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

Aggrieved, the assessee fled appeal before the ld.CIT(A) and reiterated its claim for deduction u/s 80G.He observed that the dispute related only to the CSR outlay of Rs. 1,72,25,000/-, of which deduction of Rs. 86,12,500/- had been disallowed. Explanation 2 to section 37(1) of the Act, inserted by Finance (No. 2) Act, 2014, clarifies that CSR expenditure, being mandatory in nature, could not be treated as an expenditure incurred wholly and exclusively for the purpose of business. The character of CSR outgo is statutory and lacks the element of voluntariness, which is the essence of a “donation.” The numerous judicial precedents quoted by the assessee were fairly distinguishable. It made no difference whether the CSR amount was paid to an institution eligible under section 80G or otherwise, since permitting deduction Page 4 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai under section 80G would defeat the legislative intent behind Explanation 2 to section 37 and that behind the section 135 of the Companies act 2013 as well. Accordingly, he confirmed the disallowance made by the AO.

Before us, the ld.AR argued that although the above expenditure was classified as CSR under section 135 of the Companies Act, 2013, the same was in fact donated to institutions having valid approval under section 80G of the Act. On this basis, it claimed that at least 50% of such donations should be allowed as deduction under section 80G of the Act, relying upon the fact that the donee institutions held 80G certificates. A detailed paper book was filed and reliance was placed on certain judicial precedents in support of the claim. He placed reliance on plethora of judicial decisions of various coordinate benches of Tribunal and more specifically of the juri ictional Bench of ITAT, Mumbai which has been consistently allowing such deductions. The ld.DR on the other hand placed reliance on the orders of the authorities below.

On careful consideration of all relevant facts of the case, judicial pronouncements in this regard and the provisions of the Act, we find that the ld.CIT(A) failed to take due consideration of the decisions Page 5 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai relied upon by the assessee in this respect which are on identical claim of deduction allowed on CSR expenses u/s 80G of the Act. On merits of the case, issue whether the CSR expenditure is allowable u/s. 80G of the Act or not is no more res integra as the issue is covered in favour of the assesses by a catena of decisions by various co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India (P.) Ltd.in (2024) 163 taxmann.com 536 (Mum)considered the provisions of Companies Act and Income Tax Act and held as follows:

We have heard the rival submissions and perused the materials available on record. The only morn question to be decided here is whether the expenditure towards CSR activities are an allowable deduction us 80G of the Act. The CSR expenses are governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR) Policy Rules, 2014 where companies having net worth of Rs 500 crores of more or turnover of Rs. 1000 crores or more or net profit of Rs 5 crores of more have to mandatorily comply with the CSR provisions specified us. 135(1) of the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on CSR activities. In the present case, the assessee has contributed Rs 30 lacs to various educational and charitable trust for which the assessee has claimed 50% of the total donation paid as deduction u/s. 800 of the Act. Prior to the Finance (No.2) Act, 2014, the said expenditure was claimed as 'business expenditure' u/s. 37(1) of the Act where after the insertion of Explanation 2 to section 37(1) of the Act, the CSR expenses referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of business or profession. It is observed that the said expenses pertaining to CSR has been claimed as deduction u/s. 80G of the Act which claim was perennially rejected by the Revenue for the reason that only donations which are voluntary in nature will come under the purview of section 80G of the Act and donation towards CSR was merely a statutory obligation on companies as per section 135 of the Companies Act, 2013. It is pertinent to point out that the intention of the legislature was clear when the same was clarified by the Finance (No.2) Act, 2014 that CSR expenses will not fall under the business expenditure and also there has been an express bar specified in sub clause (iiihk) and (iiihl) of section 80G(2)(a) of the Act that any sum paid by the assessee as donation to Swatch Bharat Kosh and Clean Ganga Fund will not come under the purview of deduction u's 80G of the Act subject to certain conditions. This justifies the fact that the other donations specified us 80G of the Act would be entitled to deduction provided the conditions stipulated u/s. 80G of the Act are satisfied. In the present case in hand, the contributions made by the assessee would not fall under Page 6 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai the two exceptions specified above which clearly mandates that the assessee is entitled to claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju (supra) is distinguishable on the facts of the present case where there is no requirement of proving the voluntariness of the donation contributed by the assessee for claiming deduction u/s. 80G of the Act. The amendment brought about by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses (iiihk) and (iiihl) to be the exception for qualifying a donation for claiming us. 80G of the Act could also be an evidencing factor to substantiate that CSR expenditures which falls under the nature specified in section 30 to 36 of the Act are an allowable deduction u/s 80G of the Act.

