DCIT CIRCLE 3(4), MUMBAI, MUMBAI vs. ASIAN PAINTS LIMITED, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “A” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.3909/Mum/2025 (AYs: 2020-21) DCIT Circle 3(4), vs. Asian Paints Limited Room No.559, 5th Floor, Aayakar 6A. Santi Nagar Vakola Pipeline Lane Bhavan, MK Road, Mumbai-400020. Santacruz East, Mumbai-400055. PAN/GIR No: AAACA3622K (Appellant) (Respondent) Assessee by Shri Madhur Agrawal, Adv. & Shri Punit Shah Revenue by Shri Manoj Kumar (CIT-DR) Date of Hearing 09.07.2026 Date of Pronouncement 06.10.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the revenue emanates from the orders passed u/s 250

of the Income-tax Act, 1961 (in short, ‘Act’) by National Faceless Appeal Centre

[in short “CIT(A)”] dated 31.03.2025 for assessment year (AY) 2020-21.

“1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made by the AO. u/s. 14A read with Rule BD of the Act without appreciating the fact that assessee could not substantiate the suo moto disallowance offered by it, and also assessee did not minder strecords wr the exempt Income/expense and therefore section 14A read with Rule BD of the Rules is applicable in assessee's case." 2. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 1526.45 lacs being claim of provision for Doubtful Debts made by the A.O. without appreciating the fact that the said claim is not applicable in assessee's case."

ITA No.3909/MUM/2024 Asian Paints Limited 3. "Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in remitting the matter to AO with the instruction to verify expenditure incurred against foreign income and after verification grant the DIT relief u/s 90 & 91 claimed by the assessee." 4. "Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing expenses on trip scheme expenses without appreciating the fact that the trip expenditure was not expended wholly and exclusively for the purpose of the business." 5. "Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in holding that no deduction u/s 194H of the Act is required on trip scheme expenses without appreciating the fact that the trip expenditure were eligible for such deduction." 6. "Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in holding that expenditure on "Colour Idea Stores" is in the nature of revenue expenditure ignoring the fact that the said expense was for creation of fixed assets and hence a capital expenditure and should be capitalized as Furniture and Fixture. 7. "Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee shall be eligible for deduction u/s 80G on Corporate Social Responsibility ('CSR') expenses incurred by it without appreciating the fact that CSR comes under mandatory requirement of the Companies Act, 2013?” 3. Facts of the case, in brief, are that the assessee filed its return of income

for AY 2020-21 declaring total income of Rs.34,70,21,37,770/-. The case was

selected for complete scrutiny and assessment was completed by the AO u/s

143(3) r.w.s. 144B of the Act dated 28.09.2023. A reference was also made to the

Transfer Pricing Officer (TPO) u/s 92CA in respect of the international transactions

of the assessee with its associated enterprises. The TPO did not propose any

adjustment in respect of the international transactions. During the course of

assessment proceedings, the AO made various additions and disallowances. In

respect of disallowance u/s 14A r.w.r. 8D, the assessee had suo motu disallowed

ITA No.3909/MUM/2024 Asian Paints Limited Rs.61,19,804/- and contended that the investments had been made out of

surplus funds and that no specific expenditure had been incurred for earning

exempt income. The AO, however, did not accept the explanation and computed

the disallowance under Rule 8D at Rs.10,23,24,570/-. After reducing the suo motu

disallowance, a further amount of Rs.9,62,04,766/- was added to the income of

the assessee. The AO further disallowed Rs.15,26,44,668/- towards provision for

doubtful debts and advances. The assessee submitted that the provision had

been made at individual debtor level and the corresponding amount had been

reduced from trade receivables in the balance sheet, relying upon the decision of

the Hon'ble Supreme Court in the case of Vijaya Bank vs. CIT, 323 ITR 166 (SC).

The AO did not accept the claim and disallowed the entire amount under the

normal provisions of the Act and also while computing book profit u/s 115JB. The

assessee had also claimed foreign tax relief & credit u/s 90 and 91 amounting to Rs.3,54,35,110/- in respect of taxes paid and deducted abroad on income received from overseas subsidiaries. The AO held that the assessee had not

furnished sufficient documentary evidence to establish the basis of the claim and, accordingly, disallowed the entire amount of Rs.3,54,35,110/-.

