
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....S Mining (P.) Ltd. v. PCIT [2021] 130 taxmann.com 118 (Kolkata-Trib.). It was submitted that in the said case also, the assessee had claimed deduction under Section 80G in respect of donations forming part of CSR expenditure. The Tribunal, after examining the statutory framework, particularly the proviso to Section 80G(2), noted that while donations to funds such as the Swachh Bharat Kosh and the Clean Ganga Fund are expressly excluded for CSR deductibility under Section 80G, no such restriction applies to other qualifying donations and section 263 invoked was accordingly setaside. The learned counsel further submitted that the Ld. PCIT himself had acknowledged the existence of a view taken by Co-ordinate Benches of the Tribunal favouring the allowability of such deduction, and that the Department's challenge to the same is presently pending before the jurisdictional High Court. Thus, it was argued that the view adopted by the Assessing Officer was a plausible and sustainable one in law, and merely because the Ld. PCIT held a different legal opinion, he could not invoke Section 263 to supplant the original view with his own interpretation. 5.1 In rebuttal, the learned Depa....
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....as allowed in respect of donations forming part of CSR expenditure. The assessee has also placed reliance on the judgment of the Kolkata Bench of the Tribunal in JMS Mining (P.) Ltd., while the Revenue has referred to the contrary view adopted in Agilent Technologies (International) (P.) Ltd. by the Delhi Bench. 6.2 In view of the existence of two plausible legal views on the issue, it is trite law that where the Assessing Officer has adopted one of the possible views-one which is neither perverse nor contrary to law-the exercise of revisionary jurisdiction under Section 263 of the Act is not warranted. The view adopted by the Assessing Officer cannot be regarded as unsustainable in law merely because another authority holds a different opinion. Further, in CIT v. Max India Ltd. [(2007) 295 ITR 282 (SC)], it is held that where two views are possible and the Assessing Officer has adopted one of them, the revisional jurisdiction cannot be exercised merely because the Commissioner prefers the other view. 6.3 Accordingly, we are of the view that the assessment order in question cannot be held to be erroneous and prejudicial to the interest of the Revenue so as to just....
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..../4392/2025 11. Thus it was requested to dismiss the appeal filed by the assessee. 12. We have heard the counsels of both the parties, perused the material placed on record, Judgements cited before us and also orders passed by Revenue Authorities. From the record, we noticed that as per the facts of the present case the assessee is a company engaged in the business of broking, distribution of financial products etc. During the year under consideration, the assessee had made donation to charitable Trust amounting to Rs. 26,00,000/- and had claimed deduction under section 80G of the Act. Although the assessee had classified the amount of donation as "Corporate Social Responsibility" (CSR) expenses under section 135 of the Companies Act, 2013 in his books of account and suo moto disallowed the same in computation of income in accordance Explanation 2 of section 37 of the Act. However, in his return of income, the assessee claimed deduction under section 80G of the Act. The said claim was duly disclosed in the computation of income and tax audit report, which was examined and allowed by the Ld. AO while passing the order of assessment under section 143(3) of the Act dated 24.9.202....
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.... 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 provisions of section 37 of the Income-tax Act. Therefore, in order to provide certainty on this issue, said section 37 has been amended to clarify that for the purposes of sub-section (1) of section 37 any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under said section 37. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Income-tax Act shall be allowed as deduction under those sections subject to fulfillment of conditions, if any, specified therein." 16. The CBDT Circular clearly states that the restriction on claiming deduction of CSR expense is only with respect to Section 37(1) of the Act wherein it will not be deemed to be a business ....
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.... in section 135 of the Companies Act, 2013 shall not be allowed as ' business expenditure' and shall be deemed to have not been incurred for purpose of business. The embargo created by Explanation 2 inserted in section 37 by Finance (No. 2) Act, 2014 was to deny deduction for (3SR expense incurred by companies, as and by way of regular business expenditure while computing 'income under the head business'. So, it can be clearly seen that this Explanation 2 to section 37(1) which denies deduction for CSR expenses by way of business expenditure is applicable only to the extent of computing 'business income' under Chapter IV-D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter, so as to say donations made by charitable trust registered under section 80G.Parliament has expressed its intention clearly by bringing in restriction in respect of expenditure classified by an assessee company while claiming deduction under section 80G i.e. CSR expenditure related to Swachh Bharat Kosh and Clean Ganga Fund. And if the Parliament desired, it could have been made such kin....
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....reasons given by the Id. PCIT, we are unable to sustain the impugned order u/s.263 on this issue for the reason that, this issue has been duly enquired and examined by the Id. AO during the course of assessment proceedings and without finding any defect in such order or how the claim allowed by the Id. AO u/s.80G is unsustainable in law, he cannot cancel the assessment order. Assessee has also relied upon various Tribunal decisions directly on this issue which has also been incorporated in the impugned order, wherein it has been held that even if the money spent for CSR is disallowable but if the same has been paid to charitable organisation and donation is claimed u/s.80G, the same is allowable, because both operate separately. Thus, taking a contrary opinion does not mean that order of the Id. AO erroneous and prejudicial to the interest of the Revenue. 12. 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 und....
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....ions 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." 13. 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 Incometax 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. Titus, allowing the claim of deduction u/s. 80G by the Id. 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." 20. Therefore after having gone through the decisions referred above and also keeping in view of the facts of the present case, we are also of the view ....
