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GENPACT SERVICES LLC,GURGAON vs ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - INT TAX 1(3)(1), DELHI | BharatTax

GENPACT SERVICES LLC,GURGAON vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - INT TAX 1(3)(1), DELHI

ITA 4477/DEL/2024Status: DisposedITAT Delhi31 July 2025AY 2020-21Bench: SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER\nAND\nSHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER\n\nITA No. 4477/DEL/2024\n[Assessment Year: 2020-21]\n\n| Genpact Services LLC,\nPlot 22A and B, Sector 18,\nUdyog Vihar,\nGurgaon, Haryana-122002\nPAN-AACCG3353P\nAppellant\n|\nAssistant Commissioner of Income\nTax, Circle-International Tax-1(3)(1),\nVs Delhi-110002\nRespondent\n\n| Appellant by\nShri Vishal Kalra, Adv.,\nMs. Reema Malik, Adv.& Ms.\nSnigdha Gautam, Adv.\nRespondent by\nShri S.K. Jad32 pages

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Income Tax Appellate Tribunal, DELHI BENCH, ‘H’: NEW DELHI

Before: SHRI PRAKASH CHAND YADAV & SHRI BRAJESH KUMAR SINGH

For Appellant: Shri Vishal Kalra, Adv, Ms. Reema Malik, Adv.& Ms

For Respondent: Shri S.K. Jadhav, CIT DR

Hearing: 30.07.2025Pronounced: 31.07.2025

ORDER

PER BRAJESH KUMAR SINGH, AM,

1.

1. This appeal by the assessee is directed against the order of the Assessing Officer dated 29.07.2024 passed u/s 143(3) r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter ‘the Act’) in pursuance to the directions of Dispute Resolution Panel dated 25.06.2024 pertaining to Assessment Year 2020-21.

2. The relevant facts are that the assessee is an Indian branch office of Genpact LLC, a USA Company. The assessee is a service provider rendering off-shore support services akin to BPO services, including collections/analytics call centre services and other back-office support services to its AEs. The assessee is responsible for rendering the designated BPO / collections services from its facility / infrastructure in India. As for Assessment Year 2020-21, the assessee filed its return of income (ROI') declaring an income of INR 20,57,10,540/- on 07.01.2021. During the course of scrutiny, the Assessing Officer made a reference u/s 92CA of the Act to the Transfer Pricing Officer (‘TPO’) to determine the Arm’s Length Price (‘ALP’) in respect of International transaction entered into by the assessee.

2.1. The ld. TPO proposed an adjustment of Rs.9,32,12,889/- in his order passed u/s 92CA(3) of the Act dated 27.07.2023. The TPO changed the cost allocation methodology from headcount ratio to salary expenses ratio, thereby partly disallowing support services cost. Before making the said disallowance, the TPO issued a show-cause notice dated 08.06.2023, placed at page no.3 to of the TPO’s Order, the relevant extract of which is reproduced as under:-

3. A survey action us 133A of the Act was carried out on 25-27 February, 2019 at the premises of India branch of the assessee and its Indian associated enterprise, Genpact India Private Limited, or GIPL, (formerly Genpact India) including inter-alia the following premises: DLF Phase V. Sector 53, Gurugram, Haryana and Plot No 22A and B, Udyog Vihar, Sector 18, Gurugram. Haryana.

5. During the survey, from the statement of various functionaries recorded and the documents inspected, it was noticed that many important functions of the businesses of Genpact group's companies in India are performed in an integrated manner by common teams of people, using common infrastructure and resources, These functions include HR, (including recruiting. training, etc. employee matters etc.), logistics, infrastructure, finance, legal, administration and management, 6. The businesses of the assessee (GSL) and the Indian group company Genpact India Private Ltd (Hereafter GIPL) are performed in an integrated manner by common teams of people, using common infrastructure and resources, These functions include HR, (including recruiting, training, employee matters etc), logistics, infrastructure, finance, legal, administration and management, etc. Perusal of Cost sharing agreement between GSL and GIPL shows that the persons performing these functions are on the payroll of Gl and the resources/infrastructure used in the performance of these services are also owned or acquired by GIPL and that at the end of each month GIPL shall allocate the costs incurred by it under each head to GSL India Branch. Perusal of previous years data available with the department. it is observed that the cost is allocated under the following heads Technical and facilities maintenance, communication charges, electricity and water, repair and maintenance, management charges, rent, infrastructure and support cost, staff welfare and other expenses Since assessee failed to provide the data regarding cost allocation key being used in the captioned year even when asked specifically by the TPO, therefore it is assumed that the cost allocation remains the same as being followed by the assessee in prior years. Excluding Electricity and water and repair & maintenance for a part of Plot no.22, Udyog Vihar, Sector 18 Gurugram, all expenses under various heads are allocated on a annual average head count basis, i.e., at the end of each financial year, number of employees in GSL India branch at the end of each month is taken and average for the period April to March is calculated. That average so calculated is the basis of allocation of cost under the heads 1. Technical facilities maintenance, 2. Communication cost, 3. Infrastructure support and management charges and 4. Staff welfare expenses.