3.1 Further, the AO disallowed expenditure of Rs.170,18,72,297/- incurred

under the Trip Scheme. The assessee submitted that the schemes were sales-

promotion incentives for dealers based on achievement of sales targets and that

the expenditure was incurred wholly and exclusively for business purposes. The 3

ITA No.3909/MUM/2024 Asian Paints Limited AO, however, treated the trips as essentially leisure and holiday packages and

also held that the expenditure represented commission and incentive to dealers

on which tax was deductible u/s 194H. Accordingly, the expenditure was

disallowed. In respect of expenditure incurred on Colour Idea Stores, the assessee

had claimed Rs.33,62,00,000/- as revenue expenditure. The AO, on examination

of the agreement with the dealers, held that the expenditure resulted in creation

of fixed assets and furniture and fixtures and was capital in nature. Accordingly,

the amount was capitalised, depreciation of Rs.3,36,20,000/- was allowed and

the resultant net disallowance of Rs.30,25,80,000/- was made.

3.2 Lastly, the assessee had claimed deduction u/s 80G amounting to

Rs.37,83,36,736/-, out of which Rs.5,45,12,990/- related to CSR expenditure. The

assessee contended that the restriction applicable to CSR expenditure u/s 37(1)

did not operate as a bar against a deduction otherwise allowable u/s 80G. The AO

did not accept the contention and disallowed Rs.37,83,36,767/- claimed under

section 80G in relation to CSR expenditure. Accordingly, the AO made aggregate

additions and disallowances of Rs.266,78,89,286/- and assessed the total income

of the assessee at Rs.37,37,00,27,056/- as against the returned income of

Rs.34,70,21,37,770/-.

The assessee had raised various grounds challenging the additions and

disallowances made by the AO. The CIT(A), after considering the assessment 4

ITA No.3909/MUM/2024 Asian Paints Limited order, the submissions of the assessee, the remand report of the AO and the

judicial precedents relied upon by the assessee, adjudicated the grounds as

under. In respect of disallowance u/s 14A r.w.r. 8D, the CIT(A), following the

decision of the Tribunal in the assessee's own case for earlier assessment years, held that the AO had not recorded proper satisfaction for rejecting the suo motu

disallowance made by the assessee. Accordingly, the additional disallowance of Rs.9,62,04,766/- was deleted and the grounds were allowed. With regard to provision for doubtful debts amounting to Rs.15,26,44,668/-, the CIT(A), relying

upon the subsequent decision of the Tribunal in the assessee's own case and the

judicial precedents concerning section 36(1)(vii), held the claim to be allowable. Accordingly, the addition of Rs.15,26,44,668/- made by the AO was deleted and

the ground was allowed. As regards foreign tax relief u/ss 90 and 91 amounting to Rs.3,54,35,110/-, the CIT(A), following the Tribunal's order in the assessee's own case for AY 2018-19, directed the AO to verify the expenditure incurred

against the foreign income and, upon verification, grant the foreign tax

credit/relief in accordance with law. The relevant grounds were accordingly partly

allowed for statistical purposes. In respect of expenditure incurred under the Trip Schemes amounting to Rs.170,18,72,297/-, the CIT(A), following the decisions of

the Tribunal in the assessee's own case, accepted the assessee's contention that

the relationship between the assessee and its dealers was on a principal-to-

principal basis and that the expenditure was incurred for sales and business 5

ITA No.3909/MUM/2024 Asian Paints Limited promotion. Accordingly, the entire addition of Rs.170,18,72,297/- was deleted

and the ground was allowed. With regard to expenditure incurred on Colour Idea

Stores, the CIT(A), following the decision of the Tribunal in the assessee's own

case, held the expenditure to be revenue expenditure incurred for the purposes of business. Accordingly, the net disallowance of Rs.30,25,80,000/- made by the AO was deleted and the ground was allowed. As regards the deduction claimed

u/s 80G in respect of donations made out of CSR expenditure, the CIT(A),

following the decision of the Tribunal in the assessee's own case and other judicial

precedents, held that the restriction applicable to CSR expenditure u/s 37(1)

would not, by itself, preclude an otherwise eligible deduction u/s 80G.

