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Facts
The assessee claimed a deduction under Section 80G for CSR expenditure. The Assessing Officer (AO) disallowed this claim, treating the CSR spending as mandatory and not a voluntary donation. The CIT(A) upheld the AO's decision.
Held
The Tribunal held that CSR spending, even if mandatory, does not negate the voluntary nature of the contribution made to eligible foundations under Section 80G. Therefore, the assessee is eligible for the deduction.
Key Issues
Whether CSR expenditure, mandated under Section 135 of the Companies Act, 2013, qualifies for deduction under Section 80G of the Income Tax Act, 1961.
Sections Cited
80G, 250, 234C, 244A, 270A, 135
AI-generated summary — verify with the full judgment below
Before: SHRI PAWAN SINGH & SMT. RENU JAUHRI
Date of Hearing 30.10.2025 Date of Pronouncement 11.11.2025 आदेश /O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 06.06.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2020-21. 2. The assessee has raised the following grounds of appeal: “The Appellant, objects to the order dated
6. June 2025 passed under section 250 of the Income Tax Act, 1961 ('Act') passed by the learned
Commissioner of Income-tax (Appeals) ['CIT(A)'], for the aforesaid assessment year on the following among other grounds:
1.
Disallowance of deduction claimed under section 80G of the Act 1.1 The learned CIT(A) has erred in confirming the action of the Assessing Officer in disallowing the deduction of INR 19,05,673 claimed under section 80G of the Act without adjudicating the ground on the merits of the case. 1.2 The learned CIT(A) erred in holding that the Corporate Social Responsibility (CSR) expenditure is in the nature of personal expenditure (as reflected in the tax audit report) and confirmed the disallowance made by Assessing Officer without appreciating the fact that an appeal was filed for disallowance of deduction amounting to INR 19,05,673 claimed under section 80G of the Act. 1.3 The learned CIT(A) erred in not appreciating that deduction under section 80G is available on contribution made towards CSR. 1.4 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the claim for deduction under section 80G of the Act ought to be allowed. 1.5 The Appellant prays that the Assessing Officer be directed to delete the disallowance of INR 19,05,673 under section 80G of the Act.
2. Interest under section 234C of the Act 2.1 The learned CIT(A) erred in confirming the interest amounting to INR 22,196 under section 234C of the Act. 2.2 The learned CIT(A) erred in not appreciating that the interest under section 234C of the Act to be calculated on shortfall in deposit of advance tax based on the returned income and not on the assessed income. 2.3 The Appellant prays that the Assessing Officer be directed to delete interest charged under section 234C of the Act.”
3. Erroneous computation of interest under section 244A of the Act 3.1 The learned CIT erred in confirming the interest under section 244A of the Act on income tax refund computed by the Assessing Officer. 3.2 The learned CIT(A) failed to appreciate that the interest is to be computed till the date when refund is granted. 3.3 The Appellant prays that the Assessing Officer be directed to recompute the interest. on income tax refund due to Appellant till the date of grant of refund.
4. Initiation of penalty proceedings under section 270A of the Act 4.1 The learned CIT(A) erred in confirming the penalty proceedings under section 270A of the Act. 4.2 The learned CIT(A) erred in not appreciating the fact that the Appellant has neither under reported nor misreported any income. 4.3 The Appellant prays that the Assessing Officer be directed to drop the penalty proceedings initiated under section 270A of the Act.
General 5.1 Each one of the above grounds of appeal is without prejudice to the other. 5.2 The Appellant craves leave to add to, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as it may be advised. Although multiple grounds have been raised by the assessee sole substantive issue for consideration pertains to the claim of deduction u/s. 80G in respect of donations made as part of CSR activities.
Brief facts of the case are that the assessee company filed its return for A.Y. 2020-21 on 21.01.2021 declaring total income of Rs. 29,77,26,320/-.
The case was selected for scrutiny and during the course of assessment proceedings, it was noticed by the ld. AO that Corporate Social Responsibility (CSR) expenditure of Rs. 38,11,345/- was added back to the income but the assessee claimed deduction u/s. 80G in respect of the same (@50% of Rs. 38,11,345/-) amounting to Rs. 19,05,673/-.
Ld. AO observed that the voluntary act on the part of the donor is an essential element to treat the amount paid as a donation. Noting that the amount in question was spent as mandatory CSR activity and hence it could not be treated as a donation u/s. 80G, claim of deduction amounting to Rs. 19,05,673/- was disallowed by ld. AO. Aggrieved, the assessee preferred an appeal before the ld. CIT(A). Vide order dated 06.06.2025, ld. CIT(A) rejected the assessee’s appeal. Further aggrieved, the assessee has preferred an appeal before the Tribunal.
Before us, ld. AR has submitted that the issue stands covered in favour of the assessee in several decisions of the co-ordinate benches. In particular he has placed reliance on the following decisions: i. M/s. Asian Paints Ltd. V. DCIT in ii. ACIT V. Sikka Ports and Terminal Ltd. [2025] 173 taxmann.com 366 (Mumbai-Trib.) 5. On the other hand, ld. DR has strongly argued in favour of the order of ld. AO as well as placed reliance on a decision of the co-ordinate bench in the case of Agilent Technologies (International) (P.) Ltd. V. ACIT/NFAC, Delhi [2024]160 taxmann.com 238 (Delhi-Trib.) wherein the same issue stands decided in favour of the revenue.
We have heard the rival submissions and carefully perused the judicial pronouncements relied upon by both the parties. In our considered view, the issue has been comprehensively examined and decided by the co- wherein, on similar facts, it has been held as under:
“Assessing Officer disallowed claim for reason that CSR spending was mandatory under section 135 of Companies Act, 2013 and same could not be treated as voluntary donations eligible for deduction under section 80G - -Whether further, though quantum of CSR spend is mandatory, there is no mandate on how amount is to be spent or to whom contribution is to be made and, accordingly, act of assessee to choose to contribute to foundations which were eligible to accept donations under section 80G was voluntary and was not mandated by section 135 of Companies Act, 2013 - Held, yes - Whether further, since assessee had made donations without any material return and without any consideration and not for quid pro quo, payment made by assessee, whether voluntarily or as part of a mandate did not negate intention of contribution made and was eligible for deduction under section 80G - Held, yes”
Respectfully following the above decision of the co-ordinate bench, we hold that the assessee is eligible to claim deduction u/s. 80G of the Act in respect of CSR expenditure made by way of the following donations:
Particulars Date of Payment Amount (in INR) Rotary Club of Bombay 19 March 2020 16,05,488 Juhu Beach Public Charitable Trust Rotary Club of Bombay 23 March 2020 4,16,540 Juhu Beach Public Charitable Trust Naam Foundation 19 March 2020 5,82,784 Smt Indirabai Wavikar 18 February 2020 6,00,000 Charitable Trust Sankalptaru 13 November 2019 23,750 Total 38,11,345 Ld. AO is, accordingly, directed to allow the claim of deduction u/s. 80G subject to the fulfilment of other conditions prescribed therein.
Ground no. 2 & 3 pertain to charges of interest u/s. 234C and grant of due interest u/s. 244A of the Act. Ld. AO is directed to compute the interest as per the applicable provisions. Ground no. 4 relating to initiation of penalty u/s. 270A is premature and requires no adjudication at this stage while ground no. 5 is general in nature.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 11.11.2025.