ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 14 1 2 MUMBAI, MUMBAI vs. GUJARAT PIPAVAV PORT LIMITED, MUMBAI

PDF · subscribers
ITA 4736/MUM/2026Status: DisposedITAT Mumbai30 July 2026AY 2020-218 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that CSR expenditure, even if mandatory, is eligible for deduction under Section 80G if the conditions of that section are satisfied, especially since the expenditure was already disallowed under Section 37. The Tribunal followed previous decisions that allowed such deductions.

What were the facts?

The assessee claimed a deduction under Section 80G for CSR expenditure. The Assessing Officer disallowed this deduction, arguing that CSR expenditure is mandatory and not a voluntary donation. The CIT(A) deleted the addition, holding that CSR expenditure, if disallowed under Section 37, can still be eligible for deduction under Section 80G if conditions are met.

What were the issues?

Whether CSR expenditure, which is statutorily mandated, can be claimed as a deduction under Section 80G when it has already been disallowed as a business expenditure under Section 37(1).

Which sections of the Income-tax Act were involved?

Section 80G,Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI PAWAN SINGH

For Appellant: Shri Manish Kanth, Adv. (Virtually)
For Respondent: Shri Rajgopal Parthasarathi – SR
Pronounced: 30/07/2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER)

ITA No. 4736 and 4737/MUM/2026 Assessment Year: 2021-22 and 2022-23

Assistant Commissioner of Gujarat Pipavan Port Limited, 5th Income Tax, Circle 14 1 2, Floor, Godrej Pirojshanagar, Aayakar Bhawan, Churchgate, Vs. Mumbai – 400079, Maharashtra. Mumbai – 400020, Maharashtra. PAN NO. AAACG 6975 B Appellant Respondent

Assessee by : Shri Manish Kanth, Adv. (Virtually).

Revenue by : Shri Rajgopal Parthasarathi – SR DR.

: 29/07/2026 Date of Hearing Date of pronouncement : 30/07/2026

ORDER PER OM PRAKASH KANT, AM

These two appeals by the Revenue are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (in short, "the learned CIT(A)"), for Assessment Years 2021–22 and 2022–23. As a common issue in dispute is involved in both these cases, the same

Gujarat Pipavan Port Limited 2 ITA No. 4736 and 4737/MUM/2026

were heard together and are being disposed of by way of this consolidated order for the sake of convenience.

2.

The grounds raised by the assessee in Assessment Year 2021–22 are reproduced as under:- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,74,35,648/- made on account of disclowance of deduction under Section 80G of the Income-tax Act, 1961.

2.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that CSR expenditure incurred under the mandate of Section 135 of the Companies Act, 2013, is an obligatory/statutory expenditure and lacks the essential character of a "voluntary donation" required to qualify for deduction under Section 80G.

3.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering that once an expenditure is specifically characterized as an "application of income" and disallowed under Section 37/1) via Explanation 2, it cannot be indirectly claimed as a deduction under another section to circurnvent the legislative intent of the disallowance.

4.

The appellant craves leave to add, amend, alter, or delete any ground(s) of appeal either before or at the time of hearing of the appeal.”

3.

Briefly stated, the facts of the case are that the assessee listed public company is engaged in the business of developing, constructing, operating and maintaining the port at Pipavav, Gujarat. The return of income for the year under consideration was filed on 14th February 2021, declaring a total income of ₹3,42,11,70,560/-. The return was selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short, "the Act"), were issued and duly complied with. The assessment under

Gujarat Pipavan Port Limited 3 ITA No. 4736 and 4737/MUM/2026

section 143(3) read with section 144B of the Act was completed on 28th September 2023, determining the total income at ₹3,48,99,05,752/-, inter alia, making disallowance of deduction claimed under section 80G amounting to ₹2,72,34,648/- in respect of Corporate Social Responsibility (CSR) activities.

4.

On further appeal, the learned CIT(A) deleted the said addition, observing as under:- “5.2 I have duly considered the facts of the case Assessment order passed u/s 143(3) and reply of the appellant filed during the appellate proceedings. During the year, the appellant incurred expenditure of Rs.6,73,00,036 towards Corporate Social Responsibility (CSR) activities as required under Section 135 of the Companies Act, 2013. The appellant suo motu disallowed the said amount while computing business income in view of Explanation 2 to Section 37(1). Out of the above CSR expenditure, an amount of Rs.5,48,71,296 was paid to various institutions registered under Section 80G. Accordingly, deduction of 50% amounting to Rs.2,74,35,648 was claimed under Chapter VI-A. The Assessing Officer observed that CSR expenditure is mandatory in nature and not voluntary. According to the Assessing Officer, the essential character of “donation” for the purposes of Section 80G is that it must be voluntary and without obligation. Since the expenditure was incurred in compliance with statutory requirements, the same could not be regarded as voluntary donation and hence the deduction was disallowed. 5.3 The appellant has strongly contested the findings of AO in its written submission/replies furnished during the appellate proceedings. The appellant submitted that the expenditure incurred towards Corporate Social Responsibility (CSR) had already been suo motu disallowed while computing income under the head “Profits and gains of business or profession” in accordance with Explanation 2 to Section 37(1) of the Act, and therefore no double benefit was claimed. It was further contended that there is no provision under Section 80G of the Act which restricts or prohibits deduction in respect of CSR contributions made to institutions duly approved under that section. The appellant relied upon CBDT Circular No. 01/2015 dated 21.01.2015, wherein it has been clarified that although CSR expenditure is not allowable as business expenditure under Section 37, the same may be eligible for deduction under other provisions of the Act, including Chapter VI-A, subject to fulfillment of the prescribed conditions. It was also emphasized that the statute specifically excludes CSR contributions only in respect of certain notified funds such as the Swachh Bharat Kosh and the Clean Ganga Fund, which, according to the appellant, indicates that CSR contributions

