TaxTMI 
TaxTMI 
2024 (10) TMI 1825
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....ting a total income of Rs. 245,74,25,110/- under normal provisions of the Act and a book profit of Rs. 822,06,83,524/- under section 115JB of the Act. The case was selected for scrutiny and the assessment under section 143(3) was completed accepting the income returned by the assessee. The assessment was reopened under section 147 of the Act for the reason that the assessee was involved in Specified Domestic Transactions with its Associated Enterprises (AE). The Assessing Officer (AO) during the course of re-assessment proceedings noticed on perusal of records noticed that the assessee has claimed a sum of Rs. 5,50,00,000/- (Rs. 11,00,00,000 * 50%) under section 80G of the Act. The AO further noticed that the said amount which was debited towards CSR spend was added back in the computation of income and 50% of the said amount is claimed under section 80G of the Act. The AO did not allow the claim under section 80G of the Act for the reason that CSR expenditure incurred by the company is under statutory obligation on the part of the assessee and is not a voluntary donation eligible for claim under section 80G of the Act. On further appeal the CIT(A) allowed the claim of deduction un....
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....e to the Companies Act whereas section 80G of the Act deal with donation in the nature of the voluntary out of once own violation. voluntary rather it was legal mand the Assessing Officer held the CSR 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 Reliance Industries Ltd. [2023] Ι.Τ.Α. 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) (Banglo....
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....nate Bench of ITAT Bangalore Bench decided the issue of deduction u/s. 80G relating to donations which is part of Corporate Social Responsibility in the case of M/s FNF India Pvt. Ltd., 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, appl....
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....tion 35 grants deduction on expenditure for scientific research and knowledge extension in natural and applied sciences under agriculture, animal husbandry and fisheries. Payment to approved universities/research institutions or company also qualifies for deduction. In-house R&D is eligible for deduction, under this section. ● 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 un....
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....axable Income". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, 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 grunt 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 ....