JEEVANDEEP EDUMEDIA PRIVATE LIMITED,MUMBAI vs. PRINCIPLE CIT-6, MUMBAI

3. On the facts and circumstances of the case and in law the learned 3. On the facts and circumstances of the case and in law the learned 3. On the facts and circumstances of the case and in law the learned PCIT erred on facts and in law in exercisin PCIT erred on facts and in law in exercising revisionary powers under g revisionary powers under section 263 of the Acton various issues in the impugned order, without section 263 of the Acton various issues in the impugned order, without section 263 of the Acton various issues in the impugned order, without satisfying the twin jurisdictional conditions of the assessment order satisfying the twin jurisdictional conditions of the assessment order satisfying the twin jurisdictional conditions of the assessment order being: (a) erroneous; and (b) prejudicial to the interests of the Revenue being: (a) erroneous; and (b) prejudicial to the interests of the Revenue being: (a) erroneous; and (b) prejudicial to the interests of the Revenue and consequently, the impugned order is illegal, bad in law and liable to ly, the impugned order is illegal, bad in law and liable to ly, the impugned order is illegal, bad in law and liable to be quashed.

4. The learned PCIT erred in facts and in law by enhancing/ setting 4. The learned PCIT erred in facts and in law by enhancing/ setting 4. The learned PCIT erred in facts and in law by enhancing/ setting aside the assessment order by exercising powers undersection 263 of aside the assessment order by exercising powers undersection 263 of aside the assessment order by exercising powers undersection 263 of the Act, without appreciating that: the Act, without appreciating that: a. It was not a case of lack of enquiry as the assessing officer during t a case of lack of enquiry as the assessing officer during t a case of lack of enquiry as the assessing officer during the course of assessment proceedings has duly verified the same; the course of assessment proceedings has duly verified the same; the course of assessment proceedings has duly verified the same; b. The view taken by the assessing officer in respect of the 80G b. The view taken by the assessing officer in respect of the 80G b. The view taken by the assessing officer in respect of the 80G Donation Deduction was, in any case, a plausible view; and Donation Deduction was, in any case, a plausible view; and c. Revisionary proceedings could not be initiated on a merely on the sionary proceedings could not be initiated on a merely on the sionary proceedings could not be initiated on a merely on the basis of 'change of opinion'. basis of 'change of opinion'.

6. The learned PCIT erred in facts by holding that the assessment order 6. The learned PCIT erred in facts by holding that the assessment order 6. The learned PCIT erred in facts by holding that the assessment order was "erroneous and prejudicial to the interests of revenue" merely was "erroneous and prejudicial to the interests of revenue" merely was "erroneous and prejudicial to the interests of revenue" merely because he disagreed with the view taken by the Assessing Officer, he disagreed with the view taken by the Assessing Officer, he disagreed with the view taken by the Assessing Officer, without demonstrating how the order violated Explanation 2 to Section without demonstrating how the order violated Explanation 2 to Section without demonstrating how the order violated Explanation 2 to Section 263. Ground No. 2: Incorrect disallowance of donation claimed u/s 80G of Ground No. 2: Incorrect disallowance of donation claimed u/s 80G of Ground No. 2: Incorrect disallowance of donation claimed u/s 80G of Rs. 12,49,000/- as it s forms part of CSR Expenditure as it s forms part of CSR Expenditure 1. The learned PCIT erred in facts and in law by disallowing the 1. The learned PCIT erred in facts and in law by disallowing the 1. The learned PCIT erred in facts and in law by disallowing the deduction of Rs.12,49,000/ deduction of Rs.12,49,000/- under section 80G of the IT Act. 2. On the facts and circumstances of the case and in law the learned 2. On the facts and circumstances of the case and in law the learned 2. On the facts and circumstances of the case and in law the learned PCIT erred in disallowing the deduction of donation paid and claimed in PCIT erred in disallowing the deduction of donation paid and PCIT erred in disallowing the deduction of donation paid and accordance with the provisions of section 80G of Income tax Act of accordance with the provisions of section 80G of Income tax Act of accordance with the provisions of section 80G of Income tax Act of Rs.12,49,000/-, based on assumptions and surmises. , based on assumptions and surmises. 3. The learned PCIT grossly erred in disallowing the deduction of 3. The learned PCIT grossly erred in disallowing the deduction of 3. The learned PCIT grossly erred in disallowing the deduction of donation claimed under section 80G of the IT Act of Rs.12,49,000/- donation claimed under section 80G of the IT Act of Rs.12,49 donation claimed under section 80G of the IT Act of Rs.12,49 without appreciating the fact that donation paid is eligible for deduction without appreciating the fact that donation paid is eligible for deduction without appreciating the fact that donation paid is eligible for deduction under the express provisions of section 80G of the IT Act and were under the express provisions of section 80G of the IT Act and were under the express provisions of section 80G of the IT Act and were made to entities which are duly registered u/s 12A of the Income Tax made to entities which are duly registered u/s 12A of the Income Tax made to entities which are duly registered u/s 12A of the Income Tax Ac. 4. Further, The learned PCIT also 4. Further, The learned PCIT also erred in law by disregarding the fact erred in law by disregarding the fact that the deductions claimed u/s 80G of the Act pertained to eligible that the deductions claimed u/s 80G of the Act pertained to eligible that the deductions claimed u/s 80G of the Act pertained to eligible payments specified under section 80G of the Act. payments specified under section 80G of the Act. 5. The learned PCIT failed to appreciate the fact that your Appellant has 5. The learned PCIT failed to appreciate the fact that your Appellant has 5. The learned PCIT failed to appreciate the fact that your Appellant has correctly disallowed the C correctly disallowed the CSR expenses u/s 37(1) of the Act while SR expenses u/s 37(1) of the Act while computing the business income and claimed deduction of Rs. 12,49,000 computing the business income and claimed deduction of Rs. 12,49,000 computing the business income and claimed deduction of Rs. 12,49,000 u/s 80G of the Act which falls under Chapter VIA wherein there is no u/s 80G of the Act which falls under Chapter VIA wherein there is no u/s 80G of the Act which falls under Chapter VIA wherein there is no such restriction. 6. The learned PCIT erred in holding that deduction under section 80G is 6. The learned PCIT erred in holding that deduction under sec 6. The learned PCIT erred in holding that deduction under sec not allowable for donations made in fulfillment of CSR obligations under not allowable for donations made in fulfillment of CSR obligations under not allowable for donations made in fulfillment of CSR obligations under section 135 of the Companies Act, 2013, thereby ignoring various section 135 of the Companies Act, 2013, thereby ignoring various section 135 of the Companies Act, 2013, thereby ignoring various judicial precedents wherein such deduction has been upheld, inter alia: judicial precedents wherein such deduction has been upheld, inter alia: judicial precedents wherein such deduction has been upheld, inter alia: a. Naik Seafoods Pvt. Ltd. (ITA No a. Naik Seafoods Pvt. Ltd. (ITA No. 490/Mum/2021) b. Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019) b. Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019) c. Goldman Sachs Services Pvt. Ltd. (ITA No. 2355/Bang/2019) c. Goldman Sachs Services Pvt. Ltd. (ITA No. 2355/Bang/2019) c. Goldman Sachs Services Pvt. Ltd. (ITA No. 2355/Bang/2019) d. Ericsson India Global Services Pvt. Ltd. (160 taxmann.com 599 d. Ericsson India Global Services Pvt. Ltd. (160 taxmann.com 599 d. Ericsson India Global Services Pvt. Ltd. (160 taxmann.com 599

