TaxTMI 
TaxTMI 
2026 (5) TMI 218
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....s of the case of the Appellant, the Id. PCIT has erred in holding that assessment order passed by AO after allowing deduction u/s 80G on CSR expenses is erroneous and prejudicial to interest of Revenue. 3. In law and in the facts and circumstances of the case of the Appellant, the Learned PCIT has erred in setting aside the Assessment order dated 23.09.2022 to the file of the AO to enquire the claim of Section 80G deduction out of CSR expenses and modify the assessment order. 4. In law and in the facts and circumstances of the case of the Appellant, the Id. PCIT has erred in holding that Appellant is not eligible for deduction u/s 80G of the Act on CSR expenditure incurred by it." 2.1. Aforesaid grounds raised by the assessee in the present appeal relate to revisionary proceeding initiated u/s.263 and revisionary order passed thereunder. The issue raised in the revisionary proceedings relate to denial of deduction under Chapter-VIA u/s.80G made out of Corporate Social Responsibility (CSR) expenses. 3. Brief facts of the case are that assessee filed its return of income on 22.12.2020, reporting total income at Rs. 3,02,65,360/- under the normal provisions of ....
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....eligibility of claim made u/s 80G to point out that there is no embargo on making such claim as contained in section 80G though it is not permissible u/s 37(1) for which assessee had suo moto made the disallowance while computing its total income reported in the return of income. 6. We have heard both the parties and perused the material on record and given our thoughtful consideration to the submissions made before us. The issue before us is no longer res integra in view of long line of decisions of co-ordinate benches, whereby it has been allowed in favour of the assessee. Some of the judicial precedents are listed below: Sr. No. Case Law ITA No. 1. Worley Services India Pvt Ltd v PCIT ITA 554/Mum/2024 2. Mahansaria Enterprises (P) Ltd v PCIT 175 Taxmann.com 885 3. Naik Seafood Pvt Ltd v PCIT ITA 490/Mum/2021 4. Baiai Electrical Ltd. V. PCIT ITA 1302/Mum/2021 5. Dalai & Broacha Stock Broking (P) Ltd vs. PCIT 175 Taxmann.com 984 6. DCIT v. Hinduja Global Solutions Ltd 1 75 Taxmann.com 411 7. DCIT v. Gabriel Ltd 173 Taxmann.com 21 9 8. MOIL V CIT 396 ITR 244 (Bombay) 9. CIT v. Sunbeam Auto Ltd....
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....is allowed while computing the total income under Chapter VIA. There is no pre-condition that claim for deduction u/s.80G on a donation should be voluntary. It is independent of computation of business income as it is allowed from Gross Total Income. The assessee had disallowed the CSR expenses while computing business income. Further, there is no dispute that the assessee has filed complete details of donation and also filed the certificate u/s.80G which was enclosed before the AO. Section 80G(1) of the Act provides that in computing total income of the assessee, they shall be deducted in accordance with the provision of Section, such sum paid by the assessee in the previous year as a donation. Deduction under Chapter VIA provides deduction from the gross total income which is computed after making necessary allowances / disallowances in accordance with Section 28-44BB of the Act including Explanation to Section 37(1). Thus, Section 37(1) and Section 80G of the Act are independent and the principles governing what is not allowable u/s. 37(1) have been provided in the section itself. Even in section 80G also, what is not allowable has also been provided under the Act. For instance,....
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....lso, in the case of ACIT vs. Sikka Ports and Terminals Ltd. in ITA No. 3755/Mum/2023, on similar issue, it was held as under:- "The assessee during the year disallowed a sum of Rs. 33.85 crores under section 37 towards the CSR Spend in compliance with section 135 of the Companies Act. Since the institutions to which the said amounts are given are registered under section 80G, the assessee claimed 50 per cent i.e. Rs. 16.93 crores of the same as deduction. The argument of the revenue is that the payment are made to comply with the mandate under the Companies Act, and therefore it cannot be treated as donations which are "voluntary" payments. The further argument of the revenue is that when the statute has denied the direct claim of the CSR spend under section 37, the assessee claiming the deduction indirectly under section 80G is against the intention of the legislature and cannot be allowed. The assessee's contention is that there is no restriction under section 80G to the effect that the contribution should be voluntary and that the CSR spend is an application of income which is eligible for deduction from the gross total income of the assessee as per the provisions o....
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....R spend towards donation to Swachh Bharat Kosh and Clean Ganga Fund. Therefore, the contention that the CSR spend being claimed as a deduction under section 80G is against the intention of the legislature which restricts the same to be claimed as a deduction under section 37 cannot be appreciated. * The next issue is whether the impugned payments are otherwise eligible for deduction under section 80G. It has already been established that the payments made by the assessee are donations and therefore if the other conditions for 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. In this regard it is relevant to note that though there is a statutory obligation of CSR expenditure under section 135 of Companies Act 2013, there are many prescribed modes and activities under Schedule VII of the Companies Act for spending the CSR expenditure, (the list is not exhaustive but inclusive). Further neither section 135 of the Companies Act nor S....
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....tion 80G. If the same analogy is applied to the CSR spend it is viewed that the assessee should be able to claim deduction under section 80G if the other conditions are fulfilled. Denying the claim for the reason that there is a specific mention under section 37 for disallowance and that the payments are made in compliance with section 135 of the Companies Act is not legally tenable unless there is an explicit provision for e.g. contributions towards "Swacha Bharat Kosh‟ and "Clean Ganga Fund‟. * In view these discussions and considering the judicial precedence in this regard, it is viewed that there is no infirmity in the order of the Commissioner (Appeals) in allowing the deduction under section 80G to the assessee towards donations made to Reliance Foundation and Shyam Kothari Foundation. Accordingly, the grounds raised by the revenue are dismissed." 7. Considering the facts on record where there is no dispute on making of donations by the assessee except that it has been made out of CSR fund, we find that there is no statutory bar in claiming the deduction u/s. 80G. Donations made by the assessee do not fall under specified exception and therefore, asses....