6074-6075 of 2017 (Mumbai - Trib.) - Cisco Systems (India) P Ltd vs ACIT: [2021] 127 taxmann.com 62 (Bang-Trib.) (k) Furthermore, it can be seen from the TP order that the TPO himself states that the method applied by him is 'one such method that appears to be appropriate' (refer internal page 8 of the TP order). This demonstrates that the TPO himself accepts that there can be more than one appropriate method of allocation. Thus, when the Appellant has justified cost allocation basis headcount vide cost sharing agreement, allocation working etc., the same cannot be rejected based on surmises and conjectures. TPO has not provided any data for the application of other method (1) As per the rule 10AB(2) of the Income Tax Rules, 1962, it is possible to use other method should takes into account: - the price which has been charged or paid for the same or similar uncontrolled transactions, with or between non-AEs, under similar circumstances considering all the relevant facts. (m) Reliance is placed on para 5.58 of the Guidance Note on Report Under Section 92E of the Income-Tax Act, 1961 by Institute of Chartered Accountants of India, which states that the 'Other Method' offers more flexibility and permits 'comparison' by 'use of a price which has been charged or paid, or would have been charged or paid' thereby allowing use of bonafide quotations, bids, proposals as comparable transactions or prices, and also economic and commercially justifiable models and similar approaches. (n) In view of the above, for determination of ALP for application of 'other method', comparables or similar uncontrolled comparable prices are required. However, in instant case, the TPO erred in not providing any comparable price / valid comparison as well as reasoning for applying other method (refer internal page 10 of TP order). (o) Reliance is also placed on the following decisions wherein it has been held that the TPO / assessee without searching for similar uncontrolled transaction between non-associated enterprises and finding out the independent entity in a comparable transaction, cannot straightaway resort to applying 'other method':

2.

It is pertinent to note that the allocations made by the assessee with regard to rent, electricity, water and repair and maintenance above were duly accepted by the AO. Only allocation of expenditure on the basis of “headcount” was sought to be disturbed by the ld AO. It was submitted that the very fact that different expenses were allocated on different basis, considering the nature of expenses, itself, demonstrate that such allocation was based on proper analysis by the assessee. We find that the assessee had explained before the lower authorities that it had considered “headcount” as an appropriate allocation key since the level of support required is dependent on the headcount in each entity. Key costs incurred such as electric facility, management, staff welfare, communication costs, human resources costs, etc, are driven by the number of employees using these facilities and accordingly, the headcount represents an appropriate allocation key for allocating costs in line with the basis of incurring such costs. It was also submitted that ‘salary cost’ would not be an appropriate allocation key in view of the following reasons:- Salary cost of employees is not an appropriate indicator of the support required by the businesses. It would be unreasonable to expect that the time or communication facilities extended to the employees depend on the salary of the respective employees. Similarly, for other heads as well, headcount was appropriately reflective of the level of support required by the assessee, for instance: - Telecommunication cost (voice based, and non-voice based) are charged on the basis the number of users (Headcount) irrespective of the revenue earned/ hierarchy. Thus, Headcount method in this case would be more appropriate as compared to salary expenses ratio, which due to level of position/pay-out ratio might lead to an abrupt allocation. - The amount of support HR department provides to the business of the assessee is not represented by the employee cost, but the number of employees employed by the it.

