REC LIMITED,NEW DELHI vs. ACIT-10 (OSD), DELHI, NEW DELHI

ITA 319/DEL/2025Status: DisposedITAT Delhi12 February 2026AY 2018-1942 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal addressed the issue of CSR expenses and Section 80G deduction. The assessee contributed Rs.156.68 crores to REC Foundation for charitable objectives. The AO disallowed the deduction, stating CSR expenses are mandatory. The Ld. CIT(A) allowed the deduction, holding CSR expenses are philanthropic. The Tribunal, relying on the Ld. CIT(A)'s findings and various precedents including Interglobe Technology Quotient (P.) Ltd. v. ACIT and Ericsson India Global Services (P) Ltd. v. DCIT, held that CSR expenditure, while statutorily mandated, remains philanthropic and qualifies for deduction under Section 80G, provided the donee institution is registered under Section 80G and other conditions are met. The Tribunal directed the AO to allow the deduction subject to factual verification of these conditions. The Tribunal also noted that grounds 1, 5, 6, and 7 raised by the assessee were general or not pressed and were dismissed. The Tribunal dismissed the revenue's appeals for AY 2020-21 and AY 2021-22. The assessee's appeals for AY 2018-19 and AY 2019-20 were partly allowed, and the revenue's appeals for AY 2018-19 to 2021-22 were dismissed.

What were the facts?

The assessee, REC Limited, and the Revenue (ACIT/JCIT) filed cross-appeals before the Income Tax Appellate Tribunal (ITAT) challenging orders of the Commissioner of Income Tax (Appeals) for Assessment Years (AYs) 2018-19, 2019-20, 2020-21, and 2021-22. The appeals concerned various grounds, including additions/disallowances made by the Assessing Officer (AO) beyond the scope of limited scrutiny, treatment of processing fees for loan deductions under Section 36(1)(vii) and 36(1)(viia), and the addition of interest income. A significant dispute involved the disallowance of deduction claimed under Section 80G for CSR contributions made to REC Foundation, which the AO deemed mandatory and not voluntary. The ITAT consolidated these appeals due to common issues.

What were the issues?

1. Whether the assessment order is vitiated, without jurisdiction, and contrary to law, particularly concerning issues beyond the scope of limited scrutiny (assessee's contention)? 2. Whether the Ld. CIT(A) erred in upholding the AO's action of not considering Rs.15,11,41,174/- towards processing fees for loans as derived from the Long Term Finance Business for deduction under Section 36(1)(vii) and 36(1)(viia) (assessee's contention)? 3. Whether the Ld. CIT(A) erred in remanding back the issue of interest income addition of Rs.5,32,26,430/- to the AO without examining evidence furnished by the assessee (assessee's contention)? 4. Whether the Ld. CIT(A) erred in granting relief to the assessee on the disallowance of deduction of Rs.179,74,78,529/- under Section 36(1)(vi) concerning interest income on long-term loans prepaid before 5 years, and whether the prepayment premium of Rs.106.41 crore was ignored (revenue's contention)? 5. Whether the Ld. CIT(A) erred in granting relief on the disallowance of Rs.5584,57,541/- under Section 36(1)(vii) and 36(1)(viia)(c), considering these sections as independent (revenue's contention)? 6. Whether CSR expenses, though statutorily mandated, qualify for deduction under Section 80G of the Act (assessee's contention vs. revenue's contention)? The revenue argued that CSR expenses are mandatory and not voluntary donations. The assessee contended that CSR expenses are philanthropic, without quid pro quo, and qualify for deduction if the donee institution is registered under Section 80G and other conditions are met, citing cases like Interglobe Technology Quotient (P.) Ltd. v. ACIT and Cheil India (P) Ltd. v. DCIT.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii),Section 36(1)(viia),Section 36(1)(viii),Section 80G,Section 135,Section 12A,Section 37(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Heard together (6 matters)

ITA No.319/Del/2025
ITA No.320/Del/2025
ITA No.577/Del/2025
ITA No.578/Del/2025
ITA No.609/Del/2025
ITA No.579/Del/2025

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES ‘B’: NEW DELHI.

BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.320/Del/2025 (Assessment Year: 2019-20) REC Limited, vs. ACIT — 10 (O ), C/o D-22, Second Floor, Delhi.

South Extension 1, New Delhi — 110 049

(PAN :AAACR4512R) ITA No.578/Del/2025 (Assessment Year: 2019-20

JCIT — 10 (O ), vs,

Rural Electrification Corporation Ltd., Delhi.

Core-4, Scope Complex, Kasturba Nagar, 7 Lodhi Road, East Delhi 110003

(PAN : AAACR4512R)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri Ashwani Taneja, Advocate Shri Shivam Kukreja Advocate Shri Shantanu Jain, Advocate Shri D. Dubey, Advocate Ms. Ria Jain, Advocate REVENUE BY: Ms. Pooja Swroop, CITDR

ITA Nos.319 & 320/Del/2025 ITA Nos.577& 578/Del/2025 ITA Nos.609& 579/Del/2025 ITA No.579/Del/2025 (Assessment Year: 2021-22)

JCIT — 10 (O ), vs, Rural Electrification Corporation Ltd., Delhi. Core-4, Scope Complex,

Kasturba Nagar, 7 Lodhi Road,

East Delhi 110003. (PAN : AAACR4512R) (APPELLANT) (RESPO

The order continues below.

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