Accordingly, the appeal was partly allowed.

before the Tribunal. The Ld. CIT-DR relied on the order of AO. He however,

admitted that the grounds in the appeal are covered by the decisions of Hon’ble

High Court and the Tribunal in appellant’s own case.

that all issues are covered by the decisions of ITAT in assessee’s own case for

different AYs. He has filed written submission, legal and factual paper books and

copies of the Tribunal orders. He submitted that the CIT(A) has followed the

binding decision of the Hon’ble High Court and the ITAT and allowed relief on all

the grounds. Accordingly, the Ld. AR requested to dismiss the appeal of revenue. 6

ITA No.3909/MUM/2024 Asian Paints Limited 7. We have heard both sides and perused the materials on record. We have

also carefully gone through the orders of AO and CIT(A). We have also deliberated

on the decisions relied upon by the Ld. AR. Ground No.1 pertains to disallowance

u/s 14A r.w.r. 8D of Rs.9,62,04,766/-. The above amount is over and above to suo

moto disallowance of Rs.61,19,804/- made by the assessee. The Ld. AR submitted

that the issue is settled in favour of the assessee as the addition made by the AO

u/s 14A of the Act has been deleted by the Tribunal as well as affirmed by the

Hon’ble High Court in several earlier years. The Hon’ble Bombay High Court in

assessee's own case for assessment year 2008-09 has deleted the addition u/s

14A of the Act made as per Rule 8D of the Rules holding that no satisfaction has

been recorded by the AO as required u/s 14A(2) of the Act. We find that the CIT(A)

deleted the addition with the following finding:

“I have considered to A.O.'s Order, Remand Report and as well as the appellant AR's submissions. I have also taken note to the judicial pronouncements on the issue submitted by the appellant's AR in its submissions. Having considered them the contentions raised by the appellant as against their ground of appeal is being discussed and decided as under: - The Appellant assessee in its reply dated 02.09.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY 2016-17, 2017-18, 2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "Similarly, for AYs 2010-11 to AY 2015-16, the Tribunal deleted the disallowance made under section 14A r.w.rule 8D of the Act on the grounds of no proper satisfaction being recorded by the Id. AO. Accordingly, following the earlier year's precedents, we hold that no disallowance is called for over and above what has been suomoto disallowed by the assessee because assessee has given detailed justification for suomoto disallowance and Id. AO without recording its satisfaction or incurred any expenditure which can be said to be attributable to earning of exempt income as mechanically applied, accordingly, the disallowance made by the Id. AO is deleted."

ITA No.3909/MUM/2024 Asian Paints Limited Accordingly, keeping in view the principle of judicial discipline, consistency, and reliance on the order of the Hon'ble ITAT in assessee own case, this appellate authority hereby deletes the addition of Rs. 9,62,04,766/- u/s 14A r.w.r 8D.”

7.1 It is clear from the above order of CIT(A) that he allowed the ground raised

by the assessee by following the decision of ITAT in appellant’s own case. The Ld.

CIT-DR has not been able to distinguish the decision either on fact or in law.

Hence, we do not find any infirmity in the order of CIT(A), which we confirm.

Accordingly, the ground No.1 of revenue is dismissed.

Rs.1526.45 Lakhs. The Ld. CIT-DR relied on the order of AO.