3. The fact of services being rendered is not disputed by the revenue right from the time of survey. In fact, both the ld AO and ld DRP merely rely on the findings given in AY 2015-16. In our considered opinion, the cost allocation Key on ‘headcount basis’ has been duly examined and accepted by the ld TPO to be at ALP in the transfer pricing proceedings u/s 92CA(3) of the Act. The same cannot be subjected to retest by the ld AO in the peculiar facts and circumstances of the instant case , under the garb of examining the same in the context of allowability of deduction u/s 37 of the Act as argued by the ld DR before us. No doubt, the scope of ld TPO is only to ensure whether the pricing of services is at arm’s-length or not. But for that purpose, the cost sharing agreement, cost allocation keys used thereon and reasons for such usage of allocation keys are very much material for the ld TPO to examine and conclude whether the pricing thereon is at ALP or not. In the instant case, all these documents were duly placed on record before the ld TPO and the same was accepted to be at ALP by the ld TPO. It is also pertinent to note that the reference u/s 92CA(1) of the Act to the ld TPO was made by the ld AO after the survey proceedings. Hence, even the findings of the survey team were very much available before the ld TPO. We find that the cost allocation on the basis of “headcount” has been affirmed to be an appropriate allocation key by the Hon’ble jurisdictional High Court in the case of CIT Vs. EHPT India Private Limited reported in 350 ITR 41 (Del). Similar was the view taken by the coordinate bench of this tribunal in the case of Orange Business Services India Solution Pvt Ltd Vs. DCIT in for AY 2013-14 dated 15.07.2021. Further, the coordinate bench of Mumbai tribunal in the case of Cable and Wireless India Ltd Vs. DCIT in for AY 2012–13, 756/Mum/2017 for AY 2013–14, 6074/Del/2017 for AY 2014-15 dated 25.02.2020, also had an occasion to adjudicate the similar issue, as is the case before us in the case of the assessee herein. Relevant observations of the decision of Mumbai Tribunal are as under:- “2. Briefly stated, the assessee company is a branch of a foreign company incorporated in United Kingdom and has been granted permission by the Reserve Bank of India to set up a branch office in India with effect from 23.03.1995. The assessee company is engaged in the business of providing telecommunication networking services which includes network design and management, project management and implementation, network management, providing lease circuit and trading of equipment and maintenance. The assessee company had filed its return of income for A.Y. 2012-13 on 30.11.2012, declaring its total income at Rs. 6,71,08,313/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act.

3.

During the course of the assessment proceedings the A.O made a reference under Sec. 92CA(1) of the Act to the Transfer Pricing Officer-1(3)(1), Mumbai (for short ‘TPO’) for the purpose of determining the Arm’s Length Price (ALP) of the international transactions of the assessee as were detailed in its ‘Audit report’ in ‘Form No. 3CEB’. Further, on a perusal of the financial statements, it was observed by the A.O that the assessee company pursuant to certain related party transactions had received amounts towards reimbursement of expenses. Also, it was noticed by the A.O that the assessee company had reimbursed its share of common pool expenses which were claimed to have been incurred by its related parties for and on its behalf. In order to verify the genuineness of the aforesaid claim of receipt/payment of reimbursement of expenses the A.O called upon the assessee to furnish the requisite details in respect of the same. In reply, it was submitted by the assessee that Cable and Wireless group had two entities operating in India viz. (i) Cable And Wireless India Ltd. (i.e the assessee); and (ii) Cable & Wireless Networks India Pvt. Ltd. (for short ‘CWNIPL). It was stated by the assessee that CWNIPL was engaged in the business of carrying on telecommunication networking services which included providing of National Long Distance (NLD) and International Long Distance (ILD) services. It was submitted by the assessee that administrative functions of finance, human resources for both of the aforesaid entities were managed by common staff which was under the payroll of CWNIPL. On the basis of the aforesaid facts, it was the claim of the assessee that the expenses which were incurred in respect of the aforesaid administrative functions were cross charged to it by CWNIPL on cost to cost basis. As per the details furnished by the assessee, it was noticed by the A.O that the assessee had during the year under consideration claimed to have reimbursed an amount of Rs.2,34,56,929/- to CWNIPL. It was the claim of the assessee that the aforesaid amount of reimbursement was towards support costs consisting of salary, leave encashment and gratuity expenses which were incurred by CWNIPL for and on its behalf on cost to cost basis. In order to fortify its aforesaid claim the assessee had also placed on record sample copies of ‘debit notes’. On a perusal of the details furnished in the course of the assessment proceedings, it was noticed by the A.O that the assessee had claimed that the expenses incurred by CWNIPL in respect of rendering of administrative functions were allocated to the assessee by adopting the allocation key of head count basis, as under:

