TRIVENI TURBINE LTD,NOIDA vs. ACIT, CIRCLE 5(3)(1), NOIDA

3. During the proceedings before us, the ld. Counsel for the assessee submitted that the appeal on the ground no.1.1 and 1.2 are not pressed.

Hence, same are dismissed as not pressed.

4. Regarding ground of appeal no.2 and 3, the ld. Counsel for the assessee has filed a brief written submission, which is reproduced as under:-

Re: GOA No. 2 to 2.2- Disallowance of donation under section 80G of the Act [CIT(A) Order - Para 8 to 8.3.12, Page 33-47; AO Order - Para 4 to 4.9, Page 2-13]

2. Out of the aforesaid, the appellant claimed deduction aggregating to Rs.95,79,405 under section 80G of the Act in respect of the donations made to the following entities duly registered under sub- section (5) of the aforesaid section, as part of its CSR expenditure (copy of donations receipts enclosed at pages 52-75 of PB):

Page 3 of 16 S.No. Name of Party Amount Spent % of Amount of (in Rs.) Qualifying Deduction Amont (in Rs.) 1. HSP Aruna 14,39,310 50% 7,19,655 Chetena 2. Indian Institute 30,00,000 100% 30,00,000 of Science, Bangalore 3. Compassion 5,00,000 50% 2,50,000 Unlimited Plus Action (CUPA) 4. Dharithree Trust 12,70,000 50% 6,35,000 5. Tirth Ram Shah 99,49,500 50% 49,74,750 Charitable Trust Total 1,61,58,810 95,76,405

3. The assessing officer and CIT(A) disallowed the deduction claimed by the appellant holding that donations forming part of CSR expenditure is not allowable as deduction under section 80G of the Act.

4. In this regard, it is respectfully submitted that the aforesaid issue is no longer re-integra and it has been held by various Benches of the Hon’ble Tribunal in the following cases that the donations made as part of CSR expenditure under the Companies Act 2013 are eligible for deduction in terms of provisions of section 80G of the Act:

• InterGlobe Technology Quotient Pvt Ltd vs. ACIT: 207 ITD 360 (Del Trib.) (refer Para 7 to 7.5) (refer pages 1-9 of CLPB) • Ericsson India Global Services (P.) Ltd. vs. DCIT: 160 taxmann.com 599 (Del Trib.) (refer pages 10-13 of CLPB) • Cheil India (P.) Ltd vs. DCIT: 169 taxmann.com 507 (Del. Trib.) (refer pages 14-18 of CLPB) • InterGlobe Enterprises Pvt Ltd vs. ACIT: ITA 3941/Del/2023 (Del Trib.) (refer pages 19-22 of CLPB) • Honda Motorcycle and Scooter India Pvt Ltd vs ACIT:

(Del Trib.) (refer pages 23-27 of CLPB) Page 4 of 16

• Teradata India Pvt Ltd vs. DCIT: ITA 1248/Del/2022 (Del Trib.) (refer pages 28-32 of CLPB) • ION Trading India P. Ltd vs. ACIT: 2055/Del/2022 (Del Trib.) • Agilent Technologies (International) Pvt Ltd vs. ACIT: ITA 1171/Del/2022 (Del Trib.) • Cosmo First Ltd vs. ITO, NaFAC: ITA 4176/Del/2024 (Del Trib.) • American Express (India) Pvt Ltd vs. PCIT: 208 ITD 564 (Del Trib.) • Allegis services (India) Pyt Ltd vs ACIT Bangalore:

(Bang Trib.) • FNF India Private Limited vs ACIT: 133 taxmann.com 251 (Bang Trib.) • Infinera India (P.) Ltd vs. JCIT: 194 ITD 463 (Bang Trib.) • Goldman Sachs Services Pvt Ltd vs JCIT:

(Bang Trib.) • JMS Mining (P.) Ltd vs PCIT: 130 taxmann.com 118 (Kol Trib.) • DCIT vs. Peerless General Finance & Investment Co Ltd: 112 taxmann.com 410 (Kol Trib.) • Power Mech Projects Ltd vs DCIT:

(Hyd Trib.) • Supreme Buildestates Pvt Ltd vs DCIT:

(Jpr Trib.) • Naik Seafoods Pvt Ltd vs. PCIT: ITA 490/Mum/2021 (Mum Trib.)