Gujarat Pipavan Port Limited 4 ITA No. 4736 and 4737/MUM/2026

to other eligible charitable institutions continue to qualify for deduction under Section 80G. On the basis of the above submissions, the appellant contended that the claim of deduction under Section 80G in respect of eligible donations was in accordance with law and therefore ought to be allowed.

5.4 From the proper appreciation and evaluation of the findings of AO in his assessment order and reply/submission of the appellant furnished during the appellate proceedings, it is seen that the factual position emerging from the record is that the appellant incurred CSR expenditure in compliance with statutory requirements, disallowed the same while computing business income in accordance with Explanation 2 to Section 37(1), and thereafter claimed deduction under Section 80G only in respect of contributions made to institutions approved under that provision. The issue for consideration is whether such contributions, though made in the course of meeting CSR obligations, lose their eligibility under Chapter VI-A.

The legislative scheme introduced by the Finance Act, 2014 clarified that CSR expenditure shall not be treated as business expenditure under Section 37, treating the same as application of income. However, neither the statutory provision nor the explanatory memorandum indicates any intention to deny deduction under other specific provisions where the expenditure independently satisfies the prescribed conditions. CBDT Circular No. 01/2015 also recognizes this position by clarifying that CSR expenditure, though not allowable under Section 37, may qualify for deduction under Sections 30 to 36 or under Chapter VI-A if the requirements of those provisions are fulfilled. Section 80G, which falls under Chapter VI-A, provides deduction in respect of sums paid to specified funds and institutions, subject to approval and other conditions. The provision itself contains specific exclusions in respect of contributions to Swachh Bharat Kosh and Clean Ganga Fund when made as CSR expenditure. The presence of such specific exclusions indicates that the legislature consciously restricted the denial only to those cases, and by necessary implication, did not intend a general disallowance of CSR contributions made to other eligible institutions.

In the present case, the payments have been made to institutions duly approved under Section 80G and the quantum of deduction claimed is within the permissible limits. The disallowance under Section 37 has already been made, and the claim under Section 80G represents a deduction from total income under a separate statutory framework. The provisions of Chapter VI-A operate independently of the computation of business income and are to be applied once the gross total income is determined. Judicial principles laid down by the Hon’ble Supreme Court in cases such as CIT v. Rajasthan Spinning & Weaving Mills Ltd. (274 ITR 465) and Bajaj Tempo Ltd. v. CIT (196 ITR 188) emphasize that incentive provisions should be interpreted in a manner that advances the object of the provision, subject to compliance with statutory conditions. Further, the principle that deductions under different provisions operate in distinct fields has been recognized in CIT v. Reliance Energy Ltd. (358 ITR 371) and other decisions.

Gujarat Pipavan Port Limited 5 ITA No. 4736 and 4737/MUM/2026

Considering the statutory framework, the CBDT clarification, the specific nature of exclusions contained in Section 80G, and the fact that the appellant has satisfied all the prescribed conditions, the disallowance appears to have arisen from a broader interpretation not expressly supported by the language of the provision. On a cumulative and harmonious reading of the relevant provisions and the factual matrix, the claim made by the appellant under Section 80G cannot be regarded as ineligible merely on the ground that the contribution formed part of CSR expenditure. Accordingly, the disallowance of Rs.2,74,35,648 is deleted. Therefore, this ground of appeal is hereby allowed.”

5.

We have heard the rival submissions and carefully perused the material available on record. The short controversy before us is whether a contribution made towards Corporate Social Responsibility (CSR), though disallowable as business expenditure under Explanation 2 to section 37(1) of the Act, becomes disentitled to deduction under section 80G of the Act merely because it forms part of the assessee's CSR obligation.

6.

The issue, in our considered opinion, stands concluded by the Coordinate Bench decision relied upon by the learned CIT(A). The Coordinate Bench has held that the embargo contained in Explanation 2 to section 37(1) is confined to the computation of business income and does not, by itself, prohibit a deduction otherwise admissible under Chapter VI-A, provided the statutory conditions prescribed therein are satisfied. It has further been held that where two judicial views are possible on the issue, the view adopted by the Assessing Officer constitutes a plausible view in law.

Gujarat Pipavan Port Limited 6 ITA No. 4736 and 4737/MUM/2026

7.

