TaxTMI 
TaxTMI 
2025 (3) TMI 2050
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....ppeals, issues being common relating to deduction u/s 80G w.r.t. Corporate Social Responsibility (henceforth 'CSR'),the Revenue has claimed that the ld.CIT(A) erred in allowing deduction u/s 80G of the Act without verifying compliance with provisions of the Act and also allowing CSR expenses u/s 80G undermining the legislative intent of Explanation 2 to section 37(1) of the Act which expressly disallows CSR expenses as business deductions. 4. Brief facts of the case are that the assessee claimed certain deduction u/s 80G of the Act. The details of the donations made during the year under consideration on which deduction u/s. 80G has been claimed are tabulated in the assessment orders. The said amount of donation(s) made were eligible for deduction u/s. 80G(1)(ii) of the Act and therefore, the assessee had claimed a deduction of 50% of the said amount while computing the total income for the year. During the year under consideration, the assessee had incurred certain expenditure CSR expenditure and the same had been disallowed in terms of Explanation 2 to Section 37(1) of the Act, while computing total income under the Act. During the course of the assessment proceedings, the Ass....
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.... in any form to avoid subsidizing of CSR expenditure by government and therefore claim and the contention of the assessee regarding allow ability of CSR expenditure under section 80G was against the basic nature of such amendment. Therefore, it was held by him that the claim regarding allow ability of CSR expenditure under section 80G of the Act was not correct and therefore, deductions claimed under section 80G for both the assessment years were disallowed and added back to the total income of the assessee. 5. In the subsequent appeal, the ld.CIT(A) after observing that the issue had been examined by the jurisdictional ITAT in various decision quoted by the appellant, held that there is no doubt that CSR is not an admissible business deduction u/s 37, however, there is no restriction in the law for not allowing deduction u/s 80G if its satisfies the conditions laid in the section 80G. Thus, he deleted the disallowance in both the years allowing appeals of the assessee. 6. Before us, the ld.DR relied on the assessment order reiterating that in absence of voluntary nature of the donations, deduction u/s 80G could not be allowed. Per contra, the ld.Authorised Representative of ....
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....expenditure out of purview the section 80G of the Act and accordingly he disallowed the claim of deduction of the assessee of Rs. 4,30,00,000/- the Ld. CIT(A) allowed the claim of the assessee observing as under: "I have carefully considered the assessment order and submission made by the appellant. The appellant has relied upon the following judicial decisions including the decisions of jurisdictional ITAT Mumbai where it has been held that payments towards donations made on account of corporate social responsibility, disallowed under section 37(1), are allowable as deductions under section 80G of the Act: * DCIT v. Reliance Industries Ltd. [2023] I.T.A. No. 2587 & 2588/Mum/2022 (Mumbai ITAT) * M/s. Naik Seafoods Pvt. Ltd. Vs. Pr. CIT - 2 (ITA No 490/MUM/2021) (Mumbai ITAT) * FNF India (P.) Ltd. Vs. ACIT [2021] (133 taxmann.com 251) (Bangalore ITAT) * Sling Media (P.) Ltd. Vs. DCIT [2022] (194 ITD 1) (Banglore ITAT) * Infinera India (P.) Ltd. Vs. JCIT [2022] (194 ITD 463) (Bangalore ITAT) * DCIT Vs. M/s. The Peerless General Finance & Investment & Co. Ltd (ITA No. 1469 & 1470/Kol/2019) (Kolkata ITAT) Further, ....
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...., v. ACIT (ITA. No. 1565/Bang/2019 dated 05.01.2021). The relevant findings of the Bangalore Bench are reproduced below: - "9. After hearing both the parties, we find that similar issue came up for consideration before this Tribunal in ITA No. 1693/Bang/2019 in the case of Allegis Services (India) Pvt. Ltd. v. ACIT. The Tribunal by its order dated 29.4.2020 held as under.- "10. 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, ....
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....yment to approved universities/research institutions or company also qualifies for deduction. In-house R&D is eligible for deduction, under this section. * Jamnagar Utilities and Power Pvt. Ltd Section 35CCD provides deduction for skill development projects, which constitute the flagship mission of the present Government. Section 36 provides deduction regarding insurance premium on stock, health of 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. 1. 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) 2. Donations with 50% deduction are also available under Section 80G for all those sums that do not fall under section 80G(1)(i). ....
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....lowance, which is not the intention of Legislature. 1. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. 77e also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. 1. Under such circumstances, we are remitting the 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 claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. Accordingly grounds raised by assessee stands allowed for statistical purposes: In view of the decision of jurisdictional Hon'ble Mumbai ITAT in the case of M/s. Reliance Industries Ltd. V.DCIT[2023](ITA NO.2587 & 2588/MUM/2022) and Naik Seafoods Pvt. Ltd. V.PY.CIT-2/2021]) ITA No. 490/MUM/2021, it is held that AO has erred in denying claim of the appellant under section 80G of the Act. It is also observed that assessing officer has not verified nature of payments....