5. In view of the aforesaid, the disallowance of Rs.95,79,405 made by the lower authorities calls for being deleted.

Re: GOA No. 3 to 3.1- Disallowance of donation under section 35(2AA) of the Act [CIT(A) Order - Para 8 to 8.3.12, Page 33-47; AO Order - Para 5 to 5.2, Page 13-15]

6. During the year under consideration, the appellant had made contribution of Rs.7,00,000 to Indian Institute of Technology, Bombay (‘IIT Bombay’) for promotion of education/ academic pursuit and scientific research, as part of fulfillment of its CSR commitments. A copy of the agreement entered into between the appellant and IIT Bombay for undertaking scientific research is enclosed at pages 110-112 of PB. Considering that the contribution made to IIT Bombay was towards scientific research, the same qualified for deduction in terms of section 35(2AA) of the Act.

7. The assessing officer/ CIT(A) however, simply following the rational for making disallowance of donations under section 80G in GOA 2 supra, disallowed the deduction claimed by the appellant holding that expenditure forming part of CSR expenditure is not allowable as deduction under the section 35(2AA) of the Act.

8. In this regard, it is respectfully submitted that while introducing Explanation 2 to section 37(1), the Memorandum to the Finance (No.2) Bill, 2014 specifically clarified that that CSR expenses which fall for consideration under sections 30 to 36 of the Act are allowable as deduction. Relevant extract of the Memorandum is reproduced as under (refer pages 77-78 of PB):

“The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under the existing provisions of section 37 of the Income-tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under section 37. However, the CSR expenditure which is of the nature described in section 30 to section Page 6 of 16

36 of the Act shall be allowed deduction under those sections subject to fulfillment of conditions, if any, specified therein.” (emphasis supplied)

Sub: Written Submission cum Chart of Issues by Sr. DR in the above case- reg. Issue in brief as per AO:

1. Examination of CSR Expenditure and Claim under Section 80G [Page 2, Para 4.1] [Page 7, Para 4.3):The AO analyzed the statutory framework and precedents cited by the assessee and found the following: * Section 80G provides deduction only for voluntary donations, whereas CR expenditure is a mandatory statutory obligation under Section 135 of the Companies Act, 2013. * The denial of deduction for Swachh Bharat Kosh and Clean Ganga Fund under Section 80G indicates a broader legislative intent not to allow CR expenses as deductions under Section 80G. * Allowing such a deduction would effectively subsidize a statutory obligation, which contradicts the intent behind CSR laws. * The judicial precedents cited by the assessee, including cases like Goldman Sachs Services Pvt. Ltd. v. JCIT (Bangalore ITAT) and First American (India) Pvt. Ltd. v. ACIT (Bangalore ITAT), were not applicable as they were remanded for fresh adjudication and had not attained finality. Based on the above observations, the AO concluded that CR expenditure, being mandatory in nature, does not qualify as a donation under Section 80G. Consequently, the claim for deduction under Section 80G amounting to 295,79,405 was disallowed in full. Adjudication by CIT[A] on Ground No.2: 1. Examination of the Assessee's Claim for Deduction under Section 80G:The assessee challenged the disallowance of the deduction under Section 80G in respect of amounts paid as donations under its Corporate Social Responsibility (CR) obligation, as well as the disallowance under Section 35(2AA) for expenses incurred under CSR.

2. Legal Interpretation of CR Expenditure and Disallowance under Section 37(1) [Page 42, Para 8.2]: The Ld. CIT(A) noted that CSR expenditure is a mandatory statutory obligation under Section 135 of the Companies Act, 2013 and cannot be considered as business expenditure under Section 37(1) of the Income Tax Act, 1961. This position is Page 8 of 16 explicitly clarified in Explanation 2 to Section 37(1) and reinforced by the Finance Act, 2014.

