JEWELEX INDIA PRIAVTE LIMITED,MUMBAI vs. DCIT CIRCLE 14(1)(1) , MUMBAI

Facts

The assessee claimed 50% deduction under section 80G of the Income Tax Act for Corporate Social Responsibility (CSR) expenditure, which is mandated by section 135 of the Companies Act, 2013. The Assessing Officer and CIT(A) disallowed this deduction, arguing that CSR expenses are statutory, lack voluntariness, and are not allowable as business expenditure under Explanation 2 to section 37(1) of the Income-tax Act.

Held

The Tribunal, following consistent decisions from various coordinate benches, held that CSR expenses donated to eligible institutions registered under section 80G are allowable for deduction under section 80G of the Income Tax Act. It clarified that while CSR expenses are not deductible under section 37(1), there is no corresponding amendment to section 80G to deny such deductions. The appeals for both assessment years were allowed, subject to factual verification of the donee institutions' registration.

Key Issues

Whether mandatory Corporate Social Responsibility (CSR) expenditure, when made to eligible institutions, qualifies for deduction under section 80G of the Income Tax Act, despite being disallowed as business expenditure under section 37(1) of the Act.