6.5 The decision of the Assessing Officer in the instant case is 6.5 The decision of the Assessing Officer in the instant case is 6.5 The decision of the Assessing Officer in the instant case is erroneous on merits as well as the fac erroneous on merits as well as the fact that he has not conducted t that he has not conducted further enquiries, when facts on record. per se justified and further enquiries, when facts on record. per se justified and further enquiries, when facts on record. per se justified and mandated mandated mandated further further further inquiry inquiry inquiry or or or investigation. investigation. investigation. Furthermore, Furthermore, Furthermore, the the the submissions of the assessee are not acceptable in view of the submissions of the assessee are not acceptable in view of the submissions of the assessee are not acceptable in view of the Finance Bill, 2014 vide which the concept of Finance Bill, 2014 vide which the concept of Corporate Social Corporate Social Responsibility was introduced. The intent of the legislature itself was Responsibility was introduced. The intent of the legislature itself was Responsibility was introduced. The intent of the legislature itself was that the Corporates share the burden of the Government in providing that the Corporates share the burden of the Government in providing that the Corporates share the burden of the Government in providing social services, the extract of which is reproduced here under; social services, the extract of which is reproduced here under; social services, the extract of which is reproduced here under; "Under the Companies Act, 2013 cer "Under the Companies Act, 2013 certain companies (which tain companies (which have net worth of Rs.500 crore or more, or turnover of Rs. have net worth of Rs.500 crore or more, or turnover of Rs. have net worth of Rs.500 crore or more, or turnover of Rs. 1000 crore or more, or a net profit of Rs.5 crore or more during 1000 crore or more, or a net profit of Rs.5 crore or more during 1000 crore or more, or a net profit of Rs.5 crore or more during any financial year) are required to spend certain percentage of any financial year) are required to spend certain percentage of any financial year) are required to spend certain percentage of their their their profit profit profit on on on activities activities activities relating relating relating to to to Corporate Corpora Corpora Social Responsibility (CSR). Under the existing provisions of the Act Responsibility (CSR). Under the existing provisions of the Act Responsibility (CSR). Under the existing provisions of the Act expenditure incurred wholly and exclusively for the purposes expenditure incurred wholly and exclusively for the purposes expenditure incurred wholly and exclusively for the purposes of the business is only allowed as a deduction for computing of the business is only allowed as a deduction for computing of the business is only allowed as a deduction for computing taxable taxable taxable business business business income. income. income. CSR CSR CSR expenditure, expenditure, expenditure, being being being an an an applicatio application of income, is not incurred wholly and exclusively n of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of for the purposes of carrying on business. As the application of for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of income is not allowed as deduction for the purposes of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR computing taxable income of a company, amount spent on CSR computing taxable income of a company, amount spent on CSR cannot be allowed as deduc cannot be allowed as deduction for computing the taxable tion for computing the taxable income of the company. Moreover, the objective of CSR is to income of the company. Moreover, the objective of CSR is to income of the company. Moreover, the objective of CSR is to share burden of the Government in providing social services share burden of the Government in providing social services share burden of the Government in providing social services by companies having net worth/turnover/profit above a by companies having net worth/turnover/profit above a by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this threshold. If such expenses are allowed as tax dedu threshold. If such expenses are allowed as tax dedu would result in subsidizing of around one-third of such would result in subsidizing of around one would result in subsidizing of around one expenses by the Government by way of tax expenditure". expenses by the Government by way of tax expenditure". expenses by the Government by way of tax expenditure". 6.6 Further, the Companies Act, 2013 mandates CSR spending as a 6.6 Further, the Companies Act, 2013 mandates CSR spending as a 6.6 Further, the Companies Act, 2013 mandates CSR spending as a statutory zzz obligation, not as a voluntary donation. Therefore: statutory zzz obligation, not as a voluntary donation. Therefore: statutory zzz obligation, not as a voluntary donation. Therefore:

 CSR expenses are not made out of free will but in compliance expenses are not made out of free will but in compliance expenses are not made out of free will but in compliance with statutory provisions. with statutory provisions.  Allowing deductions under Section 80G for CSR expenses Allowing deductions under Section 80G for CSR expenses Allowing deductions under Section 80G for CSR expenses would lead to double benefits would lead to double benefits-once by allowing it as a once by allowing it as a deduction and again by fulfilling a statutory obligation. deduction and again by fulfilling a statutory obligation. deduction and again by fulfilling a statutory obligation.  Claim of deduction by the assessee with regard to CSR im of deduction by the assessee with regard to CSR im of deduction by the assessee with regard to CSR expenses and allowance of such expenditure will result into expenses and allowance of such expenditure will result into expenses and allowance of such expenditure will result into wastage of entire effort of the legislature to treat CSR wastage of entire effort of the legislature to treat CSR wastage of entire effort of the legislature to treat CSR expenditure as appropriation of profit after tax. It will be expenditure as appropriation of profit after tax. It will be expenditure as appropriation of profit after tax. It will be against the spirit of law a against the spirit of law and the intention of the legislature. nd the intention of the legislature.  The Income Tax Act, through Explanation 2 to Section 37(1), The Income Tax Act, through Explanation 2 to Section 37(1), The Income Tax Act, through Explanation 2 to Section 37(1), already disallows CSR expenses from business income, already disallows CSR expenses from business income, already disallows CSR expenses from business income, reinforcing the position that they do not qualify for deductions reinforcing the position that they do not qualify for deductions reinforcing the position that they do not qualify for deductions under other provisions. under other provisions. In view of the ab In view of the above, I am of the considered opinion that the ove, I am of the considered opinion that the assessment order passed by the Assessing Officer u/s.143(3) r.w.s assessment order passed by the Assessing Officer u/s.143(3) r.w.s assessment order passed by the Assessing Officer u/s.143(3) r.w.s 144B of the Act dated 09.09.2022, is erroneous in so far as it is 144B of the Act dated 09.09.2022, is erroneous in so far as it is 144B of the Act dated 09.09.2022, is erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, the said prejudicial to the interest of the revenue. Accordingly, the said prejudicial to the interest of the revenue. Accordingly, the said assessment or assessment order passed by the Assessing Officer is set der passed by the Assessing Officer is set-aside on the issue of claim of deduction under section 80G of the Act of CSR issue of claim of deduction under section 80G of the Act of CSR issue of claim of deduction under section 80G of the Act of CSR expense amounting to Rs. 12,49,000/ expense amounting to Rs. 12,49,000/-. The AO is directed to make . The AO is directed to make an enquiry in this matter and re an enquiry in this matter and re-assess the income after giving an assess the income after giving an opportunity of being heard rtunity of being heard to the assessee.”

“अनुल�नक ANNEXURE 1. आयकर अ�ध�नयम आयकर अ�ध�नयम, 1961 क� धारा 142 (1) 142 (1) के तहत �न�न�ल�खत खाते या द�तावेज या �न�न�ल�खत खाते या द�तावेज या जानकार� मांगी गई है जानकार� मांगी गई है: 1. The following accounts or documents or information is/are 1. The following accounts or documents or information is/are 1. The following accounts or documents or information is/are sought under section 142(1) of the Income sought under section 142(1) of the Income-tax Act, 1961: tax Act, 1961:

1. You have claimed donations given on a/c of CSR 1. You have claimed donations given on a/c of CSR 1. You have claimed donations given on a/c of CSR expenditure of Rs.24,98,000/ expenditure of Rs.24,98,000/- in the P&L and the same is in the P&L and the same is disallowed in the ITR. However, the same donations are d in the ITR. However, the same donations are d in the ITR. However, the same donations are claimed u/s 80G of I.T.Act which is indirectly claiming the CSR claimed u/s 80G of I.T.Act which is indirectly claiming the CSR claimed u/s 80G of I.T.Act which is indirectly claiming the CSR expenditure which is not allowable u/s 37 (1) of I.T. expenditure which is not allowable u/s 37 (1) of I.T. expenditure which is not allowable u/s 37 (1) of I.T. Act. In this regard, please provide justification of your claim and also this regard, please provide justification of your claim and also this regard, please provide justification of your claim and also produce the objects produce the objects of the trusts to whom you have given of the trusts to whom you have given donations and explain how such objects will fall into the donations and explain how such objects will fall into the donations and explain how such objects will fall into the category of CSR expenditure u/s 135 of category of CSR expenditure u/s 135 of Companies Act Act.” 3.1 Further, the Ld. counsel referred a detailed reply filed before Further, the Ld. counsel referred a detailed reply filed before Further, the Ld. counsel referred a detailed reply filed before the Assessing Officer explaining the the Assessing Officer explaining the name of the parties in respect name of the parties in respect of whom deduction was claimed. In the said reply, the assessee also of whom deduction was claimed. In the said reply, the assessee also of whom deduction was claimed. In the said reply, the assessee also referred to the decision of the Bangalore Bench of the Tribunal in decision of the Bangalore Bench of the Tribunal in decision of the Bangalore Bench of the Tribunal in the case of First American (India) Pvt. Ltd. (supra) and Allegies the case of First American (India) Pvt. Ltd. (supra) and Allegies the case of First American (India) Pvt. Ltd. (supra) and Allegies Services (India) Pvt. Lt Services (India) Pvt. Ltd. (supra) wherein the Tribunal has allowed d. (supra) wherein the Tribunal has allowed the deduction u/s 80G in respect of CSR expenditure. For ready the deduction u/s 80G in respect of CSR expenditure. For ready the deduction u/s 80G in respect of CSR expenditure. For ready reference the relevant reply filed by the assessee is reproduced as reference the relevant reply filed by the assessee is reproduced as reference the relevant reply filed by the assessee is reproduced as under:

To Deputy Commissioner of Income Tax, Deputy Commissioner of Income Tax, Central Circle 3(2), Central Circle 3(2), Room No 1913,1 Room No 1913,19th Floor, Air India Building, Air India Building, Mumbai - 400021 400021 Dear Sir, Ref: Jeevandeep Edumedia Private Limited Ref: Jeevandeep Edumedia Private Limited PAN: AABCJ0180G PAN: AABCJ0180G DIN: ITBA/AST/F/142(l)/2022 DIN: ITBA/AST/F/142(l)/2022-23/1044213216(l) Sub: Reassessment proceedings for the assessment year Sub: Reassessment proceedings for the assessment year Sub: Reassessment proceedings for the assessment year 2020-21 With reference to the above With reference to the above subject and under the instructions subject and under the instructions of our above named client, we would like to submit as under; of our above named client, we would like to submit as under; of our above named client, we would like to submit as under; The assessee is in receipt of notice u/s 142(1) dated The assessee is in receipt of notice u/s 142(1) dated The assessee is in receipt of notice u/s 142(1) dated 28/07/2022. In response to the said notice, the assessee 28/07/2022. In response to the said notice, the assessee 28/07/2022. In response to the said notice, the assessee wishes to submit the following, in addition to th wishes to submit the following, in addition to the submissions e submissions made dated 05/01/2022, 17/03/2022, 21/07/2022 and made dated 05/01/2022, 17/03/2022, 21/07/2022 and made dated 05/01/2022, 17/03/2022, 21/07/2022 and 29/07/2022: 1. The assessee company, for the year under consideration 1. The assessee company, for the year under consideration 1. The assessee company, for the year under consideration has made a total donation of Rs.24,98,000/ has made a total donation of Rs.24,98,000/- to various to various charitable institutions as mentioned below; charitable institutions as mentioned below; Name of Institution PAN Amount (in Amount (in Rs.) Rs.) Bhagwan Mahavir Pashu Raksha Bhagwan Mahavir Pashu Raksha AAAJB0003 1,00,000 1,00,000 Kendra Shri K.V.O Utkarsh Pratishtan Shri K.V.O Utkarsh Pratishtan AAOTS5780M 2,00,000 2,00,000 Kutch Yuvak Sangh AAATK0253F 1,25,000 1,25,000 Konkan education society Konkan education society AAATK3407H 51,000 51,000 ST. Thomas Church AABTS9310C 30,000 30,000 Daar-ul-rehmat Trust AAATD0376Q 6,000 6,000 ST. MICHAEL charitable trust ST. MICHAEL charitable trust AAKTS7117G 15,000 15,000 AAATS1495D 100,000 100,000 SHETH DHANJI DEVSHI KVO SHETH DHANJI DEVSHI KVO KELAVANI FUND Karnataka Holy cross sisters Karnataka Holy cross sisters AAATK1214E 16,000 16,000 society Shri K.V.O. Seva Samaj Shri K.V.O. Seva Samaj AAATS0288A 55,000 55,000 Shri Bhojay Sarvodaya Trust Sarvodaya Trust AABTS8782J 1,00,000 1,00,000 AABTS2637Q 5,00,000 5,00,000 Srimad Rajchandra Adhyatmik Srimad Rajchandra Adhyatmik Satsang Sadhna Kendra Satsang Sadhna Kendra SWAMI VIVEKANAND SHIKSHAN SWAMI VIVEKANAND SHIKSHAN AAAAS1296H 10,00,000 10,00,000 SANSTHA Laxmiben Lalji Furia Charitable Laxmiben Lalji Furia Charitable AAATL0063C 2,00,000 2,00,000 Trust Total Donation 24,98,000 24,98,000 Qualifying Amount 24,98,000 24,98,000 Deductible amount under section 80 G @ 50% Deductible amount under section 80 G @ 50% 12,49,000 12,49,000 Donation receipts issued by all the above charitable Donation receipts issued by all the above charitable Donation receipts issued by all the above charitable institutions along with 80G certificate and bank statement institutions along with 80G certificate and bank statement institutions along with 80G certificate and bank statement highlighting payments made by the assessee company is highlighting payments made by the assessee company is highlighting payments made by the assessee company is already submitted during the ongoing course of assessment submitted during the ongoing course of assessment submitted during the ongoing course of assessment proceedings. Contemporaneously, the above donations of Rs.24,98,000/ Contemporaneously, the above donations of Rs.24,98,000/ Contemporaneously, the above donations of Rs.24,98,000/- also gets covered as a contribution made towards CSR also gets covered as a contribution made towards CSR also gets covered as a contribution made towards CSR activities and hence such expenditure was also classified as a activities and hence such expenditure was also classified as a activities and hence such expenditure was also classified as a CSR expenditure in CSR expenditure in the financial statements and hence the the financial statements and hence the same was disallowed in accordance with the provisions of same was disallowed in accordance with the provisions of same was disallowed in accordance with the provisions of section 37{1) of the IT Act while computing income under the section 37{1) of the IT Act while computing income under the section 37{1) of the IT Act while computing income under the head Income from Business. head Income from Business. While computing the total income of the assessee company for While computing the total income of the assessee company for While computing the total income of the assessee company for the year under consideration, deduction under section 80G of der consideration, deduction under section 80G of der consideration, deduction under section 80G of the IT Act is available for donations made by an assessee to the IT Act is available for donations made by an assessee to the IT Act is available for donations made by an assessee to institutions/funds/trusts registered under the Income Tax Act, institutions/funds/trusts registered under the Income Tax Act, institutions/funds/trusts registered under the Income Tax Act, 1961. During the year, the assessee company had made 14 1961. During the year, the assessee company had made 14 1961. During the year, the assessee company had made 14 donations (as stated above donations (as stated above) and ail the entities were duly ) and ail the entities were duly registered under the provisions of Income Tax Act, 1961 and registered under the provisions of Income Tax Act, 1961 and registered under the provisions of Income Tax Act, 1961 and hence all the conditions laid down in section 80G of the IT Act hence all the conditions laid down in section 80G of the IT Act hence all the conditions laid down in section 80G of the IT Act were were were duly duly duly satisfied satisfied satisfied and and and accordingly accordingly accordingly deduction deduction deduction of of of Rs.12,49,000/ Rs.12,49,000/- was claimed in the return of income. For the sake of easy reference, we wish to draw your kind For the sake of easy reference, we wish to draw your kind For the sake of easy reference, we wish to draw your kind attention to the history behind the allowability of CSR attention to the history behind the allowability of CSR attention to the history behind the allowability of CSR expenditure and amendment thereon for disallowance, as expenditure and amendment thereon for disallowance, as expenditure and amendment thereon for disallowance, as under; Prior to 2013 either by the company or group companies, some Prior to 2013 either by the company or group companies, some Prior to 2013 either by the company or group companies, some of the voluntary of the voluntary CSR activities undertaken by the company / CSR activities undertaken by the company / group like public welfare scheme etc such activities, when group like public welfare scheme etc such activities, when group like public welfare scheme etc such activities, when found to be having nexus with the business of the assessee found to be having nexus with the business of the assessee found to be having nexus with the business of the assessee and were incurred wholly and exclusively for the purpose of and were incurred wholly and exclusively for the purpose of and were incurred wholly and exclusively for the purpose of the business, were eligible as a ta the business, were eligible as a tax-deductible expenditure. In deductible expenditure. In a few other instances, the expenditure incurred on the CSR a few other instances, the expenditure incurred on the CSR a few other instances, the expenditure incurred on the CSR activities were not allowed as a deduction, but were eligible activities were not allowed as a deduction, but were eligible activities were not allowed as a deduction, but were eligible for deduction under section 80G, subject to meeting the for deduction under section 80G, subject to meeting the for deduction under section 80G, subject to meeting the conditions therein. conditions therein. However, having regard to the However, having regard to the fact that CSR expenses have a fact that CSR expenses have a philanthropic nature and were not necessarily a business philanthropic nature and were not necessarily a business philanthropic nature and were not necessarily a business expense, the Parliament legislated that CSR expenses would expense, the Parliament legislated that CSR expenses would expense, the Parliament legislated that CSR expenses would not be eligible for deduction under section 37 of the IT Act. For not be eligible for deduction under section 37 of the IT Act. For not be eligible for deduction under section 37 of the IT Act. For this purpose, Explanation 2 to section 37(1) this purpose, Explanation 2 to section 37(1) was inserted vide was inserted vide the Finance (No 2) Act, 2014 (applicable from the assessment the Finance (No 2) Act, 2014 (applicable from the assessment the Finance (No 2) Act, 2014 (applicable from the assessment year 2015-16), which provided that any expenditure incurred 16), which provided that any expenditure incurred 16), which provided that any expenditure incurred by an assessee on the activities relating to CSR referred to in by an assessee on the activities relating to CSR referred to in by an assessee on the activities relating to CSR referred to in section 135 of Companies Act 2013, shall not be deem section 135 of Companies Act 2013, shall not be deem section 135 of Companies Act 2013, shall not be deemed to be an expenditure incurred by the assessee for the purpose of an expenditure incurred by the assessee for the purpose of an expenditure incurred by the assessee for the purpose of business or profession and shall not be allowed as deduction business or profession and shall not be allowed as deduction business or profession and shall not be allowed as deduction under section 37(1) of the IT Act. The intent of Parliament in under section 37(1) of the IT Act. The intent of Parliament in under section 37(1) of the IT Act. The intent of Parliament in bringing the said provision is given in the Explanatory bringing the said provision is given in the Explanatory bringing the said provision is given in the Explanatory Memorandum to the Finance (No.2) Bill, 2014 [Circular No. um to the Finance (No.2) Bill, 2014 [Circular No. um to the Finance (No.2) Bill, 2014 [Circular No. - 01/2015, Dated 21st January, 2015] and is reproduced as 01/2015, Dated 21st January, 2015] and is reproduced as 01/2015, Dated 21st January, 2015] and is reproduced as under:

CSR expenditure, being an application of income, is not "CSR expenditure, being an application of income, is not "CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on incurred wholly and exclusively for the purposes of carrying on incurred wholly and exclusively for the purposes of carrying on business. As the appl business. As the application of income is not allowed as ication of income is not allowed as deduction for the purposes of computing taxable income of a deduction for the purposes of computing taxable income of a deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as company, amount spent on CSR cannot be allowed as company, amount spent on CSR cannot be allowed as deduction for computing the taxable income of the company. deduction for computing the taxable income of the company. deduction for computing the taxable income of the company. Moreover, the objective of CSR is to share burden o Moreover, the objective of CSR is to share burden o Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having Government in providing social services by companies having Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses net worth/turnover/profit above a threshold. If such expenses net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing are allowed as tax deduction, this would result in subsidizing are allowed as tax deduction, this would result in subsidizing of around one of around one-third of such expenses by the Government by third of such expenses by the Government by way of tax expenditure. expenditure. The existing provisions of section 37(1) of the Act provide that The existing provisions of section 37(1) of the Act provide that The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned deduction for any expenditure, which is not mentioned deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be specifically in section 30 to section 36 of the Act, shall be specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for allowed if the same is incurred wholly and exclusively for allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR purposes of carrying on business or profession. As the CSR purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for expenditure (being an application of income) is not incurred for expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditures the purposes of carrying on business, such expenditures the purposes of carrying on business, such expenditures cannot be allowed under the existing provisions of section 37 cannot be allowed under the existing provisions of section 37 cannot be allowed under the existing provisions of section 37 of the Income come-tax Act. Therefore, in order to provide certainty tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clarify that for the purposes of on this issue, it is proposed to clarify that for the purposes of on this issue, it is proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the section 37(1) any expenditure incurred by an assessee on the section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to activities relating to corporate social responsibility referred to activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed ion 135 of the Companies Act, 2013 shall not be deemed ion 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence to have been incurred for the purpose of business and hence to have been incurred for the purpose of business and hence shall not be allowed as deduction under section 37. However, shall not be allowed as deduction under section 37. However, shall not be allowed as deduction under section 37. However, the CSR expenditure which is of the nature described in the CSR expenditure which is of the nature described in the CSR expenditure which is of the nature described in section 30 to section 36 section 30 to section 36 of the Act shall be allowed as of the Act shall be allowed as deduction under those sections subject to fulfillment of deduction under those sections subject to fulfillment of deduction under those sections subject to fulfillment of conditions, if any, specified therein." conditions, if any, specified therein."

Thus, it is a clear that the CSR expenditure referred to in Thus, it is a clear that the CSR expenditure referred to in Thus, it is a clear that the CSR expenditure referred to in section 135 cannot be claimed as a tax deductible expenditure section 135 cannot be claimed as a tax deductible expenditure section 135 cannot be claimed as a tax deductible expenditure under section 37(1) of the IT Act. However, CSR expenditure, under section 37(1) of the IT Act. However, CSR expenditure, under section 37(1) of the IT Act. However, CSR expenditure, which is of the nature described under sections 30 to 36 of the which is of the nature described under sections 30 to 36 of the which is of the nature described under sections 30 to 36 of the IT, was allowable as a deduction, say CSR expenditure laid IT, was allowable as a deduction, say CSR expenditure laid IT, was allowable as a deduction, say CSR expenditure laid out or expended on Scientific Research related to the business out or expended on Scientific Research related to the business out or expended on Scientific Research related to the business is allowable under section 35(1)(i) and 35(1)(iv) etc. ble under section 35(1)(i) and 35(1)(iv) etc. Expenditure on CSR could take many forms. There could be Expenditure on CSR could take many forms. There could be Expenditure on CSR could take many forms. There could be expenditure on projects directly undertaken by company, such expenditure on projects directly undertaken by company, such expenditure on projects directly undertaken by company, such as setting up and running schools, social business projects, as setting up and running schools, social business projects, as setting up and running schools, social business projects, etc. Such expenditure would inc etc. Such expenditure would include expenditure otherwise lude expenditure otherwise falling for consideration under section 37(1) of the IT Act. On falling for consideration under section 37(1) of the IT Act. On falling for consideration under section 37(1) of the IT Act. On the other hand, companies, instead of undertaking or the other hand, companies, instead of undertaking or the other hand, companies, instead of undertaking or participating directly in a project, may choose to give donations participating directly in a project, may choose to give donations participating directly in a project, may choose to give donations to institutions that are engaged in undertakin to institutions that are engaged in undertaking such projects. g such projects. While expenditure falling within the ambit of section 37(1) While expenditure falling within the ambit of section 37(1) While expenditure falling within the ambit of section 37(1) would undoubtedly not qualify, the donations, which indirectly would undoubtedly not qualify, the donations, which indirectly would undoubtedly not qualify, the donations, which indirectly help to meet the CSR obligation, would qualify for deduction help to meet the CSR obligation, would qualify for deduction help to meet the CSR obligation, would qualify for deduction under section 80G, if the donation otherwise satisfies under section 80G, if the donation otherwise satisfies under section 80G, if the donation otherwise satisfies the conditions laid down in that section. conditions laid down in that section. After the amendment, the revenue have objected to the claim of After the amendment, the revenue have objected to the claim of After the amendment, the revenue have objected to the claim of deduction under section 80G for eligible donations, qualifying deduction under section 80G for eligible donations, qualifying deduction under section 80G for eligible donations, qualifying for CSR under the Companies Act 2013. The revenue for CSR under the Companies Act 2013. The revenue for CSR under the Companies Act 2013. The revenue authorities contend that the intentio authorities contend that the intention of the legislature was n of the legislature was never to allow deduction for CSR expenditure, else it would never to allow deduction for CSR expenditure, else it would never to allow deduction for CSR expenditure, else it would result in subsidizing the CSR expenditure by one result in subsidizing the CSR expenditure by one-third amount. third amount. Furthermore, it is the contention of the revenue that CSR Furthermore, it is the contention of the revenue that CSR Furthermore, it is the contention of the revenue that CSR expenditure is not 'voluntary', but 'mandatory' in expenditure is not 'voluntary', but 'mandatory' in nature. nature. In this regard, assessee company submits as under; In this regard, assessee company submits as under;-  In the Memorandum to the Finance Bill, it has been In the Memorandum to the Finance Bill, it has been In the Memorandum to the Finance Bill, it has been clarified that no deduction will be allowed for CSR clarified that no deduction will be allowed for CSR clarified that no deduction will be allowed for CSR expenditure as a business expenditure, but there is no expenditure as a business expenditure, but there is no expenditure as a business expenditure, but there is no reference to ineligibility or restric reference to ineligibility or restriction in claiming tion in claiming deduction under section 80G for donations made deduction under section 80G for donations made deduction under section 80G for donations made pursuant to Companies Act 2013 obligations. Also, in pursuant to Companies Act 2013 obligations. Also, in pursuant to Companies Act 2013 obligations. Also, in the Memorandum, it has been clarified that CSR the Memorandum, it has been clarified that CSR the Memorandum, it has been clarified that CSR expenses which fall for consideration under sections 30 expenses which fall for consideration under sections 30 expenses which fall for consideration under sections 30 to 36 of the IT Act are allowable. T to 36 of the IT Act are allowable. Thus, a position hus, a position emerges that the intent of the Legislature was not to emerges that the intent of the Legislature was not to emerges that the intent of the Legislature was not to blankly disallow every CSR expenditure. blankly disallow every CSR expenditure.