(ii). We have given a thoughtful consideration to the aforesaid claim of the assessee, and are persuaded to subscribe to the aforesaid contention so advanced by him. Admittedly, the transaction of reimbursement of expenses by the assessee (a branch of a foreign company) to CWNIPL i.e its Indian AE, is an International transaction within the meaning of Sec.92B of the Act. As per Sec. 92CA(4) of the Act, on receipt of order under sub-section (3) of Sec. 92CA, the A.O shall proceed to compute the total income of the assessee under sub- section (4) of Sec. 92C in conformity with the arm‟s length price so determined by the TPO. As is discernible from the order of the DRP, it was the claim of the assessee that now when the Asst. Commissioner of Income-tax (Transfer Pricing)-1(3)(1), Mumbai, had during the course of the TP proceedings accepted the reimbursement of expenses to be at arm‟s length, therefore, as per the provisions of Sec. 92CA(4) of the Act, the A.O was obligated to pass the order and compute the total income of the assessee in conformity with the arm‟s length price so determined by the TPO. Also, in support of his aforesaid claim the assessee had relied on the order of the ITAT, Bangalore in the case of Herbalife International India (P) Ltd. Vs. ACIT (2016) 65 taxmann.com 143 (Bang). In our considered view, now when the TPO on a reference made to him under Sec. 92CA(1) of the Act for benchmarking the international transactions of the assesssee, had accepted the ALP of the reimbursement of expenses by the assessee to its AE viz. CWNIPL, 6075 & 756/Mum/2017 A.Ys. 2012-13,2013-14 & 2014-15 Cable and Wirless (India) Limited Vs. The DCIT (I.T.), Circle-2(1)(1) thereafter, the A.O as per the mandate of Sec. 92CA(4) of the Act, was statutorily bound to compute the total income of the assessee in conformity with the arm‟s length price so determined by the TPO. Although, the A.O in the course of the assessment proceedings continues to remain vested with the jurisdiction to verify as to whether or not an expense claimed by the assessee as a deduction was incurred wholly and exclusively for the purpose of its business, however, in the garb of exercise of such jurisdiction he is precluded to redetermine the arm‟s length price of an international transaction, in any way. In our considered view, now when the TPO while benchmarking the international transactions of the assessee, had not disturbed the arm‟s length price of the transaction of reimbursement of expenses by the assessee to its AE viz. CWNIPL, therefore, a relooking into the basis of allocation of such expenses inter se the assessee and CWNIPL would clearly militate against the express provisions of Sec. 92CA(4) of the Act. Our aforesaid view, that the A.O as per the mandate of Sec. 92CA(4) is obligated to compute the income of the assessee in conformity with the ALP so determined by the TPO, is fortified by the judgment of the Hon‟ble High Court of Bombay in Vodafone India Service (P) Ltd. Vs. Union of India (2013) 359 ITR 133 (Bom) and that of the Hon‟ble High Court of Delhi in CIT Vs. Oracle India (P) Ltd. (2011) 243 CTR 103 (Del). Also, support is drawn from the order of the ITAT, Delhi in DCIT vs, YKK India Pvt. Ltd. Accordingly, on the basis of our aforesaid observations, we are of a strong conviction that the rejection of the allocation key of reimbursement of expenses by the assessee to its AE viz. CWNIPL after the arm‟s length price of the same had been accepted by the TPO, would clearly be contrary to the mandate of law. 6.1. However, we observe that the only difference in the present appeal is that in those years, the allocation method has been disturbed by the AO. However, in this year, the TPO has taken cognizance of the allocation method used by the assessee and has applied other method for making adjustment qua these expenses. However, we further note that there is no material change in the basis and the conclusion arrived both by the TPO and the Assessing Officer in this case and the identical amount of disallowance of Rs.9,32,12,889/- has been determined by the TPO by changing the cost allocation methodology from headcount ratio to salary expense ratio. Therefore, even though in this case, the adjustment was made by the TPO but no new finding has been given by the TPO for the Assessing Officer to make out a distinguishable case from the finding given by the Tribunal in assessee’s own case for AY 2017-18 as discussed above.