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....we would like to submit the following details and doc ment as follows 1. Reason of High Refund: (Point No. 'b' of notice dated 07.03.2022 and Point no. '5' of notice dated 07.11.2021) e has filed the return of income declaring the total income of Rs. 1,68,56,447/- Detail of the same is as follows: Particulars Amount 5.60.323 Income under Head of Business & Profession 19,05,60,323 | Income from Long Term Capital Gain @10% 2,17,13,972 3.71 997 Less: Deduction under Chapter VI-A 20,00,000 Net Income after Deduction as above Het Income after Deduction as a Income chargeable to tax at special rates 2.20.85.970 0 DE 56 000 Income chargeable to tax at normal rates 20,35,76,990 |Tax payable on total income including Interest (A) Less: - Prepaid Taxes :- 227. Starllt Tower sie dente Fax Naga, Dehl - 92. Ph. : 011-46081818 e-mail : delhi@kcjainc 227. Starlit Tower, 28, Yeshwant Niwas Road, Indore - 452 001. Ph. : 0731 - 2547979 e-mail : indore@kcjainc House 25, G. T. Capital Home, Bihiyee Science Centre, Saddu, Raipur, Chhattisgarh - 492 014. e-mail : raipur@kciain 5-A, 162, Aashirwad Complex, Maharana Pratap Nagar, Zone-1, Bhopal, ....
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....ission we would like to submit the following details and document as follows: 1. Reason of High Refund: (Point No. 'b' of notice dated 07.03.2022 and Point no. '5' of notice dated 07.11.2021) The assessee has filed the return of income declaring the total income of Rs. 1,68,56,447/ -. Detail of the same is as follows: Particulars Amountan Income under Head of Business & Profession Business & Profession 9,05,60,323 2,00,020 Income from Short Term Capital Gain @15% 1,10,80,1 Income from Long Term Capital Gain @10% 2,17,13,97 Income from Income from other sources 3.71.997 Total Income for the Year 22,69,62,955 Tess. Deduction under Chapter VI- Less: Deduction under Chapter VI-A 13.00.000 10,00,000 Net Income after Deduction as above as above 22,56,62,960 Hetaction Income chargeable to tax at special rates 2,20,85,970 Income charanable to love of warmal sabor ttome Chargeable to tax at normal rates 20,00,70,990 Tax payable on total income including Interest (A) 5.37.51.453 Less: - Prepaid Taxes :- Tess. Deduction under Chapter VI- Less: Deduction under Chapter VI-A 13.00.000 10,00,000 Net Income after Deduction as above a....
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....s under: Assessment Year 2018-19 2019-20 2020-21 Gross Profit/ (Loss) 6.50.35,323 216,80,28,94 60,55,74,800 Net Profit/(Loss) 27.36,59,868 18,13,61,633 23,19,72,981 Turnover 239,10,05,52 266,76,57,23 242,04,89,915 Deduction Claimed 10,75,000 5,10,000 13,00,000 B L SINGHANIA FOUNDATION 121 Atlanta, Nariman Point, Mumbai - 400 021 Tel :- 022 - 4212 8000 ; Fax: 022 - 2202 9146 Receipt No .: 19-20/02 Date: Received reith thanks from: Ravi Dyeware Company Pot Ltd the sinn of Rupees: Fifteen Lacs Only *** By Cheque / Draft No.381393 Dated: 06/02/2020 Drawn on: Punjab National Bank, Illaco House B Muwho- 400001 Towards contribution for Medical/Education/other relifs Attached herewith 80 G certificate under the Income Tax act, 1961. PAN:AACTB8916E For B. L.SINGHANIA FOUNDATION Rs. 15,00,000/ that Authorised Signatory "Subject to realisation of Cheque OF INCOME T COMMISSIONER OF INCOME TAX (EXEMPTIONS) 617, 6th Floor, Piramal Chambers, Lalbaug, Mumbai - 400 012 CERTIFICATE UNDER SECTION 80-G OF THE INCOME TAX ACT, 1961 Name & Addr n.B.L. SINGHANIA FOUNDATION 4532 Datod 20.08.2017 Registration No. :15.09.2017 of the f....
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....ble to he recalled'rescinded'withdrawn. in case of any contravention o statutory provisions as contained in the Income tax Acu/Rules, 1961 or any of the conditions moletour Huneine as also the corpus of the Trust fund should be applied to and for public charitable purpo Te conditions of Iunitarions if any, as may from time to time be laid down in the Bombay Public Trust Acu 19son subje 1 Act. (961 or any other Act governing the Public Charitable Trust. Hex Act. i fatyunterwinding up of the Trust, the entire frust fund shall be realized and first be used for payment liabilities of the Trust. The user'se cover of Trustees o, founder er member of their relatives or related concerns, but distributed in my muratmotor Tras whose objects are similar to those of this Trust after obtaining previous approval the Charity Commission court or any other er curipetent auth here the Frust tends to promote The Trust may apply the Trust fund for charitable purposes outside India only in International Welfare in which India is interested ind prior approvalis co wat is caused by" s of a General or special order front the In terms of provise to Section II( IxC) of the Income Tax Act. 196....