 Section 80G(1) provides that in computing the total Section 80G(1) provides that in computing the total Section 80G(1) provides that in computing the total income of the assessee, there shall be deducted, in income of the assessee, there shall be deducted, in income of the assessee, there shall be deducted, in accordance with the provisions of this se accordance with the provisions of this section, such ction, such sum paid by the assessee in the previous year as a sum paid by the assessee in the previous year as a sum paid by the assessee in the previous year as a donation. Further, section 80G(2) list down the sums on donation. Further, section 80G(2) list down the sums on donation. Further, section 80G(2) list down the sums on which deduction shall be allowed to the assessee. which deduction shall be allowed to the assessee. which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play Section 80G falls in Chapter VIA, which comes into play Section 80G falls in Chapter VIA, which comes into play only after the gross total inco only after the gross total income has been computed by me has been computed by applying the computation provisions under various applying the computation provisions under various applying the computation provisions under various heads of income, including the Explanation 2 to section heads of income, including the Explanation 2 to section heads of income, including the Explanation 2 to section 37(1). Thus, there is no correlation between section 37(1) and Thus, there is no correlation between section 37(1) and Thus, there is no correlation between section 37(1) and section 80G. Principles governing what is not allowable section 80G. Principles governing what is not allowable section 80G. Principles governing what is not allowable under s under section 37(1) have been explained in the section ection 37(1) have been explained in the section itself (i.e. what is allowable, the conditions subject to itself (i.e. what is allowable, the conditions subject to itself (i.e. what is allowable, the conditions subject to which it is allowable, the extent to which it is allowable) which it is allowable, the extent to which it is allowable) which it is allowable, the extent to which it is allowable) and also what is not allowable under section 80G. and also what is not allowable under section 80G. and also what is not allowable under section 80G.  Section 80G specifically mentions two in Section 80G specifically mentions two instances (viz, stances (viz, section 80G(2)(a)(iiihk) and (iiihl), i.e., contributions section 80G(2)(a)(iiihk) and (iiihl), i.e., contributions section 80G(2)(a)(iiihk) and (iiihl), i.e., contributions towards Swacha Bharat Kosh and Clean Ganga Fund), towards Swacha Bharat Kosh and Clean Ganga Fund), towards Swacha Bharat Kosh and Clean Ganga Fund), where CSR expenditure is not allowable as deduction where CSR expenditure is not allowable as deduction where CSR expenditure is not allowable as deduction under section 80G. under section 80G.  Section 80G(2)(a) allows deduction for 'any sums paid Section 80G(2)(a) allows deduction for 'any sums paid Section 80G(2)(a) allows deduction for 'any sums paid by the a by the assessee in the previous year as donations'. ssessee in the previous year as donations'. Thus, the deduction allowable is for sums paid as Thus, the deduction allowable is for sums paid as Thus, the deduction allowable is for sums paid as donation. Donations made to the Swacha Bharat Kosh donation. Donations made to the Swacha Bharat Kosh donation. Donations made to the Swacha Bharat Kosh and Clean Ganga Fund are not allowable under section and Clean Ganga Fund are not allowable under section and Clean Ganga Fund are not allowable under section 80G(2)(a)(iiihk) and (iiihl). Contributions to Swacha 80G(2)(a)(iiihk) and (iiihl). Contributions to Swacha 80G(2)(a)(iiihk) and (iiihl). Contributions to Swacha Bharat Kosh and Clean Ganga Fund are CSR activities at Kosh and Clean Ganga Fund are CSR activities at Kosh and Clean Ganga Fund are CSR activities included in Schedule VII to the Companies Act 2013. included in Schedule VII to the Companies Act 2013. included in Schedule VII to the Companies Act 2013. The disallowance for deduction under section 80G vis- The disallowance for deduction under section 80G vis The disallowance for deduction under section 80G vis à-vis CSR can be restricted only to contributions to vis CSR can be restricted only to contributions to vis CSR can be restricted only to contributions to these Funds under CSR. It is a well these Funds under CSR. It is a well-established ru established rule of interpretation that one has to look merely at what is interpretation that one has to look merely at what is interpretation that one has to look merely at what is stated in the statute; there is no scope for intendment in stated in the statute; there is no scope for intendment in stated in the statute; there is no scope for intendment in law. Your kind attention is invited to the recent ruling of law. Your kind attention is invited to the recent ruling of law. Your kind attention is invited to the recent ruling of Karnataka High Court in case of Nandi Steels Ltd (TS- Karnataka High Court in case of Nandi Steels Ltd (TS Karnataka High Court in case of Nandi Steels Ltd (TS 483-HC HC-2021), wherein it is held that attention has to is held that attention has to be paid to what is said and what has not been said. be paid to what is said and what has not been said. be paid to what is said and what has not been said. In view of the above, your goodself will appreciate that In view of the above, your goodself will appreciate that In view of the above, your goodself will appreciate that contributions made to the above two funds will not contributions made to the above two funds will not contributions made to the above two funds will not qualify for deduction under section 80G(2)(a), however qualify for deduction under section 80G(2)(a), however qualify for deduction under section 80G(2)(a), however as there i as there is no restriction on other donations which also s no restriction on other donations which also qualify for CSR activity, the said donation will be qualify for CSR activity, the said donation will be qualify for CSR activity, the said donation will be eligible for deduction. eligible for deduction.  Furthermore, Furthermore, amid amid Covid Covid-19 19 pandemic, pandemic, the the Government had provided various relaxation and Government had provided various relaxation and Government had provided various relaxation and measures and also sought contributions to the PM measures and also sought contributions to the measures and also sought contributions to the CARE fund to deal with the pandemic. Such CARE fund to deal with the pandemic. Such CARE fund to deal with the pandemic. Such contributions are eligible as CSR expenditure under contributions are eligible as CSR expenditure under contributions are eligible as CSR expenditure under the Companies Act 2013 and for deduction under the Companies Act 2013 and for deduction under the Companies Act 2013 and for deduction under section 80G of the IT Act. Thus, it can be said that section 80G of the IT Act. Thus, it can be said that section 80G of the IT Act. Thus, it can be said that the intent of the legislature is not to restrict the intent of the legislature is not to restrict the intent of the legislature is not to restrict deduction deduction under section 80G, even if the contribution under section 80G, even if the contribution qualifies as CSR expenditure under the CA 2013. qualifies as CSR expenditure under the CA 2013. qualifies as CSR expenditure under the CA 2013.  The Ministry of Corporate Affairs ('MCA') has issued The Ministry of Corporate Affairs ('MCA') has issued The Ministry of Corporate Affairs ('MCA') has issued Frequently Asked Questions ('FAQ') through General Frequently Asked Questions ('FAQ') through General Frequently Asked Questions ('FAQ') through General circular no. 01/2016 dated January 12, 2016 (FAQ circular no. 01/2016 dated January 12, 2016 (FAQ circular no. 01/2016 dated January 12, 2016 (FAQ No. 6) has No. 6) has clarified that as follows: "Question No. 6: What tax benefits can be availed under CSR? "Question No. 6: What tax benefits can be availed under CSR? "Question No. 6: What tax benefits can be availed under CSR? Answer: No specific tax exemptions have been extended to Answer: No specific tax exemptions have been extended to Answer: No specific tax exemptions have been extended to CSR expenditure per se. The Finance Act, 2014 also clarifies CSR expenditure per se. The Finance Act, 2014 also clarifies CSR expenditure per se. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business that expenditure on CSR does not form part of business that expenditure on CSR does not form part of business expenditure. While no specific tax exemptions have been expenditure. While no specific tax exemptions have been expenditure. While no specific tax exemptions have been extended to expenditure inc extended to expenditure incurred on CSR, spending on several urred on CSR, spending on several activities like Prime Minister's Relief Fund, scientific research, activities like Prime Minister's Relief Fund, scientific research, activities like Prime Minister's Relief Fund, scientific research, rural rural rural development development development projects, projects, projects, skill skill skill development development development projects, projects, projects, agriculture extension projects etc, which fund place in agriculture extension projects etc, which fund place in agriculture extension projects etc, which fund place in Schedule VII, already enjoys exemptions un Schedule VII, already enjoys exemptions under different der different sections of the Income sections of the Income-tax Act, 1961." This clarification issued by one arm of the Government, This clarification issued by one arm of the Government, This clarification issued by one arm of the Government, supports the view that deduction under section 80G is supports the view that deduction under section 80G is supports the view that deduction under section 80G is allowable on such contributions. allowable on such contributions. Jurisprudence on allowability of donations (forming Jurisprudence on allowability of donations (forming Jurisprudence on allowability of donations (forming part of CSR expenditure) under section 80G of the IT Act CSR expenditure) under section 80G of the IT Act CSR expenditure) under section 80G of the IT Act  In Goldman Sachs Services Pvt. Ltd. v. JCIT [IT(TP)A In Goldman Sachs Services Pvt. Ltd. v. JCIT [IT(TP)A In Goldman Sachs Services Pvt. Ltd. v. JCIT [IT(TP)A No.2355/Bang/2019 No.2355/Bang/2019-Banglore ITAT ), the Assessing Banglore ITAT ), the Assessing Officer ('AO'), disallowed deduction under section 80G Officer ('AO'), disallowed deduction under section 80G Officer ('AO'), disallowed deduction under section 80G on the basis that the donations were in the nature of on the basis that the donations were in the nature on the basis that the donations were in the nature CSR expenditure and not in the nature of 'voluntary CSR expenditure and not in the nature of 'voluntary CSR expenditure and not in the nature of 'voluntary contribution'. The Bangalore Tribunal observed that the contribution'. The Bangalore Tribunal observed that the contribution'. The Bangalore Tribunal observed that the CSR expenditure was required to be incurred as per the CSR expenditure was required to be incurred as per the CSR expenditure was required to be incurred as per the Companies Act 2013 and as per the amendment Companies Act 2013 and as per the amendment Companies Act 2013 and as per the amendment introduced to section 37 of the IT Act, a ded introduced to section 37 of the IT Act, a deduction for uction for the same was not available under section 37 of the IT the same was not available under section 37 of the IT the same was not available under section 37 of the IT Act. However, the assessee had claimed deduction of Act. However, the assessee had claimed deduction of Act. However, the assessee had claimed deduction of donation under section 80G. The Tribunal noted that donation under section 80G. The Tribunal noted that donation under section 80G. The Tribunal noted that CSR contributions to Swachh Bharat Kosh and Clean CSR contributions to Swachh Bharat Kosh and Clean CSR contributions to Swachh Bharat Kosh and Clean Ganga Fund, were specifically exclude Ganga Fund, were specifically excluded from the ambit d from the ambit of section 80G of the IT Act. In view of this, the Tribunal of section 80G of the IT Act. In view of this, the Tribunal of section 80G of the IT Act. In view of this, the Tribunal inferred that other CSR qualifying donations are eligible inferred that other CSR qualifying donations are eligible inferred that other CSR qualifying donations are eligible for deduction under section 80G, subject to the for deduction under section 80G, subject to the for deduction under section 80G, subject to the assessee satisfying the requisite conditions prescribed assessee satisfying the requisite conditions prescribed assessee satisfying the requisite conditions prescribed for deduction und for deduction under section 80G of the IT Act. In another set of following decisions of Bangalore Tribunal; In another set of following decisions of Bangalore Tribunal; In another set of following decisions of Bangalore Tribunal;  First First First American American American (India) (India) (India) Pvt. Pvt. Pvt. Ltd Ltd Ltd v. v. v. ACIT ACIT ACIT (ITA (ITA (ITA No.1762/Bang/2019) No.1762/Bang/2019) / / [TS-5676 [TS 5676-ITAT- 2020(BANGALORE) 2020(BANGALORE)-0]  Allegis Allegis Allegis services services services (India) (India) (India) Pvt. Pvt. Pvt. Ltd Ltd Ltd v. v. v. ACIT ACIT ACIT (ITA (ITA (ITA No.1693/Bang/2019) No.1693/Bang/2019) / [TS-5678 5678-ITAT- 2020(BANGALORE) 2020(BANGALORE)-O]] The deduction under section 80G was initially disallowed by The deduction under section 80G was initially disallowed by The deduction under section 80G was initially disallowed by the AO, since CSR qualifying donations were not 'voluntary the AO, since CSR qualifying donations were not 'voluntary the AO, since CSR qualifying donations were not 'voluntary contributions'. On appeal filed by the assessee, Tribunal contributions'. On appeal filed by the assessee, Tribunal contributions'. On appeal filed by the assessee, Tribunal allowed the deduction under section 80G a allowed the deduction under section 80G and held that, nd held that, "assessee cannot be denied the benefit of claim under Chapter "assessee cannot be denied the benefit of claim under Chapter "assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing 'Total Taxable VI A, which is considered for computing 'Total Taxable VI A, which is considered for computing 'Total Taxable Income". If assessee is denied this benefit, merely because Income". If assessee is denied this benefit, merely because Income". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double such payment forms part of CSR, would lead to double such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature." , which is not the intention of Legislature." , which is not the intention of Legislature." Considering the above, the assessee has correctly disallowed Considering the above, the assessee has correctly disallowed Considering the above, the assessee has correctly disallowed the CSR / donation expenses u/s 37(1) of the Act in computing the CSR / donation expenses u/s 37(1) of the Act in computing the CSR / donation expenses u/s 37(1) of the Act in computing the business income and claimed deduction u/s 80G of the Act the business income and claimed deduction u/s 80G of the Act the business income and claimed deduction u/s 80G of the Act in accordance with the pro in accordance with the provisions of IT Act. In connection with the requirement of your office in regards to In connection with the requirement of your office in regards to In connection with the requirement of your office in regards to the objects of the trust to whom donations have been given the objects of the trust to whom donations have been given the objects of the trust to whom donations have been given and explanation as to how the same falls into the category of and explanation as to how the same falls into the category of and explanation as to how the same falls into the category of CSR expenditure u/s 135 of Companies Act 2013, the CSR expenditure u/s 135 of Companies Act 2013, the CSR expenditure u/s 135 of Companies Act 2013, the assessee company submits the Annual Report on CSR ssessee company submits the Annual Report on CSR ssessee company submits the Annual Report on CSR activities (vide Annexure 1) which contains the nature and activities (vide Annexure 1) which contains the nature and activities (vide Annexure 1) which contains the nature and category of the CSR expenditure incurred by the assessee category of the CSR expenditure incurred by the assessee category of the CSR expenditure incurred by the assessee company during the year under reference. It may be noted that company during the year under reference. It may be noted that company during the year under reference. It may be noted that the expenditure incurred by t the expenditure incurred by the assessee company during the he assessee company during the year under reference has been duly accepted as a CSR year under reference has been duly accepted as a CSR year under reference has been duly accepted as a CSR expenditure under the Companies Act 2013. In view of the expenditure under the Companies Act 2013. In view of the expenditure under the Companies Act 2013. In view of the same, your goodself will appreciate that the claim made by the same, your goodself will appreciate that the claim made by the same, your goodself will appreciate that the claim made by the assessee company for the year under reference is cor assessee company for the year under reference is cor assessee company for the year under reference is correct and in accordance with the provisions of laws. in accordance with the provisions of laws. In light of above facts, your goodself will appreciate that the In light of above facts, your goodself will appreciate that the In light of above facts, your goodself will appreciate that the donations made by the assessee company although forming donations made by the assessee company although forming donations made by the assessee company although forming part of CSR expenditure, is allowed as a deduction under part of CSR expenditure, is allowed as a deduction under part of CSR expenditure, is allowed as a deduction under section 80G of the IT Act a section 80G of the IT Act and therefore no adverse inference is nd therefore no adverse inference is called for. Should your goodself require any further clarification, Should your goodself require any further clarification, Should your goodself require any further clarification, explanation or elaborations in respect of the above, we shall explanation or elaborations in respect of the above, we shall explanation or elaborations in respect of the above, we shall be glad to furnish the same. be glad to furnish the same. In case your goodself is inclined to deny the above claim, In case your goodself is inclined to deny the above claim, In case your goodself is inclined to deny the above claim, then a virtual hearing may please be fixed. a virtual hearing may please be fixed. Thanking you. Thanking you. Yours truly, Yours truly, For GBCA & Associates LLP For GBCA & Associates LLP Chartered Accountants Accountants” 3.2 The Assessing Officer has already referred to the said reply of he Assessing Officer has already referred to the said reply of he Assessing Officer has already referred to the said reply of the assessee in the assessment order. the assessee in the assessment order. In light of the above, the In light of the above, the learned counsel contended that a full learned counsel contended that a full-fledged enquiry was fledged enquiry was conducted by the Assessing Officer on the very issue now sought to conducted by the Assessing Officer on the very issue now sought to conducted by the Assessing Officer on the very issue now sought to be revised, and hence, the invocation of Explanation 2 to section be revised, and hence, the invocation of Explanation 2 to section be revised, and hence, the invocation of Explanation 2 to section 263 of the Act—on the ground of lack of enquiry or inadequate on the ground of lack of enquiry or inadequate on the ground of lack of enquiry or inadequate enquiry—was unwarranted. It was further submitted that the issue was unwarranted. It was further submitted that the issue was unwarranted. It was further submitted that the issue under consideration is one on which two views are reasonably under consideration is one on which two views are reasonably under consideration is one on which two views are reasonably possible, and the Assessing Officer had taken a view which is legally possible, and the Assessing Officer had taken a view which is legally possible, and the Assessing Officer had taken a view which is legally tenable. In such circumstances, it was urged that the assessment tenable. In such circumstances, it was urged that the assessmen tenable. In such circumstances, it was urged that the assessmen order cannot be termed as erroneous insofar as it is prejudicial to order cannot be termed as erroneous insofar as it is prejudicial to order cannot be termed as erroneous insofar as it is prejudicial to the interest of the Revenue." the interest of the Revenue."