“5.2. In the case of the assessee company, the assessee has claimed an amount of Rs. 33,81,950/- on account of CSR (i.e. Corporate Social Responsivity). The payment has been purportedly paid to M/s Teach to Lead. From a perusal of the evidence furnished, it is seen that the said concern is registered under Section 12AA as well as under Section 80G(5) of the Act. The assessee has also furnished confirmation from this concern. Corporate social responsibility (CR) refers to initiatives taken up by companies to give back to society. The Financial Times defines it as a business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders. It is the company's "sense of responsibility" towards the community and surrounding in which it operates. Also called corporate citizenship, it is a self-regulating business model developed by companies to create a positive impact on society. CSR addresses various issues like human rights, education, health, and safety. It also covers corporate governance, working conditions, environmental sustainability, and more. Along with economic development, CSR also focuses on social and environmental development (the triple bottom line). Thus, when spending on CSR is made, it is pertinent that the said amount must be spend by the recipient. In present case, the CSR expense incurred has been paid in such a manner that the recipient, a group concern of the assessee, does not stand to incur the amount. Rather the same has been paid by way of corpus so that the recipient can treat the receipt as part and parcel of its corpus/capital. This way the objective behind the incurrence of CSR expense is blatantly defeated. Accordingly, during the course of assessment proceeding, the assessee was required to place on record, the utilization certificate which could prove that the amount incurred on CSR was actually spend by receiver. In this regard, in-spite of specific opportunities, no utilisation certificates were placed on record. Further from a perusal of computation of total income (as per normal provisions of the Act), it is noted that the assessee company had claimed deduction under Section 80G of Rs. 16,90,975/- with respect to CSR (i.e. Corporate Social Responsivity) expense. The said deduction has been computed @ 50% of Rs. 33,81,950/-. In this regard, it would be relevant to refer to the provisions of Explanation 2 of Section 37(1) of the Act which is being reproduced hereunder: "Explanation 2.—For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession." Thus, from a perusal of the above provisions, it is evident that expense incurred on account of CSR (i.e. Corporate Social Responsively) cannot be permitted to a corporate assessee at all. It is settled law that what cannot be done directly, cannot also be done indirectly. No authority is required for this proposition, but if any authority is required the authorities in the case of Jagir Singh Vs. Ranbir Singh and Another and the case of District Collector, Chittor and Others Vs. Chittoor District Groundunt Traders" Association, Chittoor and Others are sufficient. In Jagir Singh's case the Supreme Court has held that what cannot be done directly, cannot be allowed to be done indirectly as that would be an evasion of the statute. The Supreme Court has held that it is a well known principle of law that the provisions of law cannot be evaded by shift or contrivance. The Supreme Court has held that in an indirect or circuitous manner the objects of a statute cannot be defeated. In the District Collector's case a circular was issued under the Commodities Act purporting to impose restriction on movement of edible oil and oil seeds and to impose compulsory levy for supply of oil to State Government at a fixed price. The Supreme Court held that there was no power to impose levies and what could not be done directly could not be done indirectly by using the regulatory powers given to that Authority. This power cannot be used to subvert the provisions of the said Act and to assume powers and functions not conferred by the said Act. It is also noted that what section 80G permits is deduction on account of Donation, Donations perse are voluntary payments which are subjected to the discretion of the payer. On the contrary CSR (i.e. Corporate Social Responsivity) expense are mandatorily to be incurred by the assessee by virtue of provisions of law and thus, being obligatory cannot be treated as discretionary or voluntary. The mere fact that the CSR (i.e. Corporate Social Responsivity) expense has been paid to an organization which is registered or approved under Section 80G(5) of the Act can not in any way alter the nature and scope of the obligatory payment to a voluntary payment. In-any case, the fact that the purported payment has not been incurred at all (since no utilisation certificate was furnished) cannot be lost sight off. In view of the above facts and discussion, the deduction of Rs. 16,90,975/- claimed under Section 80G(5) of the Act is hereby disallowed and added to the total income of the assessee as per normal provisions of the Act…..……”

(Kol Trib.) - Power Mech Projects Ltd vs DCIT: (Hyd Trib.) - Supreme Buildestates Pvt Ltd vs DCIT: ITA No.495/Jpr/2023 (Jpr Trib.) - Naik Seafoods Pvt Ltd vs. PCIT: ITA 490/Mum/2021 (Mum Trib.) - Societe Generale Securities India Pvt Ltd vs. PCIT: ITA 1921/Mum/2023 (Mum Trib.) 7. Learned DR has failed to bring forth any decision to the contrary. Thus, we accept the plea of learned counsel on the basis of case law cited, denial of CSR expenditure u/s 37(1) of the Act is not embargo to claim deduction u/s 80G of the Act. 7.1 Further, we like to observe that as a matter of fact as per Section 135 of the Companies Act, 2013 ('CA 2013), the qualifying Companies as mentioned therein are required to spend certain percentage of profits of last three years on activities pertaining to Corporate Social Responsibility (CSR). The expenditure on CSR, could be by way of expenditure on projects directly undertaken by said companies, such as setting up and running schools, social business projects, etc. Such expenditure would include expenditure otherwise falling for consideration under section 37(1) of the Act. On the other hand, companies, instead of undertaking or participating directly in a project, may choose to give donations to institutions that are engaged in undertaking such projects, which is also a recognized way of compliance of CSR obligation. 7.2 The assessing officer and CIT(A) have relied upon General Circular 14/2021 dated 25.08.2021 issued by MCA and "Explanatory Notes to the provisions of the Finance (No.2) Act, 2014" to hold that donations made as part of CSR expenditure are not allowable as deduction. The foundation of their reasoning being that the donation is voluntary in nature, while CSR expenditures are under statutory obligations. 7.3 As we take notice of the fact that Parliament legislated that CSR expenses would not be eligible for deduction as business expenditure under section 37 of the Act by inserting Explanation 2 to section 37(1) vide the Finance (No.2) Act, 2014 (applicable from the assessment year 2015-16), which provided that any expenditure incurred by an assessee on the activities relating to CSR referred to in section 135 of the CA 2013, shall not be deemed to be an expenditure incurred by an assessee for the purpose of business or profession and shall not be allowed as deduction under section 37(1) of the IT Act.