1 In the case of Deputy Commissioner of Income-tax vs. Gabriel India Ltd. [2025] 173 taxmann.com 219 (Mumbai-Trib.)[13-03-2025], it was held as under:

After giving a thoughtful consideration to the orders of the authorities below, we are of the considered view that the Coordinate Benches have been consistently taking the stand that 80G deduction cannot be denied. The relevant findings in the case of Ericsson India Global Services (P) Ltd. (supra), read as under:- "

We have considered rival submissions and perused the material on record. We have also applied our mind to case laws cited before us. Undisputedly, expenditure incurred towards CSR is specifically prohibited from being allowed as deduction towards business expenditure by insertion of Explanation - 2 to Section 37(1) of the Act by Finance Act, 2014 w.e.f01.04.2015. However, there is no such Ericsson India Global Services Pvt. Ltd. v. DCIT corresponding amendment to section 80G of the Act. Only condition for claiming deduction under section 80G of the Act as per the existing provision is the institute to which donation is made must have been registered under section 80G of the Act. Once the aforesaid condition is fulfilled, the donor is entitled to avail the deduction. This is also the view expressed by the Coordinate Bench in case of Honda Motorcycle and Scooter India Pvt. Ltd. (supra). The relevant observation are as under:

Apropos the issue of disallowance u/s 80G of the Income-tax Act, 1961 (for short 'the Act') : The assessee made certain donation to approved institutions or funds and claimed 50% of the total donation made as deduction u/s 80G. This amount also formed part of the CSR initiative of the assessee company which amounts to INR 22,81,29,964/-. It is observed that the assessee has duly disallowed CSR expenditure of INR 22,81,29,964/-debited to the statement of profit and loss under section 37 of the Act. DRP rejected the claim of the assessee by saying that the donation is pursuant to the CSR policy of the company and lacks the test of voluntariness as required under section 80G. The AO has disallowed the claim on the ground that anything donation over and above the CSR u/s 80G will be only allowed as the CSR expense is not an allowable expense u/s 37 of the Act. Ld. Counsel of the assessee placed reliance on the following decisions :- (i) JMS Mining (P.) Ltd. v. PCIT [2021] 130 taxmann.com 118/190 ITD 702/91 ITR(T) 80 (Kolkata- Trib.) (ii) Goldman Sachs Services (P) Ltd. v. JCIT (2020) ([2020] 117 taxmann.com 535 (Bangalore -Trib.) ) (ITAT Bangalore) (iii) First American (India) Pvt. Ltd. (ITA No. 1762/Bang/2019)(iv) Allegis Services (India) Pvt. Ltd. (ITA No. 1693 /Bang/2019) Ld. Counsel further submitted that if the intention was to deny deduction of CSR expenses under section 80G, appropriate Page 7 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai amendments on lines of section 37(1) should also have been made under section 80G of the Act. In the absence of any such amendment, CSR expenses should not be disallowed under section 80G of the Act.

Before us, it is the specific contention of learned Counsel of the assessee that the institutes to whom the assessee has donated the CRS fund are registered under section 80G of the Act. Keeping in view the submissions of the assessee as well as the ratio laid down in the judicial precedents cited before us, we direct the Assessing Officer to allow assessee's claim of deduction under section 80G of the Act, subject to, factual verification of assessee's claim that the donee institutions are registered under section 80G of the Act and other conditions of section 80G of the Act are fulfilled. Ground is allowed for statistical purposes."