In the present case, it is an undisputed position that the assessee had itself disallowed the CSR expenditure while computing its business income under section 37(1). The deduction under section 80G has been claimed only in respect of donations made to institutions admittedly approved under that provision. The Revenue has not disputed the fulfilment of any of the statutory conditions prescribed under section 80G. Its sole objection is that the payments formed part of the assessee's CSR obligation. Such an objection, by itself, cannot constitute a ground to deny deduction under section 80G in the absence of any statutory prohibition. The issue in dispute is no longer res integra. The Coordinate Bench, in the case of Val Organics Pvt. Ltd vs. Deputy Commissioner of Income tax in ITA No.2473/M/2025 is reproduced as under:-

“4. We have heard the rival submissions advanced by the learned counsel for the parties and have carefully perused the record. The learned counsel for the assessee has reiterated the submissions earlier placed before the Principal Commissioner of Income-tax (PCIT). He has pointed out that the Assessing Officer, in the course of scrutiny, had issued a notice under section 143(2) of the Act dated 29.06.2021 calling for details with respect to the deduction claimed under Chapter VIA of the Act, whereupon the assessee, vide response dated 05.07.2021, furnished complete particulars of donations made. Thereafter, the Assessing Officer, by notice issued under section 142(1) of the Act dated 24.11.2021, specifically enquired into the claim of deduction under section 80G of the Act. In response, the assessee furnished detailed explanations together with supporting evidence, including justification regarding the eligibility of the Corporate Social Responsibility (CSR) expenditure for deduction under section 80G of the Act. It was, therefore, submitted that the enquiry required in law had, in fact, been conducted by the Assessing Officer and, accordingly, the Explanation appended below section 263 of the Act could not have been invoked in the present case. The PCIT, however, proceeded on the premise that no enquiry had been undertaken on the specific issue of CSR expenditure vis-à-vis deduction under section 80G of the Act.

Gujarat Pipavan Port Limited 7 ITA No. 4736 and 4737/MUM/2026

4.1 On the substantive issue of eligibility of CSR expenditure for deduction under section 80G of the Act, it is evident that divergent views have been expressed by various benches of the Income Tax Appellate Tribunal. The Bangalore Bench of the Tribunal in FNF India Private Limited v. ACIT [(2021) 85 ITR (T) 18 (Bang.)] and the Kolkata Bench in JMS Mining Private Limited v. PCIT [(2021) 136 taxmann.com 118 (Kol-Trib.)] have upheld the admissibility of such deduction. Conversely, the Delhi Bench of the Tribunal in Agilent Technologies (International) Pvt. Ltd. v. ACIT [2024] 160 taxmann.com 238 (Del. Trib.) has taken a contrary view and disallowed the claim. Particular significance attaches to the decision of the Kolkata Bench in JMS Mining Private Limited v. PCIT (supra), which arose in the context of revisional proceedings under section 263 of the Act. In that case, the Tribunal held that the Assessing Officer’s decision to allow deduction under section 80G in respect of CSR expenditure constituted a plausible and legally sustainable view, and consequently, the revisional order passed under section 263 of the Act was quashed. 4.2 In the present case also, having regard to the existence of divergent judicial opinion and the fact that the Assessing Officer adopted one such plausible view, it cannot be said that the assessment order suffered from an error which was prejudicial to the interests of the Revenue. In this connection, reference may usefully be made to the decision of Hon’ble Supreme Court in CIT v. Max India Limited [2007] 295 ITR 282 (SC), wherein it was held that when two views are reasonably possible on a question of law and the Assessing Officer has adopted one such view, the mere preference of the Commissioner for another view does not justify invocation of revisional jurisdiction under section 263 of the Act. 4.3 In view of the foregoing discussion, we are of the considered opinion that the assessment order passed by the Assessing Officer does not fall within the ambit of section 263 of the Act. Consequently, the impugned order passed by the PCIT is unsustainable in law and is hereby set aside.”

8.

The learned CIT(A), while deleting the disallowance, has merely followed the legal position emerging from the aforesaid Coordinate Bench decision. The Revenue has not brought to our notice any contrary binding precedent warranting a different view. We, therefore, find no infirmity in the impugned order of the learned CIT(A) requiring interference. Accordingly, the grounds raised by the Revenue for Assessment Year 2021-22 are dismissed

Gujarat Pipavan Port Limited 8 ITA No. 4736 and 4737/MUM/2026

9.

The issue involved in the Revenue's appeal for Assessment Year 2022-23 is identical, the only variation being the quantum of deduction claimed. Since the facts and the issue in dispute are the same, our findings for Assessment Year 2021-22 shall apply mutatis mutandis to this year also. The grounds raised by the Revenue are, accordingly, dismissed. 10. In the result, both the appeals of the Revenue are dismissed.

Order pronounced in the open Court on 30/07/2026.

Sd/- Sd/- (PAWAN SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai; Dated: 30/07/2026 M. Ranganath Vittal , Sr. P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai

More judgments on Section 80G

All 6,482 judgments and leading authorities on Section 80G →

Latest GST High Court judgments

Search GST case law →