4.1 In the rejoinder, the Ld. counsel for the assessee relied on the In the rejoinder, the Ld. counsel for the assessee relied on the In the rejoinder, the Ld. counsel for the assessee relied on the following three decisions on the Mumbai Bench of the Tribunal : ions on the Mumbai Bench of the Tribunal : ions on the Mumbai Bench of the Tribunal :

 NTT Global Networks Pvt. Ltd. v. PCIT [ITA No. NTT Global Networks Pvt. Ltd. v. PCIT [ITA No. NTT Global Networks Pvt. Ltd. v. PCIT [ITA No. 3095/Mum/2025] 3095/Mum/2025]  Dalal and Broacha Stock Broking Pvt. Ltd. v. Pr. Dalal and Broacha Stock Broking Pvt. Ltd. v. Pr. Dalal and Broacha Stock Broking Pvt. Ltd. v. Pr. CIT [ITA No. 2718/Mum/2025] CIT [ITA No. 2718/Mum/2025]  FDC Ltd. v. PCIT [ITA No. 1031/Mum/2024] FDC Ltd. v. PCIT [ITA No. 1031/Mum/2024] 5. We have heard the rival contentions advanced on behalf of the We have heard the rival contentions advanced on behalf of the We have heard the rival contentions advanced on behalf of the parties and carefully perused the material placed on record. The parties and carefully perused the material placed on record. The parties and carefully perused the material placed on record. The legal position governing the exercise of revisional jurisdiction under legal position governing the exercise of revisional jurisdiction under legal position governing the exercise of revisional jurisdiction under Section 263 of the Act, stands well Section 263 of the Act, stands well-settled by the decisio settled by the decision of this Court in Malabar Industrial Co. Ltd. v. CIT Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC)], [(2000) 243 ITR 83 (SC)], wherein it is held that for assumption of jurisdiction under Section wherein it is held that for assumption of jurisdiction under Section wherein it is held that for assumption of jurisdiction under Section 263, the twin conditions of the order being 263, the twin conditions of the order being erroneous erroneous and prejudicial be cumulatively satisfied. to the interests of the Revenue to the interests of the Revenue must be cumulatively satisfied. Unless both these conditions coexist, the invocation of the Unless both these conditions coexist, the invocation of the Unless both these conditions coexist, the invocation of the revisional power would be without lawful foundation. revisional power would be without lawful foundation. revisional power would be without lawful foundation.

