GIA INDIA LABORATORY PRIVATE LIMITED,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-14(1)(2), MUMBAI

1 The Assessing Officer has erred in not allowing the deduction claimed under section 80G while computing the appellant’s total income for the year under consideration.

Then, the appellant company has also raised the issues like short grant of TDS, credit for tax paid on regular assessment was not granted and short granting of interest under section 244A of the Income Tax Act which are mistakes relating computation of tax as per law.

The first and main ground of appeal in this assessment year, raised by appellant company is that the AO passed a draft assessment order dated 25.9.2023 under section 144C(1) of the Act making an upward adjustment of GIA India Laboratory Pvt. Ltd.

At the time of hearing before ITAT, the Ld. AR of the appellant company has stated that the appellant company has signed Unilateral Advance Pricing Agreement with CBDT on 27.3.2025 in terms of payment of Royalty to Associated Enterprises (AE) was a covered transaction. The Ld. AR of the appellant has filed a note before the Bench where relevant extract of APA is reproduced as follows :- “The covered international transaction of payment of royalty shall be considered to be at arm's length in a previous year, if the payment made by the Applicant in respect of the said transaction does not exceed an amount which represents 53.5% of the operating profit of India Graded Segment of the relevant previous year. Further, it is clarified that the operating profits for the purpose of this sub-item shall be the operating profit of India Graded Segment determined after reduction of payment for all operating expenses but before any deduction on account of royalty”.

It was submitted by Ld. AR of the appellant that in terms of this APA, the Royalty was calculated at Rs. 3,12,12,95,549/- which implies that the upward increase is Rs. 66.36 crore as against Rs. 66.96 crore computed by Ld. AO. After the conclusion of APA, in March, 2025 the Ld. AR of the appellant has stated that the appellant company has filed a modified Return of Income on 30.6.2015 in terms of section 92CD of the Act. In view of the same, the Ld. AR of the appellant company requested the Bench to give a direction to Ld. AO to give effect to the modified return filed by the appellant in accordance with the above mentioned Advance Pricing Agreement.

The Ld. DR has stated that the order may be passed as per the Provisions of Law.

Heard both sides. As the appellant company has signed the Unilateral Advance Pricing Agreement with CBDT and accordingly filed a modified Return of Income enhancing the income, the Ld. AO is directed to give effect to this Agreement and pass the order accordingly.

The second ground of appeal of appellant company is that they claimed a deduction of Rs. 4.18 crore under section 80G of the Act being 50% of the expenditure of Rs. 8.37 crore incurred as Corporate Social Responsibility (CSR) expenses. It was mentioned by Ld. AR that the Ld. AO disallowed the deduction provided by recipients of donation pertains to earlier year were not valid for the captioned year and second being the CSR expenses cannot be given benefit under section 80G of the Act again. As per the first objection that approval certificates provided pertain to earlier years, the Ld. AR of the appellant has relied on the Explanatory Note to Finance Act 2009, which is reproduced below :-

5 Therefore, the proviso to clause (vi) of sub-section (5) of section 80G has been omitted to provide that the approval once granted shall continue to be valid in perpetuity.

6 Further, the Commissioner will also have the power of withdraw the approval if the Commissioner is satisfied that the activities of such institution or fund are not genuine or are not being carried out in accordance with the objects of the institution or fund.

7 Applicability - This amendment has been made applicable with effect from 1st October, 2009. Accordingly, existing approvals expiring on or after 1st October, 2009 will be deemed to have been extended in perpetuity unless specifically withdrawn. However, in case of approvals expiring before 1st October, 2009, these will have to be renewed and once renewed these shall continue to be valid in perpetuity, unless specifically withdrawn.”

The Ld. AR of the appellant has stated that due to the deletion of proviso, the approvals which were in force on 1.10.2009 need not renewed

The Ld. DR relied on the final assessment order of Ld. AO on this aspect.

Since the Explanatory Note mentioned by Ld. AR was clear, there is no need of issuance of approval certificate every year and the certificates filed by appellant company of earlier years are held as valid.

Coming to the second objection of Ld. AO that 80G deduction cannot be allowed where appellant has already claimed the same as CSR expenses, the Ld. AR has submitted that this issue was covered in favour of the appellant company in a plethora of decisions of various Tribunals across the country and more importantly by Bombay High Court decision of Castrol India Vs. DCIT (2024) 101 taxman.com 75 (Bom) and ACIT Vs. Sikkar Ports and Terminals Ltd. reported in (2025) 173 taxman.com 366 (Mum-ITAT).

On the above objection, the Ld. DR relied on assessment order.

After hearing both parties, the Bench decided to follow the decisions mentioned by Ld. AR – Castrol India (supra) and Sikka Ports (supra) and hence the disallowance made by Ld. AO with respect to 80G deduction is deleted.

As mentioned in page No. 1 of this order, the appellant company raised other grounds relating to short grant of TDS, credit not given to taxes paid, short grant of 244A interest. These are basically issues relating to verification as per record. The Ld. AO is directed to get the particulars from the appellant company and their grievances should be taken care as per law. The Ld. AO is directed to provide the details of taxes paid by them with proof, so that due credit would be given to the taxes paid.

Thus, the appeal of appellant company is allowed. Order pronounced in the open Court on 21/11/2025. (RAHUL CHAUDHARY) ACCOUNTANT MEMBER

The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.