3. Nature of Donations under Section 80G (Page 44, Para 8.3.2, 8.3.3): * Voluntariness as an Essential Element of Donation: The Ld. CIT(A) analyzed the meaning of "donation" and held that a donation must be voluntary and without any legal compulsion. CR expenses, being a statutory mandate. lack the essential characteristic of a voluntary donation. * Mandatory Nature of CR Spending: Section 135(5) of the Companies Act, 2013, states that companies "shall ensure" spending on SR activities, which establishes a compulsory obligation rather than a voluntary act of charity.

4. Legislative Intent and Interpretation of Section 80G/Page 45): The Ld. CIT(A) emphasized the legislative intent behind CR laws and tax deductions: * Prevention of Dual Benefits: Allowing deductions under Section 80G for CR expenses would effectively subsidize corporate obligations and shift the burden to the government through reduced tax collection. * Legislative Clarity on CR-related Deductions: The Finance Act, 2015 explicitly restricted deductions under Section 80G for CSR contributions by introducing the phrase "other than the sum spent in pursuance of CSR under Section 135(5) of the Companies Act. 2013." * Only expenses under Sections 30 to 36 of the Income Tax Act. 1961, are eligible for deduction if they qualify as CSR expenses.

5. Analysis of Judicial Precedents Cited by the Assessee (Page 46, Para 8.3.10): The assessee relied on various ITAT rulings, including:First American (India) Pvt. Ltd. [2019], Allegis Services (India) Pvt. Ltd. [2019], Goldman Sachs Services Pvt. Ltd. [2019]. However, CIT(A) noted that these cases were remanded back to the Assessing Officer (AO) and did not establish a binding legal precedent supporting the appellant's claim. The Ld. CIT(A) upheld the AO's decision and ruled that CR expenditure cannot be classified as a "donation" under Page 9 of 16 Section 80G due to its non-voluntary nature and is specifically disallowed under Explanation 2 to Section 37(I) and does not qualify for deductions except under Sections 30 to 36 of the Act. Allowing such deductions would contravene the intent of CR legislation and create an undue tax advantage for corporations. Accordingly, the appeal was dismissed, and the disallowance of the deduction under Section 80G was confirmed. DR's Contentions for Ground No. 2: 1. CSR Expenditure is a Statutory Obligation and Not a Voluntary Donation: The assessee's claim for deduction under Section 80G on CSR expenses is legally untenable, as CR spending is a mandatory statutory obligation under Section 135 of the Companies Act, 2013. The nature of a "donation" requires it to be voluntary and gratuitous, whereas CR spending is compulsory and mandated by law. * The expression "shall ensure" in Section 135(5) of the Companies Act. 2013. establishes an absolute obligation on companies to spend a prescribed percentage of their profits on CR * A payment made under legal compulsion cannot be classified as a donation, which inherently requires voluntary intent. * The AO correctly disallowed the deduction under Section 80G, as CSR expenditure does not qualify as a donation within the meaning of the Income Tax Act, 1961.

2. Express Legislative Prohibition Under Explanation 2 to Section 37(1): * Explanation 2 to Section 37(1) of the Income Tax Act. 1961, explicitly disallows CR expenditure as a business expense, stating that: "Any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in Section 135 of the Companies Act, 2013, shall not be deemed to be an expenditure incurred for the purposes of business or profession." * The assessee, in an attempt to circumvent this disallowance, has wrongly recharacterized CSR expenses as donations. * What is expressly disallowed under Section 37(1) cannot be claimed under another provision, such as Section 80G, by Page 10 of 16 merely giving a different nomenclature to the same expenditure.

