TaxTMI 
TaxTMI 
2026 (6) TMI 557
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....ssment year 2020-21), whereby, the earlier order dated 04.12.2025, passed under section 254(1) of the Act was recalled limited to the extent of adjudication of grounds no. 5-10, since these grounds could not be decided. 3. During the hearing, the learned Authorised Representative ("learned AR") submitted that ground no.5 was decided vide order dated 04.12.2025 by the Co-ordinate Bench and the issue was restored to the file of TPO/AO for de novo adjudication. Thus, it was submitted that only grounds no.6-10 require adjudication. 4. At the outset, the learned AR wishes not to press grounds no.6,7 and 10 raised in the assessee's appeal. Accordingly, these grounds are dismissed as not pressed. 5. Ground no.8, raised in assessee's appeal, pertains to the denial of deduction claimed under section 80G of the Act on Corporate Social Responsibility ("CSR") expenses. 6. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that during the year under consideration, the assessee incurred expenditure of Rs. 5,86,20,701 towards CSR expenses. Accordingly, the assessee suo moto disallowed the said amount under sec....
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....Section 135 of Companies Act, 2013 requires companies with CSR obligations, with effect from 01/04/2014. Finance (No.2) Act, 2014 inserted new Explanation 2 to sub- section (1) of section 37, so as to clarify that for 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 be an expenditure incurred by the assessee for the purposes of the business or profession. 11. This amendment will take effect from 1/04/2015 and will, accordingly, apply to assessment year 2015-16 and subsequent years. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head Income form Business and Profession'. Further, clarification regarding impact of Explanation 2 to section 37(1) of the Income Tax Act in Explanatory Memorandum to The Finance (No.2) Bill, 2014 is as under: "The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Ac....
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....f employees, loans or commission for employees, interest on borrowed capital, employer contribution to provident fund, gratuity and payment of security transaction tax. Income Tax Act, under section 80G, forming part of Chapter VIA, provides for deductions for computing taxable income as under: * Section 80G(2) provides for sums expended by an assessee as donations against which deduction is available. a) Certain donations, give 100% deduction, without any qualifying limit like Prime Minister's National Relief Fund, National Defence Fund, National Illness Assistance Fund etc., specified under section 80G(1)(i). b) Donations with 50% deduction are also available under Section 80G for all those sums that do not fall under section 80G(1)(i). Under Section 80G(2) (iiihk) and (iiihl) there are specific exclusion of certain payments, that are part of CSR responsibility, not eligible for deduction u/s80G. 14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, 'Income form Business and Profession", where as monies spent under section 80G are claimed while computing "Total Taxable i....
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....e issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its calim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility." 8. We further find that the Co-ordinate Bench of the Tribunal in Societe Generale Securities India (P.) Ltd. vs. Principal Commissioner of Income-tax, reported in [2023] 157 taxmann.com 533 (Mumbai - Trib), while affirming the claim of deduction under section 80G of the Act in respect of CSR expenditure, observed as follows: - "6. After computing the business income, while computing the total income of the assessee, the assessee is invoking the benefit under Chapter VIA by claiming deduction of the sums under section 80G of the Act. According to the revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction under section 80G of the Act. There is no express provision to support the contention of Revenue. On the other hand, section 80G (2) (iiihk) and (iiihl....
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....on receipts were also produced before the lower authorities and before us also." 9. Thus, respectfully following the aforementioned decisions, we are of the considered view that the claim for deduction under section 80G of the Act in respect of CSR expenses cannot be denied. Further, section 80G (2) (iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swatch Bharath Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards Swatch Bharath Kosh and Clean Ganga Fund spent as a part of CSR are not qualified for deduction under section 80G of the Act. Thus, out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. However, from the perusal of the details placed on record, it is evident that in the present case, the donation was not made to Swatch Bharath Kosh or Clean Ganga Fundby the assessee. Therefore, in the facts and circumstances of the present case, the assessee's claim of deduction under section 80G of the Act is allowed. Accordingly, ground no.8 raise....