TaxTMI 
TaxTMI 
2026 (1) TMI 1677
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....RP failed to appreciate that the donations made by the Appellant to recognized charitable institutions are eligible for deduction under section 80G of the Act and complied with all conditions stipulated under the said section. The Ld. AO/ DRP erred in inferring that expenses towards CSR cannot again be utilized for claiming deduction under section 80G of the Act. b. The Ld. AO/DRP erred in interpreting the provisions of Explanation 2 to section 37(1) of the Act which only bars deduction of CSR expenditure under section 37(1) of the Act and does not in any way restrict or prohibit deduction under section 80G of the Act. c. The Ld. AO/ DRP erred in interpreting that only if donations are made under "Swachh Bharat Kosh" and "Clean Ganga Fund", then such donations shall be eligible for deduction under section 80G of the Act if the same is forming part of CSR expenditure. However, these are the only explicit donations excluded under section 80G of the Act. Therefore, all other donations made to registered trusts under section 80G(5) of the Act, except towards the two aforementioned donations remain eligible for deduction under section 80G of the Act. d. The Ld....
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....ligibility or restriction in claiming deductions for donations made pursuant to Companies Act, 2013. Deduction had been quantified in line with the mechanism provided under the Act. Therefore, disallowance of deduction claimed under section 80G of the Act is not warranted. 4. In order to take note of the factual matrix in the present case, we referred to the computation of total income and tax for the year under consideration placed in the paper book wherein assessee had made suo moto disallowance of CSR expenses. It had claimed a deduction u/s. 80G for the donations made which actually pertains to CSR expenses. This factual position is undisputed. 5. The issue in context in the present appeal is no longer res integra and is settled by long line of decisions of Coordinate Benches of ITAT. We refer to the decision of Coordinate Bench of ITAT, Mumbai in the case of DCIT vs. Gabriel India Ltd. [2025] 173 taxmann.com 219 (Mum) wherein this issue has been elaborately dealt with. The Coordinate Bench while giving relief to the assessee followed various other decisions of difference benches of the Tribunal. Relevant parts of the decision are extracted below for ready reference: ....
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....) ([2020] 117 taxmann.com 535 (Bangalore Trib.)) (ITAT Bangalore) (iii) First American (India) Pvt. Ltd. (ITA No. 1762/Bang/2019) Allegis Services (India) Pvt. Ltd. (ITA No. 1693/Bang/2019) Ld. Counsel further submitted that if the intention was to deny deduction of CSR expenses under section 80G, appropriate amendments on lines of section 37(1) should also have been made under section 80G of the Act. In the absence of any such amendment, CSR expenses should not be disallowed under section 80G of the Act. 18. We have heard both the parties and perused the records. We find that ITAT, Bangalore Bench in the case of Goldman Sachs Services (P.) Ltd. (supra) has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction/s 80G of Ericsson India Global Services Pvt. Ltd. v. DCIT the Act subject to satisfying the requisite conditions prescribed for deduction u/s 80G of the Act. For this purpose, the issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of donation u/s 80G of the Act. We find that the case law is fully applicable to the facts of the case. There is no r....
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....cation on the same issue. Ld. PCIT cannot cancel the assessment order to re-examine the same issue without finding any defect in such order that how the claim made u/s. 80G is unsustainable in law. 10. On merits also, we find that view of ld. AO is correct in law. 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 under the provision of Section 28-44DB, whereas deduction u/s. 80G 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....
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....lowed 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. Thus, allowing the claim of deduction u/s. 80G by the ld. 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. 12. Thus, we hold that ld. PCIT is not correct in law in cancelling the assessment order by the ld. AO on this issue. Accordingly, the order of the ld. PCIT is quashed. Consequently, the appeal of the assessee is allowed. 5.3. Also, 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 th....
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.... makes it clear that there is no bar regarding the admissibility of CSR expenditure under any other provision of the Act, except under section 37(1). In other words, the intention of the legislature is not to restrict the right of the assessee to claim deduction towards the CSR spend if the payment is otherwise allowable under a specific provision of the Act. Further wherever the intention is to restrict the claim of deduction under any other provisions of the Act the same is explicitly provided for to that effect by the legislature. This view is supported by the Explanatory Memorandum to Finance Bill 2015 which brought in the specific restriction for claiming deduction under section 80G towards the CSR 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 assesse....
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....deduction under section 80G provided the CSR spend meets the conditions specified therein. In other words, the provisions of section 37 is computation provision whereas section 80G is a beneficial provision which allows deduction towards payments made by the assessee for charitable purposes and therefore these two sections are independent of each other. For example, when a company which is not required to comply with the provisions of section 135 of the Companies Act 2013 makes a donation or a company makes donations in excess of 2 per cent even then the payment may get disallowed under section 37 but in that case the revenue would not impose any restriction to evaluate the payment for claiming deduction under section 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" a....