8.1 On the other hand, the ld. AR of the assessee submitted that the issue is

settled in favour of the assessee by the Tribunal, in assessee's own case in

common order for AYs 2016-17 to 2018-19. The Tribunal in the said order has

relied on the decision of the Hon’ble Supreme Court in case of Vijaya Bank (supra)

and the decision of the jurisdictional Bombay High Court in case of CIT v. Tainwala

Chemicals & Plastics India Limited [2013] 215 Taxman 153 (Bombay), wherein the

Hon’ble High Court has held that once a provision of doubtful debt has been

debited to the profit and loss account and corresponding provision has been

credited or reduced from the debtors account in the balance sheet, the same

would amount to writing off such debtors. Once there is an actual write off of the

debtor, then deduction is not claimed on the provision but on actual write off,

ITA No.3909/MUM/2024 Asian Paints Limited which is allowable as deduction u/s 36(1)(vii) of the Act. Further, the finding of

the AO that the provision for bad and doubtful debt has been made on an

estimate is factually incorrect as above-stated that the provision has been made

on individual debtor basis. The Ld. AR also relied on the decision in case of T.R.F.

Ltd. v. CIT [2010] 323 ITR 397 (SC), wherein the Hon'ble Supreme Court has held

that it is not necessary for the assessee to establish that the debt, in fact, has

become irrecoverable. It is enough if the bad debt is written off as irrecoverable

in the accounts of the assessee. He submitted that the said CBDT vide Circular No.

12/2016 dated 30.05.2016 affirmed the view of the Hon'ble Supreme Court and

confirmed that claim for any debt or part thereof in any previous year, shall be

admissible u/s 36(1)(vii) of the Act, if it is written off as irrecoverable in the books

of account of the assessee for the relevant previous year.

8.2 We have gone through the assessment order, appellate order of CIT(A) and

the orders of Tribunal and the Hon’ble Courts, relied upon by the Ld. AR. The

CIT(A) deleted the impugned addition with the following finding:

“I have considered to A.O.'s Order, Remand Report and as well as the appellant AR's submissions. I have also taken note to the judicial pronouncements on the issue submitted by the appellant's AR in its submissions. Having considered them the contentions raised by the appellant as against their ground of appeal is being discussed and decided as under: - The Appellant assessee in its reply dated 02.09.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY 2016-17, 2017-18, 2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "This principle of Hon'ble Bombay High Court has been followed by the Hon'ble Karnataka High Court and Hon'ble Gujarat High Court wherein post amendment to

ITA No.3909/MUM/2024 Asian Paints Limited Section 115JB also even for the book profit provision for doubtful debts has been allowed as deduction. Therefore, in view of the principles laid down by the Hon'ble Jurisdictional High Court and other High Courts as noted above, we hold that the provision for doubtful debts is deductible not only under normal provisions of law but also u/s.115JB. Accordingly, ground No. IX and X are allowed." Accordingly, keeping in view the principle of judicial discipline, consistency, and reliance on the order of the Hon'ble ITAT in assessee own case, this appellate authority hereby deletes the addition of Rs.15,26,44,668/- made on account of provision of doubtful debts.”

8.3 It is clear from the order of CIT(A) that he allowed the ground raised by the

assessee by following the decisions of Hon’ble Bombay High Court and those of

ITAT in appellant’s own case. The Ld. CIT-DR has not been able to distinguish the

decision either on fact or in law. Hence, we do not find any infirmity in the order

of CIT(A), which we confirm. Accordingly, the ground No.2 of revenue is dismissed.

of the Act amounting to Rs.3,54,35,110/-. The Ld. CIT-DR supported the order of

AO.

9.1 On the other hand, the ld. AR submitted that the issue is settled in favour

of the assessee by the Tribunal, in assessee's own case in common order for AY

2016-17 to 2018-19. The Tribunal in the said order has allowed the claim of

foreign tax credit claimed by the assessee in its return of income, as well as the

additional claim made before the AO, and directed the AO to verify the claims of

the assessee and grant appropriate credit of tax deducted at source outside India.

Therefore, the Ld. AR requested that the AO may be directed to grant foreign tax

ITA No.3909/MUM/2024 Asian Paints Limited credit of Rs.3,54,35,110/- claimed in the return of income and further amount of

credit of Rs.97,15,291/-after verifying the same.

