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Facts
The appellant claimed deduction u/s. 80G for 'Corporate Social Expenses', which was disallowed by the AO and confirmed by the DRP. The appellant also challenged the assessment order's limitation and an adjustment to Arm's Length Price (ALP).
Held
The tribunal held that the deduction u/s. 80G is allowable even if the expenses were initially claimed as CSR, following coordinate benches. The issue of limitation was not adjudicated, and the ALP adjustment was dismissed based on a subsequent Bilateral Advance Pricing Agreement.
Key Issues
Whether deduction u/s. 80G for CSR expenses is allowable, and if an ALP adjustment is valid post a Bilateral APA.
Sections Cited
80G, 92CD, 270A
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Income Tax Appellate Tribunal, Mumbai “J” Bench, Mumbai.
Before: Shri Pawan Singh (JM) & Shri Omkareshwar Chidara (AM)
O R D E R Per Omkareshwar Chidara (AM) :-
In the above cited appeal, the appellant raised the grounds – viz., the assessment order passed by the Ld. AO is barred by limitation, deduction u/s. 80G is not granted, the adjustment to Arm’s Length Price (ALP) is incorrect and initiation of penalty is not correct.
The first ground relates to passing of assessment order beyond time limitation prescribed under the Act. The Ld. AR of appellant company raised a ground that the final assessment order was passed after 30th September, 2023 and hence based by limitation and hence to be quashed. During the hearing proceedings, the Ld. AR has requested the Bench to keep the issue open and pass the Order on merits on other issues. In view of the same, this ground is academic not adjudicated.
The second ground relates to non-grant of deduction u/s. 80G of the Income Tax Act. The appellant company claimed certain amount made the head, “Corporate Social Expenses” (CSR) which could not be allowed because of statutory restriction. The appellant company again claimed the same amount as deduction u/s. 80G since the conditions for claiming deduction under this section are fulfilled. The Ld. AO has disallowed this claim of deduction u/s. 80G stating that the amount claimed under the head of CSR was again claimed under the head u/s. 80G. The Ld. DRP has confirmed the addition and the appellant is aggrieved and hence filed an appeal before ITAT.
Before ITAT, Ld. AR of appellant has relied on several decisions of Co- ordinate Benches of Mumbai including Gabriel India Vs. DCIT (2025) 173 taxmann.com 219 (Mumbai-Trib) and argued that since the issue is covered in their favour already, the addition made by Ld. AO may be deleted.
Per contra, Ld. AR relied on the orders of Lower Authorities and pleaded that the addition made by Ld. AO may be confirmed.
Heard the rival submissions. This issue of allowing the deduction u/s. 80G eventhough the appellant claimed CSR expenses, cropped up in the Tribunals almost all over country. Several Tribunals including ITAT Mumbai have taken a view that the deduction under the head of donation u/s. 80G had be allowed even though the same was already claimed under the head of CSR. Apart from the case of Gabriel India Ltd. (supra), the Co-ordinate Bench of Mumbai in the case of Sikka Ports and Terminals Ltd., 173 taxmann.com 366, has taken a view that the appellant is entitled for deduction u/s. 80G of IT Act as there is no bar or restriction on claiming the same under any provisions of Act if the conditions mentioned u/s. 80G of IT Act are satisfied, the appellants are eligible. Respectfully following the decision of Co-ordinate Benches, the disallowance of deduction u/s. 80G of Rs. 2.89 Crore by Ld. AO is deleted. The appellant company succeeds on this ground.
The Third ground relates to adjustment to Arm’s Length Price (ALP) by making an addition of Rs. 89.92 Crore.
During the hearing before ITAT Ld. AR of appellant has filed a paper book stating that they entered into a Bilateral Advance Pricing Agreement with Central Board of Direct Taxes (CBDT) on 15/03/2024 and computed the income and filed a Modified Return of Income u/s. 92CD of the IT Act. In view of this submission, the ground raised by appellant company in ground of appeal is dismissed.
The last ground of appeal relates initiation of penalty u/s. 270A of IT Act which is premature and hence dismissed.
10. Thus, the appeal of appellant co is partly allowed as mentioned in this order. Order pronounced in the open Court on 08/12/2025.