The intent of Parliament in bringing the aforesaid provision is given in the Explanatory Memorandum to the Finance (No.2) Bill, 2014 and is reproduced as under ; “CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business, As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for .computing the taxable income of the company, Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one-third of such expenses by the Government by way of tax expenditure." (emphasis supplied) 7.4 The aforesaid explanatory memorandum categorically expresses the legislative intent and the rationale of disallowance of CSR expenditure referred to in section 135 of the Companies Act, that such expenditure is application of income and not incurred for the purposes of business. We are of considered view that this in itself justifies the grant of deduction u/s 80G. As CSR expenditure is application of income of the assessee under the Income Tax Act, that means it continues to form part of the Total income of the assessee. Section 80G(1) of the Act provides that in computing the total income of an assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Further, section 80G(2) lists down the sums on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no correlation between suo-moto disallowance in section 37(1) and claim of deduction under section 80G of the Act. 7.5 As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of donee. The CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. The Act permits deduction of donations as per Section 80G of the Act, even though, assessee is not gaining any benefit out of any reciprocity from donee. Similar is the case of CSR expenditure. Thus the reasoning of learned Tax Authority, the CSR expenditure is mandatory, does not justify disallowance of these expenditures u/s 80G, if other conditions of section 80G are fulfilled. There is no allegation of Revenue that other conditions of Section 80G are not fulfilled. We, thus sustain the ground.

8. Ground No. 5 This ground arises out of claim of assessee that during the FY 2009-10 (relevant to AY 2010-11), the Assessee acquired a business of third-party debt collection services as well as part of the analytics business from Genpact India Pvt. Ltd (the seller entity') for a total sum of Rs.62,12,70,648 vide agreement to sell entered into between the Assessee and Genpact India. Out of the total purchase consideration of Rs.62,12,70,648, an aggregate sum of Rs.22, 16,00,276 (paid towards acquisition of customer contracts as well as the assembled workforce) was claimed as revenue expenditure by the Assessee on its return of income ('ROI"), filed for AY 2010-11. Subsequently, the ROI of AY 2010-11 was selected for scrutiny assessment under section 143(3) of the Act. The AO, vide assessment order, dated May 21, 2014, inter-alia, took a view that the aforesaid amount of Rs.22,16,00,276/-, incurred by the Assessee towards acquisition of customer contracts and assembled workforce, is in the nature of capital expenditure and hence the same should have been capitalised as intangible assets by the Assessee. Accordingly, the sum of Rs.22,16,00,276 was added back to the returned income of the Assessee and a corresponding depreciation claim of 25% i.e., Rs.5,54,00,069 was allowed to the Assessee under section 32(1)(ii) of the Act. Being aggrieved by the aforesaid assessment order passed for AY 2010-11, the Assessee preferred an appeal before the Ld. Commissioner of Income-tax (Appeal) ['ІТ(А)]. On appeal, the CIT(A) vide its order, dated February 15, 2016, passed under section 250 of the Act, had upheld the view taken by the AO. Further, the CIT(A), for the limited purpose of allowing depreciation under the Act, held that out of the total sum of Rs.22,16,00,276, only Rs.16,05,41,276 was to be considered as the value of intangible assets for allowing depreciation at the rate of 25%. This Tribunal vide its order dated January 31, 2023, in in assessee’s own case for AY 2010-11 modified the decision of CIT(A) to the extent of valuation of intangible assets treating the value of intangible assets to be Rs.22,16,00,276 and allowing depreciation on the same.