9.2 We have heard both sides and perused the materials on record. The CIT(A)

deleted the addition with the following finding:

“I have considered to A.O.'s Order, Remand Report and as well as the appellant AR's submissions. I have also taken note to the judicial pronouncements on the issue submitted by the appellant's AR in its submissions. Having considered them the contentions raised by the appellant as against their ground of appeal is being discussed and decided as under: - The Appellant assessee in its reply dated 26.11.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "8. AY 2018-19 ITAT remanded the issue to AO to verify the details of expenses in relation to such foreign income and examine the normal and additional claim of foreign tax credit and allow accordingly." Accordingly, keeping in view the principle of judicial discipline, consistency, and reliance on the order of the Hon'ble ITAT in assesee's own case, this appellate authority hereby directs the AO to verify such expenditure incurred against foreign income & after verification grant the DIT relief u/s 90 & 91 claimed by the appellant as per the provision of the law. With this specific direction, the appellant's ground of appeal is adjudicated and for statistical purpose, this ground of appeal is partly allowed.”

9.3 The CIT(A) has allowed the ground raised by the assessee by following the

decision of ITAT in appellant’s own case. The Ld. CIT-DR has not been able to

distinguish the decision either on fact or in law. Accordingly, we confirm the order

of CIT(A) and dismiss ground No.3 of revenue.

DR supported the order of AO.

ITA No.3909/MUM/2024 Asian Paints Limited 10.1 On the other hand, the Ld. AR supported the order of CIT(A). The assessee

submitted that the issue is settled in favour of the assessee by the Tribunal, in

assessee's own case in earlier years including the common order for AYs 2016-17

to 2018-19. The Tribunal in the said order has allowed the expenditure for the trip

scheme to be revenue in nature, and has allowed deduction for the same. Further,

the Tribunal held that assessee has been deducting TDS as per applicable law

while making payments to travel operators for the said scheme. The Ld. AR also

submitted that the relationship with the dealers is that of principal to principal

and not a principal-agent relationship, and the same cannot be considered as

commission and therefore the question of deduction of tax at source u/s 194H of

the Act, and disallowance of the expenditure upon failure to do so, does not arise

at all.

10.2 We have heard both sides and perused the materials on record. The CIT(A)

deleted the addition with the following finding:

“I have considered the AO's order, Remand report and submissions of the assessee's AR, on this issue of 'TRIP SCHEME EXPENSES', it is noted that, The Appellant assessee in its reply dated 02.09.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY 2016-17, 2017-18, 2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "Ground no. XI: disallowance of trip scheme expenses; Ground no. XII: disallowance of colour idea stores expenses; Ground no. XIV: disallowance of discount and incentives which are target based to increase sales (i.e. by way of credit notes) given to dealers (by way of enhancement by Id. CIT(A); In so far as Ground No. XI & XII are concerned, at the outset, the assessee submits that the issue is favourably covered in the assessee's own case in AY 2009-10 wherein the Tribunal held that relationship between the assessee and its Dealers 12

ITA No.3909/MUM/2024 Asian Paints Limited is Principal to Principal and not Principal to Agent, accordingly, section 194H of the Act does not apply and consequently no disallowance u/s. section 40(a)(ia) of the Act be made. This has been consistently followed by Tribunal in AY 2010-11 to AY 2015-16. We have heard both the parties and also perused the relevant materials referred to before us and the findings given in the impugned orders. We will first take up the issue of disallowance of trip scheme expenses and disallowance of colour idea store expenses as raised in ground No.11 & 12 respectively. As mentioned above assessee has various dealers all across the country who are normally hardware stores dealing in many other products other than paints and assessee company sell such paints to various dealers who will further sell to painters and other customers. There is no agreement as such between the assessee and its dealers for sale of goods. The assessee provided the basic details and after verification and due diligence had approved the dealers and then the customer code is created in the books of accounts of the assessee. Dealers also share their success stories and interact with top management to give the feedback. These conventions are often done on the trips sponsored for the dealers who had achieved the target as per the scheme floated by the assessee company. Thus, expenses incurred for organizing such trips is allowable as 'revenue expenditure'. It has also been brought on record that where assessee was paying to the travel or tour operator, appropriate TDS has been deducted. These trade discounts / cash discounts are given as reduction in purchase price in the invoice and GST as applicable is levied on the net price. Such discount nowhere can be treated as commission and accordingly, discounts given by the assessee company to the dealers is allowable as 'revenue expenditure'. The whole case of the Id. AO and Id. CIT (A) is that there is an agency relationship between the assessee company and the dealers. Thus, the expenditure incurred under this head, we hold that it is purely Revenue expenditure as it is in the nature of sales promotion. All other aspects which has been raised by the Id. DR and the Id. CIT(A) has been clarified and reported by the assessee before us which has been incorporated in detailed in the foregoing paragraphs to which we fully endorse for the reasons that there is no concept of agency qua the dealing between the assessee and the dealers. It is purely on principal-to-principal basis and all the expenses incurred for sales promotion, business promotion, trip expenses, colour Idea store expenses are purely for the purpose of business and allowable as revenue expenditure. Accordingly, ground No. XI and XII are allowed." Accordingly, keeping in view the principle of judicial discipline, consistency, and reliance on the order of the Hon'ble ITAT in assessee own case, this appellate authority hereby deletes the addition of Rs.170,18,72,297/- made on account of provisions of the Act i.e.: sec. 37(1) and sec. 40(a)(ia) r.w.s. 194H & its explanation.”