5.1 In the instant case, the learned Principal Commissioner of In the instant case, the learned Principal Commissioner of In the instant case, the learned Principal Commissioner of Income-tax (PCIT) has held the assessment order passe tax (PCIT) has held the assessment order passe tax (PCIT) has held the assessment order passed by the Assessing Officer to be both erroneous and prejudicial to the Assessing Officer to be both erroneous and prejudicial to the Assessing Officer to be both erroneous and prejudicial to the interest of the Revenue. The principal grounds on which such interest of the Revenue. The principal grounds on which such interest of the Revenue. The principal grounds on which such conclusion is drawn are twofold: first, the invocation of Explanation conclusion is drawn are twofold: first, the invocation of Explanation conclusion is drawn are twofold: first, the invocation of Explanation 2 to Section 263 of the Act, which deems an order to be erroneous 2 to Section 263 of the Act, which deems an order to b 2 to Section 263 of the Act, which deems an order to b and prejudicial where the Assessing Officer has failed to make and prejudicial where the Assessing Officer has failed to make and prejudicial where the Assessing Officer has failed to make enquiries or verification which, in the circumstances of the case, he enquiries or verification which, in the circumstances of the case, he enquiries or verification which, in the circumstances of the case, he ought to have undertaken; and second, the assertion that the ought to have undertaken; and second, the assertion that the ought to have undertaken; and second, the assertion that the Assessing Officer erred in law in allowing the ass Assessing Officer erred in law in allowing the assessee’s claim of essee’s claim of deduction under Section 80G of the Act in respect of expenditure deduction under Section 80G of the Act in respect of expenditure deduction under Section 80G of the Act in respect of expenditure incurred towards corporate social responsibility (CSR), the same incurred towards corporate social responsibility (CSR), the same incurred towards corporate social responsibility (CSR), the same being, according to the PCIT, of a non being, according to the PCIT, of a non-voluntary nature. voluntary nature.

5.2 On a careful consideration of the record, we fi On a careful consideration of the record, we fi On a careful consideration of the record, we find substantial force in the submission of the learned counsel for the assessee that force in the submission of the learned counsel for the assessee that force in the submission of the learned counsel for the assessee that the Assessing Officer did not proceed mechanically or in breach of the Assessing Officer did not proceed mechanically or in breach of the Assessing Officer did not proceed mechanically or in breach of the standard of enquiry contemplated under the Act. The the standard of enquiry contemplated under the Act. The the standard of enquiry contemplated under the Act. The assessment record clearly demonstrates that a specific query was assessment record clearly demonstrates that a spe assessment record clearly demonstrates that a spe raised under Section 142(1) of the Act, vide notice dated raised under Section 142(1) of the Act, vide notice dated raised under Section 142(1) of the Act, vide notice dated 28.07.2022, calling upon the assessee to justify its claim under 28.07.2022, calling upon the assessee to justify its claim under 28.07.2022, calling upon the assessee to justify its claim under Section 80G vis-à-vis donations which formed part of its CSR vis donations which formed part of its CSR vis donations which formed part of its CSR expenditure. The assessee, in response, furnished a detailed reply, expenditure. The assessee, in response, furnished a deta expenditure. The assessee, in response, furnished a deta setting out the names of the donee institutions, the amount of setting out the names of the donee institutions, the amount of setting out the names of the donee institutions, the amount of donation, the nature of their registration under the Act, and further donation, the nature of their registration under the Act, and further donation, the nature of their registration under the Act, and further relied upon judicial precedents in support of its claim. These facts, relied upon judicial precedents in support of its claim. These facts, relied upon judicial precedents in support of its claim. These facts, in our considered view, clearly establish in our considered view, clearly establish that the Assessing Officer that the Assessing Officer had applied his mind and examined the issue in depth. he had applied his mind and examined the issue in depth. he had applied his mind and examined the issue in depth. he Coordinate Bench of the Tribunal in Coordinate Bench of the Tribunal in NTT Global Networks Pvt. Ltd. NTT Global Networks Pvt. Ltd. v. PCIT [supra] has categorically held that where the Assessing [supra] has categorically held that where the Assessing [supra] has categorically held that where the Assessing Officer has taken one of the plausible views in law after considering Officer has taken one of the plausible views in law after considering Officer has taken one of the plausible views in law after considering the material before him, the revisional jurisdiction under Section the material before him, the revisional jurisdiction under Section the material before him, the revisional jurisdiction under Section 263 cannot be validly exercised. 263 cannot be validly exercised. The relevant finding of the The relevant finding of the Tribunal(supra) is reproduced as under is reproduced as under:

12. Considering the second aspect of the Id. PCIT's order which is on 12. Considering the second aspect of the Id. PCIT's order which is on 12. Considering the second aspect of the Id. PCIT's order which is on CSR expenditure which according to the Id. PCIT was mandatory in CSR expenditure which according to the Id. PCIT was mandatory in CSR expenditure which according to the Id. PCIT was mandatory in nature as per the provisions of Section 135 of the Companies Act and nature as per the provisions of Section 135 of the Companies Act and nature as per the provisions of Section 135 of the Companies Act and does not tan does not tantamount to an expenditure incurred, wholly and tamount to an expenditure incurred, wholly and exclusively for the purpose of business as per Explanation 2 to Section exclusively for the purpose of business as per Explanation 2 to Section exclusively for the purpose of business as per Explanation 2 to Section 37(1) of the Act and the same would not amount to the voluntary 37(1) of the Act and the same would not amount to the voluntary 37(1) of the Act and the same would not amount to the voluntary donation u/s. 80G of the Act. Admittedly, the Id. PCIT in his order has donation u/s. 80G of the Act. Admittedly, the Id. PCIT in his order has donation u/s. 80G of the Act. Admittedly, the Id. PCIT in his order has categorically stated that the said issue is covered in favour of the ategorically stated that the said issue is covered in favour of the ategorically stated that the said issue is covered in favour of the assessee by the decisions of the jurisdictional coordinate benches and assessee by the decisions of the jurisdictional coordinate benches and assessee by the decisions of the jurisdictional coordinate benches and the same is pending adjudication before the Hon'ble Jurisdictional the same is pending adjudication before the Hon'ble Jurisdictional the same is pending adjudication before the Hon'ble Jurisdictional Bombay High Court. Though, the ld. DR has relied o Bombay High Court. Though, the ld. DR has relied on the decisions of n the decisions of the ITAT Delhi Bench decision in the case of the Agilent Technologies the ITAT Delhi Bench decision in the case of the Agilent Technologies the ITAT Delhi Bench decision in the case of the Agilent Technologies (International) (P.) Ltd. (Supra), there are catena of decisions of the (International) (P.) Ltd. (Supra), there are catena of decisions of the (International) (P.) Ltd. (Supra), there are catena of decisions of the jurisdictional coordinate benches which has decided this issue in jurisdictional coordinate benches which has decided this issue in jurisdictional coordinate benches which has decided this issue in favour of the assessee which favour of the assessee which the Id. AO is bound to follow as the Id. AO is bound to follow as precedent. Hence, we observe that the ld. AO has taken one of the precedent. Hence, we observe that the ld. AO has taken one of the precedent. Hence, we observe that the ld. AO has taken one of the views that CSR expenditure is eligible deduction u/s. 80G of the Act. views that CSR expenditure is eligible deduction u/s. 80G of the Act. views that CSR expenditure is eligible deduction u/s. 80G of the Act. On this note, we find that the Id. PCIT's order does not hold merit on On this note, we find that the Id. PCIT's order does not hold merit on On this note, we find that the Id. PCIT's order does not hold merit on this count also this count also as the twin conditions specified u/s. 263 of the Act is as the twin conditions specified u/s. 263 of the Act is not satisfied in the present not satisfied in the present case in hand.

