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

Facts

The assessee claimed a 50% deduction under section 80G of the Income-tax Act, 1961, for Corporate Social Responsibility (CSR) expenses amounting to Rs. 1,72,25,000/- for A.Y. 2017-18 and Rs. 2,89,01,000/- for A.Y. 2018-19. The Assessing Officer and CIT(A) disallowed these deductions, arguing that CSR expenses are mandatory under section 135 of the Companies Act, 2013, and not voluntary donations, thus not eligible for section 80G deduction, particularly in light of Explanation 2 to section 37(1) of the Income-tax Act.

Held

The Tribunal observed that the issue of allowing section 80G deduction for CSR expenses is no longer res integra, as various coordinate benches have consistently allowed such deductions. It held that if the donee institutions are registered under section 80G and other prescribed conditions are fulfilled, the assessee is entitled to the deduction. The Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to allow the claimed deductions for both assessment years.

Key Issues

Whether Corporate Social Responsibility (CSR) expenditure, mandated by Section 135 of the Companies Act, 2013, is eligible for deduction under Section 80G of the Income-tax Act, 1961, given the disallowance under Explanation 2 to Section 37(1) for business expenditure.