ITA No.3909/MUM/2024 Asian Paints Limited 10.3 It is clear from the order of CIT(A) that he allowed the ground raised by the

assessee by following the binding decisions of ITAT in appellant’s own case. The

Ld. CIT-DR has not been able to distinguish the decision either on fact or in law.

Hence, we do not find any infirmity in the order of CIT(A), which we confirm.

Accordingly, the ground No.4 of revenue is dismissed.

AO treated the said expenses as capital expenditure and allowed depreciation

@10%. The Ld. CIT-DR has supported the order of AO.

11.1 On the other hand, the Ld. AR has relied on the order of CIT(A). He

submitted that the issue is settled in favour of the assessee by the Tribunal, in

assessee's own case in earlier years including the common order for AYs 2016-17

to 2018-19. The Tribunal in the said order has allowed the expenditure for the

"Colour Idea stores" to be revenue in nature, and has allowed deduction for the

same. The said issue has also been decided by the Tribunal in favour of the

assessee in its own case in Asian Paints Ltd. v. DCIT, ITA No. 1673/Mum/2019,

dated 08.03.2024 for AY 2015-16. In light of the above, the Ld. AR requested that

the order of CIT(A)may be upheld.

11.2 We have heard both sides and perused the materials on record. We have

also gone through the orders of AO and CIT(A). We have also carefully gone

through the decision of the Tribunal relied upon by the Ld. AR. The CIT(A) deleted

the addition with the following finding: 14

ITA No.3909/MUM/2024 Asian Paints Limited “I have considered to A.O.'s Order, Remand Report and as well as the appellant AR's submissions. I have also taken note to the judicial pronouncements on the issue submitted by the appellant's AR in its submissions. Having considered them the contentions raised by the appellant as against their ground of appeal is being discussed and decided as under: - The Appellant assessee in its reply dated 02.09.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY 2016-17, 2017-18, 2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "Ground no. XI: disallowance of trip scheme expenses; Ground no. XII: disallowance of colour idea stores expenses; Ground no. XIV: disallowance of discount and incentives which are target based to increase sales (i.e. by way of credit notes) given to dealers (by way of enhancement by ld. CIT(A); In so far as Ground No. XI & XII are concerned, at the outset, the assessee submits that the issue is favourably covered in the assessee's own case in AY 2009-10 wherein the Tribunal held that relationship between the assessee and its Dealers is Principal to Principal and not Principal to Agent, accordingly, section 194H of the Act does not apply and consequently no disallowance u/s. section 40(a)(ia) of the Act be made. This has been consistently followed by Tribunal in AY 2010-11 to AY 2015-16. We have heard both the parties and also perused the relevant materials referred to before us and the findings given in the impugned orders. We will first take up the issue of disallowance of trip scheme expenses and disallowance of colour idea store expenses as raised in ground No.11 & 12 respectively. As mentioned above assessee has various dealers all across the country who are normally hardware stores dealing in many other products other than paints and assessee company sell such paints to various dealers who will further sell to painters and other customers. There is no agreement as such between the assessee and its dealers for sale of goods. The assessee provided the basic details and after verification and due diligence had approved the dealers and then the customer code is created in the books of accounts of the assessee. Dealers also share their success stories and interact with top management to give the feedback. These conventions are often done on the trips sponsored for the dealers who had achieved the target as per the scheme floated by the assessee company. Thus, expenses incurred for organizing such trips is allowable as 'revenue expenditure'. It has also been brought on record that where assessee was paying to the travel or tour operator, appropriate TDS has been deducted. These trade discounts/cash discounts are given as reduction in purchase price in the invoice and GST as applicable is levied on the net price. Such discount nowhere can be treated as commission and accordingly, discounts given by the assessee company to the dealers is allowable as 'revenue expenditure'. The whole case of the Id. AO and Id. CIT (A) is that there is an agency relationship between the assessee company and the dealers. Thus, the expenditure incurred under this head, we hold that it is purely Revenue expenditure as it is in the nature of sales promotion. All other aspects which have been raised by the Id. DR and the Id. CIT(A) has been clarified and reported by the 15

