Corporate Social Responsibility compliance requires mandated profit-based spending, governance duties, and a new CSR reporting obligation.
Section 135 requires companies meeting specified net worth, turnover, or net profit thresholds to spend at least two percent of the average net profits of the three preceding financial years on activities in Schedule VII, governed by the Companies (CSR Policy) Rules. Governance requires a board-level CSR Committee to formulate policy, recommend expenditure, and monitor implementation, while the board must ensure implementation, disclose the policy, report utilization, and account for any unspent amounts. The rules exclude ordinary business activities and set implementation modes, mandatory registration for implementing agencies, and introduce E Form CSR 2 for reporting; statutory penalties apply for noncompliance. (AI Summary)

Substance over form principle affirmed, permitting inquiry into economic reality to determine tax character of transactions.
The note explains the substance over form doctrine as allowing tax authorities to disregard contractual nomenclature and assess the commercial reality of transactions where factual and documentary evidence demonstrates a sham or tax-avoidance purpose; it traces divergent judicial approaches, outlines GAAR as a statutory codification permitting disregard of form for impermissible avoidance arrangements lacking commercial substance, and highlights recent authority endorsing holistic, fact-driven "look at" inquiries in indirect-tax disputes while stressing the need for threshold proof of abuse and procedural safeguards. (AI Summary)