2 In a recent decision in the case of The Ruby Mills Limited, Mumbai vs PCIT dated 27 June, 2025 in ITA No.3035/Mum/2025, the coordinate bench while dealing with similar issue held as under:

We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. On careful perusal of assessment order, we find that case was selected for scrutiny on the issue of large amount of donation. No doubt that the assessing officer during the assessment examined the issue and disallowed donation under section 80G to Urvashi Foundations. Though, there is no discussion about the donation to other charitable trust or institution, however the assessing officer has sought details of donations to all about such charitable trust and institution. We find that the assessee also furnished all required details to the assessing officer. Thus, the assessing officer impliedly accepted the donation to such charitable trust or institution. We find that recently Co-ordinate taxmann.com 219 (Мит) on similar issue where the assessee-compапу claimed deduction under section 80G at the rate of 50% of CSR expenses and furnished receipts of donees evidencing eligibility of deduction under section 80G allowed claim of such assessee. The tribunal while allowing relief to the assessee followed various other decisions of the different benches of the Tribunal. The relevant part of the decision if extracted below. "7.After giving a thoughtful consideration to the orders of the authorities below, we are of the considered view that the Coordinate Benches have been consistently taking the stand that 80G deduction cannot be denied. The relevant findings in the case of Ericsson India Global Services (P) Ltd. (supra), read as under:- "

We have considered rival submissions and perused the material on record. We have also applied our mind to case laws cited before us. Undisputedly, expenditure incurred towards CSR is specifically prohibited from being allowed as deduction towards business expenditure by insertion of Explanation 2 to Section 37(1) of the Act by Finance Act, 2014 w.e.f01.04.2015. However, there is no such Ericsson India Global Services Pvt. Ltd. v. DCIT corresponding amendment to section 80G of the Act. Only condition for claiming deduction under section 80G of the Act as per the existing provision is the institute to which donation is made must have been registered under section 80G of the Act. Once the aforesaid condition is fulfilled, the donor is entitled to avail the deduction. This is also the view expressed by the Coordinate Bench in case of Honda Motorcycle and Scooter India Pvt. Ltd. (supra). The relevant observation are as under:

Apropos the issue of disallowance u/s 80G of the Income-tax Act, 1961 (for short 'the Act') : The assessee made certain donation to approved institutions or funds and claimed 50% of the total donation made as deduction u/s 80G. This amount also formed part of the CSR initiative of the assessee company which amounts to INR 22,81,29,964/-. It is observed that the assessee has duly disallowed CSR expenditure of INR 22,81,29,964/- debited to the statement of profit and loss under section 37 of the Act. DRP rejected the claim of the assessee by saying that the donation is pursuant to Page 9 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai the CSR policy of the company and lacks the test of voluntariness as required under section 80G. The AO has disallowed the claim on the ground that anything donation over and above the CSR u/s 80G will be only allowed as the CSR expense is not an allowable expense u/s 37 of the Act. Ld. Counsel of the assessee placed reliance on the following decisions :- JMS Mining (P.) Ltd. v. PCIT [2021] 130 taxmann.com 118/190 ITD 702/91 ITR(T) 80 (Kolkata - Trib.) Goldman Sachs Services (P) Ltd. v. JCIT (2020) ([2020] 117 taxmann.com 535 (Bangalore - Trib.) ) (ITAT Bangalore) (iii) First American (India) Pvt. Ltd. (ITA No. 1762/Bang/2019) Allegis Services (India) Pvt. Ltd. (ITA No. 1693 /Bang/ 2019) Ld. Counsel further submitted that if the intention was to deny deduction of CSR expenses under section 80G, appropriate amendments on lines of section 37(1) should also have been made The Ruby Mills Limited under section 80G of the Act. In the absence of any such amendment, CSR expenses should not be disallowed under section 80G of the Act.

We have heard both the parties and perused the records. We find that ITAT, Bangalore Bench in the case of Goldman Sachs Services (P.) Ltd. (supra) has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction/s 80G of Ericsson India Global Services Pvt. Ltd. v. DCIT the Act subject to satisfying the requisite conditions prescribed for deduction u/s 80G of the Act. For this purpose, the issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of donation u/s 80G of the Act. We find that the case law is fully applicable to the facts of the case. There is no restriction in the Act that expenditure when disallowed for CSR cannot be considered u/s 80G of the Act. Hence, we remit the issue to the file of AO to verify whether these payments were qualified as donations u/s 80G of the Act or not, if they qualify as donation u/s 80G of the Act then the requisite amount deserves to be allowed."