5.3 A similar position was taken by the Tribunal in A similar position was taken by the Tribunal in A similar position was taken by the Tribunal in FDC Ltd. v. PCIT [supra], wherein following the decisions in ], wherein following the decisions in ], wherein following the decisions in Allegis Services (India) Pvt. Ltd.(supra) (supra) and First American (India) Pvt. Ltd. First American (India) Pvt. Ltd. (supra), it is held that while CSR expenses may not be allowable under Section held that while CSR expenses may not be allowable under Section held that while CSR expenses may not be allowable under Section 37(1) of the Act, there exists no statutory bar in claiming deduction 37(1) of the Act, there exists no statutory bar in claiming deduction 37(1) of the Act, there exists no statutory bar in claiming deduction under Section 80G, provided the donation otherwise qualifies under under Section 80G, provided the donation otherwise qualifies under under Section 80G, provided the donation otherwise qualifies under the said provision. The Tribunal rightly noted that this is a said provision. The Tribunal rightly noted that this is a said provision. The Tribunal rightly noted that this is a debatable issue and hence, the view taken by the Assessing Officer, issue and hence, the view taken by the Assessing Officer, issue and hence, the view taken by the Assessing Officer, being one of the possible views, cannot be branded as erroneous. being one of the possible views, cannot be branded as erroneous. being one of the possible views, cannot be branded as erroneous. The relevant finding of the Tribunal is reproduced as under: The relevant finding of the Tribunal is reproduced as under: The relevant finding of the Tribunal is reproduced as under:

“12. With regard to the deduction allowed under section 80G of the With regard to the deduction allowed under section 80G of the With regard to the deduction allowed under section 80G of the Act, the view of Ld PCIT is that the said claim has been made by the Act, the view of Ld PCIT is that the said claim has been made by the Act, the view of Ld PCIT is that the said claim has been made by the assessee in respect of the expenses incurred on Corporate Social assessee in respect of the expenses incurred on Corporate Social assessee in respect of the expenses incurred on Corporate Social Responsibility (CSR), which is disallowable under section 3 Responsibility (CSR), which is disallowable under section 3 Responsibility (CSR), which is disallowable under section 37(1) of the Act and hence deduction under section 80G should not have been Act and hence deduction under section 80G should not have been Act and hence deduction under section 80G should not have been allowed. We notice that, in the following cases, it has been held that allowed. We notice that, in the following cases, it has been held that allowed. We notice that, in the following cases, it has been held that the disallowance of CSR expenses are required to be made u/s 37(1) the disallowance of CSR expenses are required to be made u/s 37(1) the disallowance of CSR expenses are required to be made u/s 37(1) of the Act, but there is no statutory bar i of the Act, but there is no statutory bar in claiming the deduction u/s n claiming the deduction u/s 80G of the Act if the said expenses are otherwise allowable as 80G of the Act if the said expenses are otherwise allowable as 80G of the Act if the said expenses are otherwise allowable as deduction under that section: deduction under that section:- (a) Allegis Services (India) Pvt Ltd vs. ACIT (ITA No.1693/Bang/ (a) Allegis Services (India) Pvt Ltd vs. ACIT (ITA No.1693/Bang/ (a) Allegis Services (India) Pvt Ltd vs. ACIT (ITA No.1693/Bang/ 2019)(Bang.) (Trib.) 2019)(Bang.) (Trib.)

(b) JMS Mining (P) Ltd vs. PCIT (130 (b) JMS Mining (P) Ltd vs. PCIT (130 taxmann.com 118) taxmann.com 118) (c) First American (India) P Ltd vs. ACIT (ITA No. 1762/Bang/ (c) First American (India) P Ltd vs. ACIT (ITA No. 1762/Bang/ (c) First American (India) P Ltd vs. ACIT (ITA No. 1762/Bang/ 2019)(Bang) (Trib.) 2019)(Bang) (Trib.) Thus, the view taken by Ld PCIT on this issue is a debatable one, Thus, the view taken by Ld PCIT on this issue is a debatable one, Thus, the view taken by Ld PCIT on this issue is a debatable one, meaning thereby, the action of the AO in allowing deduction u/s 80G meaning thereby, the action of the AO in allowing deduction u/s 80G meaning thereby, the action of the AO in allowing deduction u/s 80G results in a possible results in a possible view. Accordingly, the Ld PCIT was not justified in view. Accordingly, the Ld PCIT was not justified in initiating revision proceedings on this issue. Accordingly, we set aside initiating revision proceedings on this issue. Accordingly, we set aside initiating revision proceedings on this issue. Accordingly, we set aside his order on this issue.” 5.4 In light of the foregoing discussion, it is evident that the In light of the foregoing discussion, it is evident that the In light of the foregoing discussion, it is evident that the Assessing Officer had undertaken the req Assessing Officer had undertaken the requisite enquiries and uisite enquiries and verification warranted in the fact verification warranted in the facts and circumstances of the case s and circumstances of the case and it is not necessary to reproduce his discussion wherever he has and it is not necessary to reproduce his discussion wherever he has and it is not necessary to reproduce his discussion wherever he has accepted the view of the Assessing Officer and the claim of Ld. DR accepted the view of the Assessing Officer and the claim of Ld. DR accepted the view of the Assessing Officer and the claim of Ld. DR of non-application of the mind of application of the mind of the Assessing Officer was the Assessing Officer was unwarranted. It is well It is well-established that the mere absence of established that the mere absence of elaborate discussion in the assessment order does not imply lack of elaborate discussion in the assessment order does not imply lack of elaborate discussion in the assessment order does not imply lack of enquiry or non-application of mind, where the record reveals that application of mind, where the record reveals that application of mind, where the record reveals that the issue was specifically raised a the issue was specifically raised and replied to. The submission of nd replied to. The submission of the Department that the order is vitiated by non the Department that the order is vitiated by non-application of mind application of mind stands negated in the face of documentary evidence to the contrary. stands negated in the face of documentary evidence to the contrary. stands negated in the face of documentary evidence to the contrary.

5.5 It further emerges from the record that divergent views exist It further emerges from the record that divergent views exist It further emerges from the record that divergent views exist on the allowability of deduction under Section 80G in respect of of deduction under Section 80G in respect of of deduction under Section 80G in respect of donations which also constitute CSR expenditure. While the Delhi donations which also constitute CSR expenditure. While the Delhi donations which also constitute CSR expenditure. While the Delhi Bench of the Tribunal in Bench of the Tribunal in Agilent Technologies (International) (P.) Ltd. Agilent Technologies (International) (P.) Ltd. [(2024) 160 taxmann.com 238] has taken a view against such [(2024) 160 taxmann.com 238] has taken a view against such [(2024) 160 taxmann.com 238] has taken a view against such deductibility, the Bangalore Benches in the Bangalore Benches in Allegis Services (India) Pvt. Allegis Services (India) Pvt. Ltd.(supra) and First American (India) Pvt. Ltd. First American (India) Pvt. Ltd.(supra) (supra) have allowed the claim. The existence of contrary but plausible legal views the claim. The existence of contrary but plausible legal views the claim. The existence of contrary but plausible legal views fortifies the conclusion that the issue is debatable. In CIT v. Max fortifies the conclusion that the issue is debatable. In fortifies the conclusion that the issue is debatable. In India Ltd. [(2007) 295 ITR 282 (SC)], [(2007) 295 ITR 282 (SC)], Hon’ble Supreme Hon’ble Supreme Court held that where two views are reasonably possible and the Assessing that where two views are reasonably possible and the Assessing that where two views are reasonably possible and the Assessing Officer has taken one such view, the Commissioner cannot exercise Officer has taken one such view, the Commissioner cannot exercise Officer has taken one such view, the Commissioner cannot exercise revisionary revisionary revisionary powers powers powers merely merely merely because because because he he he prefers prefers prefers a a a different different different interpretation. The authority under Section 263 is not intended to interpretation. The authority under Section 263 is not int interpretation. The authority under Section 263 is not int confer jurisdiction upon superior officers to substitute their own confer jurisdiction upon superior officers to substitute their own confer jurisdiction upon superior officers to substitute their own opinion for that of the Assessing Officer, in matters which admit of opinion for that of the Assessing Officer, in matters which admit of opinion for that of the Assessing Officer, in matters which admit of a legitimate divergence of views. a legitimate divergence of views. In the light of the foregoing In the light of the foregoing discussion, we are of the considered opinion th discussion, we are of the considered opinion that the assessment at the assessment order passed by the Assessing Officer cannot be said to be either order passed by the Assessing Officer cannot be said to be either order passed by the Assessing Officer cannot be said to be either erroneous or prejudicial to the interests of the Revenue within the erroneous or prejudicial to the interests of the Revenue within the erroneous or prejudicial to the interests of the Revenue within the meaning of Section 263 of the Act. The Assessing Officer has meaning of Section 263 of the Act. The Assessing Officer has meaning of Section 263 of the Act. The Assessing Officer has applied his mind to the issue in question a applied his mind to the issue in question and adopted a view which nd adopted a view which finds support in judicial pronouncements. Accordingly, the finds support in judicial pronouncements. Accordingly, the finds support in judicial pronouncements. Accordingly, the impugned order passed by the PCIT is liable to be, and is hereby, impugned order passed by the PCIT is liable to be, and is hereby, impugned order passed by the PCIT is liable to be, and is hereby, set aside. The relevant grounds of appeal of the assessee are The relevant grounds of appeal of the assessee are The relevant grounds of appeal of the assessee are accordingly allowed.