Page 11 of 16 * If the expenditure were a genuine donation, it should have been accounted for under "Donations" rather than "Corporate Social Responsibility." * The AO and CIT(A) correctly rejected this artificial classification, as accounting treatment cannot override statutory provisions. Ground No. 3:That on the facts and circumstances of the case and in law, the CIT(A) erred in not. deleting the disallowance of weighted deduction of Rs.10,50,000 claimed by the appellant under section 35(2AA) of the Act, being the amount paid to IT, Bombay during the year under consideration. 3.1 That the CIT(A) erred in confirming the disallowance of the said deduction on the ground that the underlying expenditure represented mandatory contribution towards CR as specified under the Companies Act, 2013 and was not allowable as deduction. Issues involved in Ground No. 3: Whether the assessee is entitled to claim deductions under Sections 80G and 35(2AA) for CR expenditure, despite the explicit prohibition under Explanation 2 to Section 37(1) and the legislative intent to disallow CSR-related tax benefits. Issue in brief as per AO: 1. Disallowance of Deduction Under Section 35(2AA)[Page 13, Para 5.1): The assessee claimed a weighted deduction of R10,50,000 under Section 35(2AA) of the Income Tax Act, 1961, in respect of an amount paid to IT Bombay as part of its Corporate Social Responsibility (CSR) obligation. The AO noted that 27,00,000 out of this amount was specifically classified as CR expenditure under the Companies Act, 2013.

3. Legislative Intent and Clarifications by CBDT [Page 14, Para 5.1]: The AO considered the assessee's argument Page 12 of 16

that the Explanatory Memorandum to the Finance Bill and CBDT clarifications allow CR expenditure if it qualifies under Sections 30 to 36 of the Act. However, the AO found that CSR- related contributions do not fall within the purview of Section 35(2AA), which specifically allows deductions for research contributions made voluntarily to approved institutions. Given the mandatory nature of CR expenditure and its explicit disallowance under Explanation 2 to Section 37(1), the AO disallowed the deduction of 210,50,000 claimed under Section 35(2AA) and added the amount back to the assessee's total taxable income. Adjudication by CIT[A] on Ground No.3: Covered in Ground of Appeal

No. 2 DR's Contentions for Ground No. 3:

1. CSR Expenditure Does Not Qualify for Deduction Under Section 35(2AA): * Section 35(2AA) of the Act allows a weighted deduction on contributions made to scientific research institutions, provided such contributions are made voluntarily and with the intent of furthering research. * In the present case, the contribution made to IT Bombay was part of the company's statutory CRobligation under Section 135 of the Companies Act and was not a voluntary research * The Finance Act, 2015, clarified that CR-related expenses are deductible only if they fall within the ambit of Sections 30 to 36 of the Act, which does not include Section 35(2AA) unless such expenses are specifically incurred for research and not as part of CR obligations. * The AO has correctly observed that the assessee's claim under Section 35(2AA) is an attempt to circumvent the disallowance under Explanation 2 to Section 37(1) and that such an artificial reclassification cannot be permitted in law.

2. Legislative Intent and Policy Considerations: * The entire legislative framework surrounding CR obligations, tax deductions, and business expenditure makes it abundantly clear that CSR is not intended to be subsidized by the government through tax incentives. Page 13 of 16

* The introduction of specific exclusions in Section 80G and the Finance Act, 2015, further reinforces that only voluntary contributions, and not CR-mandated expenses, are eligible for deduction. * Allowing CR deductions under Sections 80G or 35(2AA) would lead to unintended consequences where corporates would fulfill their statutory obligation at the cost of public revenue, which is not the objective of the CSR legislation. Ground No. 4 is consequential in nature and does not require substantive arguments at this stage of the case. In view of the foregoing submissions, it is most humbly and respectfully prayed that this Hon’ble Tribunal may be pleased to: a) Dismiss the appeal of the assessee and uphold the order of the CIT(A) confirming the disallowance made by the AO under Sections 80G and 35(2AA): b) Hold that CSR expenses, being statutory obligations, are not eligible for deduction either as business expenditure under Section 37(1) or as donations under Section 80G; c) Pass any other order or relief in favor of the Revenue as may be deemed fit and proper in the interest of justice.

Page 14 of 16 companies. In case, CSR expenditure is taken within the ambit of section 80G, where 50% deduction is allowable then in fact the real CSR expenditure will remain only 50% of the amount which otherwise the company is supposed to spend. We are of this view that this is neither the intent of legislature nor it is justified. Accordingly, assessee’s appeal on this issue keeping in view a number of case laws discussed above is dismissed.

Accordingly, assessee’s appeal of claiming weighted deduction under Page 15 of 16 section 35(2AA) for giving contribution to IIT Bombay from its CSR fund is dismissed.

Order pronounced in the open court on 16th February, 2026.