ITA No.3909/MUM/2024 Asian Paints Limited assessee before us which has been incorporated in detailed in the foregoing paragraphs to which we fully endorse for the reasons that there is no concept of agency qua the dealing between the assessee and the dealers. It is purely on principal-to-principal basis and all the expenses incurred for sales promotion, business promotion, trip expenses, colour Idea store expenses are purely for the purpose of business and allowable as revenue expenditure. Accordingly, ground No. XI and XII are allowed." Accordingly, keeping in view the principle of judicial discipline, consistency, and reliance on the order of the Hon'ble ITAT in assessee own case, this appellate authority hereby deletes the addition of Rs. 30,25,80,000/- Color Idea Store.”

11.3 It is clear from the order of CIT(A) that he allowed the ground raised by the

assessee by following the decisions of ITAT in appellant’s own case. The Ld. CIT-

DR has not been able to distinguish the decision either on fact or in law. Hence,

we do not find any infirmity in the order of CIT(A), which we confirm. Accordingly,

the ground No.5 of revenue is dismissed.

donations under CRS. The Ld. CIT-DR supported the order of AO.

12.1 On the other hand, the ld. AR relied on the order of CIT(A). He submitted

that the assessee has incurred CSR expenditure amounting to Rs.74,63,57,150/-.

The assessee has claimed a deduction of Rs.37,83,36,767/- u/s 80G of the Act,

with respect to the donations which were done as a part of the CSR obligations of

the assessee. The AO in the impugned assessment order held that since the

donations are made pursuant to obligations u/s 135 of the Companies Act, 2013,

the said donations are not voluntary and therefore, deduction u/s 80G of the Act

cannot be granted. However, the CIT(A) in the appellate order, deleted the entire

ITA No.3909/MUM/2024 Asian Paints Limited addition made by the AO by placing reliance on the order of the Tribunal in

assessee's own case for AYs 2016-17 to 2018-19 (supra), wherein the Tribunal has

held that donations made under CSR obligations are eligible for deduction u/s 80G

of the Act. The Ld. AR, therefore, requested to uphold the order of CIT(A) and

dismiss the ground of revenue.

12.2 We have heard both sides and perused the materials on record. We have

also gone through the orders of AO and CIT(A). We have also carefully gone

through the decision of the Tribunal relied upon by the Ld. AR. The CIT(A) deleted

the addition with the following finding:

“10.4 I have considered to A.O.'s Order, Remand Report and as well as the appellant AR's submissions. I have also taken note to the judicial pronouncements on the issue submitted by the appellant's AR in its submissions. Having considered them the contentions raised by the appellant as against their ground of appeal is being discussed and decided as under: - The Appellant assessee in its reply dated 26.11.2024 has provided an order of the Hon'ble ITAT in assessee own case for the AY 2016-17, 2017-18, 2018-19 dated 26.07.2024 on similar issues and the decision regarding to this issue states: "100. The brief facts are that during the year under consideration, the assessee incurred a CSR expenditure of Rs.46.51 crores and the same has been offered to tax as per section 37 of the Act. Out of which, Rs.9.44 crores are eligible (i.e. 50% of amount) for deduction/claim u/s. 80G of the Act and the assessee has claimed such deduction in its ROI. 101. The AO denied such deduction on the premise that such being part of mandatory CSR expenditure as per section 135 of the Companies Act, it loses the essence of being a 'donation' which is typically understood as 'voluntary' act, element of charity is missing. Further, considering the legislative intent of insertion of CSR and its implication u/s. 37, deduction u/s 80G could not be allowed. However, the CIT(A) allowed the claim of the assessee and dismissed the AO's observation by observing as under:-

ITA No.3909/MUM/2024 Asian Paints Limited

- The assessee has chosen voluntarily the organisation to which donation is given. Neither the donee organisation had a right to receive nor the assessee was under any obligation to donate to donee only, it could have given to any of the entities covered within the scope of section 135 of the Companies Act; - On the part of element of charity, the CIT(A) held that the activities of list of organisations covered under Schedule VII of the Companies Act, 2013 are related to social benefit and eligible to issue certificates u/s. 80G. Therefore, the element of charity cannot be missing and the assessee is eligible to claim deduction u/s. 80G of the Act.

"......By this, the assessee seeks compliance with Explanation 2 of section 37 of the Act and, therefore, the revenue shall not have any grievance. Whether or not the assessee suomoto disallowed the amount spend towards the CSR while computing the business income is a verifiable fact. 6. After computing the business income, while computing the total income of the assessee, the assessee is invoking the benefit under Chapter VIA by claiming deduction of the sums under section 80G of the Act. According to the revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction under section 80G of the Act. There is no express provision to support the contention of Revenue. On the other hand, section 80G (2) (iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swachh Bharat Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to

ITA No.3909/MUM/2024 Asian Paints Limited the CSR, and other than covered by section 80G(2) (iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G (2) (iiihk) and (iiihl) of the Act. Explanation 2 to section 37(1) of the Act which denies deduction for CSR expenses by way of business expenditure is applicable only to extent of computing 'business income' under Chapter IV-D of the Act and; it could not be extended or imported to CSR contributions which was otherwise eligible for deduction under Chapter VI-A of the Act. 7. Where the deduction under section 80G of the Act is also disallowed, since CSR qualifying donations are not 'voluntary contributions', it will be a double jeopardy in the case of assessee. Assessee cannot be denied the benefit of claim under Chapter VIA of the Act, which is considered for computing 'Total Taxable Income'. If assessee is denied this benefit, merely because such payment forms part of CSR, it would lead to double disallowance, which is not the intention of Legislature at all. Legislature on this matter simply dealing with the computation of total income under chapter IVD pertaining to "Income under the head Business and Profession" and not at all dealt with the eligibility of assessee to claim deduction u/s. 80G of the Act, falling in chapter VIA of the Act. It is further observed that genuineness of the transactions and identity of the donees are also not under challenge. All the payments were made through proper banking channel and appropriate donation receipts were also produced before the lower authorities and before us also.

ITA No.3909/MUM/2024 Asian Paints Limited In light of the principles of judicial discipline, consistency, and reliance on the decisions of the Hon'ble ITAT in the assessee's case, this appellate authority, after considering the facts and circumstances of the case, partly allows the appeal on this ground in favour of the appellant.”

12.3 It is clear from the order of CIT(A) that he allowed the ground raised by the

assessee by following the binding decisions of ITAT in appellant’s own case. The

Ld. CIT-DR has not been able to distinguish the decision either on fact or in law.

Hence, we do not find any infirmity in the order of CIT(A), which we confirm.

Accordingly, the ground No.6 of revenue is dismissed.

Order is pronounced on 06.10.2026.

Sd/- Sd/- (ANIKESH BANERJEE) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 06.10.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order Digitally signed by ABHINAV ABHINAV ANANT ANANT GAVANDE GAVANDE Date: 2026.10.13 16:30:19 +05'30' Assistant Registrar ITAT, MUMBAI 20