Before us, it is the specific contention of learned Counsel of the assessee that the institutes to whom the assessee has donated the CRS fund are registered under section 80G of the Act. Keeping in view the submissions of the assessee as well as the ratio laid down in the judicial precedents cited before us, we direct the Assessing Officer to allow assessee's claim of deduction under section 80G of the Act, subject to, factual verification of assessee's claim that the donee institutions are registered under section 80G of the Act and other conditions of section 80G of the Act are fulfilled. Ground is allowed for statistical purposes."

The facts of the case in hand show that the assessee has submitted the receipts of the donees evidencing the eligibility of deduction u/s 80G of the Act. Therefore, respectfully following the decision of the Coordinate Bench, we do not find any reason to interfere with the findings of the ld. CIT(A). The decision relied upon by the ld. D/R is on different reasoning as the Co- ordinate Bench was of the opinion that CSR expenses cannot be allowed u/s 37(1) of the Act, therefore, no deduction is allowed u/s 80G, whereas in the case in hand, assessee has claimed deduction u/s 80G and not u/s 37(1) of the Act. Accordingly, ITA No. 1710/PUN/2023 is also dismissed. Page 10 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai 9.In the result, appeals of the revenue are dismissed." Considering the fact that view taken by assessing officer while allowing 50% of donation under section 80G out of CSR expenses are in accordance with the decisions of various benches of Tribunal. Thus, the view taken by assessing officer cannot be said to be erroneous. Thus, the pre-requisite twin conditions for exercising juri iction under section 263 has not meet out in the present case hence we quash / set aside the order of Pr. CIT dated 17.03.2025. In the result, grounds of appeal raised by assessee are allowed.” In view of the facts of the case and catena of decision of various coordinate benches of ITAT discussed in the preceding paras and respectfully following the same, we are of the considered view the orders of the lower authorities cannot be sustained. Accordingly, the impugned appellate order is set aside and the AO is directed to allow the deduction claimed. In the result, the ground filed by the assessee is hereby allowed.

1 In the result, appeal of the assessee is allowed.

The learned Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 1,44,50,500/- on account of deduction claimed under section 80G of the Act in respect of donations aggregating to Rs. 2,89,01,000/- paid to eligible institutions/trusts, classified as Corporate Social Responsibility expenditure in the books of account. The disallowance of deduction under section 80G of the Act is unwarranted and ought to be deleted.

The AO noted that the assessee had debited donations in three categories during the relevant previous year. First, an amount of Rs. Page 11 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai 2,89,01,000/- was debited towards CSR expenditure, of which it claimed 50% deduction under section 80G of the Act amounting to Rs. 1,44,50,500/-. In addition, the assessee made certain donations which were allowed/not disputed by the AO.He disallowed the claim as in AY 2017-18 and the ld.CIT(A) upheld the same.

Since the issue involved is identical as in ITA No.5283/Mum/202025(AY 2017-18),our decision in para 7 above would apply mutatis mutandis in the instant appeal as well. Accordingly, the ground of appeal and the appeal of the assessee are allowed.

In the result, both the above appeals of the assessee are allowed. Order pronounced in the open court on 06/01/2026. NARENDER KUMAR CHOUDHRY (न्यायिक सदस्य /JUDICIAL MEMBER) Place: मुंबई/Mumbai दिनांक / Date 06.01.2026 Lubhna Shaikh / Steno PRABHASH SHANKAR (लेखाकार सदस्य/ACCOUNTANT MEMBER) Page 12 ITA No. 5283 & 5284/Mum/2025 Α.Υ. 2017-18 & 2018-19 Jewelex India Pvt. Ltd., Mumbai आदेश की प्रतिलिपि अग्रेषित/Copy of the Order forwarded to : 1. 2. 3. 4. 5. अपीलार्थी / The Appellant प्रत्यर्थी / The Respondent. आयकर आयुक्त / CIT विभागीय प्रतिनिधि, आयकर अपीलीय अधिकरण DR, ITAT, Mumbai गार्ड फाईल / Guard file. सत्यापित प्रति //// आदेशानुसार / BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.