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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Dispute Resolution Panel-2, Delhi (hereinafter referred to as the “Ld. DRP”] dated 01.04.2024 for the AY 2020-21. 2. In the various grounds of appeal the common issue has been raised challenging the order passed by the Ld. DRP affirming the disallowance of the claim u/s 80G of
Facts in brief are that the assessee spent a sum of Rs. 12,54,000/- towards donation paid for CSR expenses in terms of the provisions of the Companies Act. The said amount was paid as donation to some institution which was holding exemption certificate u/s 80G of the Act, meaning thereby the donation made to the said institution would entitle the assessee to claim exemption u/s 80G of the Act. Accordingly, the assessee while filing the return of income in its computation of total income added back the entire donation of Rs. 12,54,000/-. However, the claimed of deduction u/s 80G @ 50% which works out to Rs. 6,27,000/-. According to AO, the assessee was not entitled to the said benefit of 80G as the donation was made under CSR expenses in accordance with the provisions of Companies Act and proposed the addition of RS. 6,27,000/- in the draft assessment order which was finally affirmed by the DRP and added in the final assessment order.
After hearing the rival contentions and perusing the material on record, we find that nonetheless the assessee has made payment under CSR expenses amounting to Rs. 12,54,000/- but it is undisputed that the same was not claimed as deduction while computing the income as is apparent from the computation filed before us during the course of hearing as the deduction claimed in the profit and loss account was added back to the income in the computation of income suo-motto. We note that the deduction u/s 80G @ 50% amounting to Rs. 6,27,000/- was claimed. In our opinion, there is no bar in claiming the said deduction u/s 80G of the Act. Moreover the case finds support from the decision of Co-ordinate Bench in the case of Britannia Industries Ltd. vs. DCIT in [2024] 161 taxmann.com 393 (Kolkata-Tribunal) wherein the Co-ordinate Bench has held as under:
“16. We have heard both the parties and perused the relevant provisions of the Act. It is noted that the provisions of Section 37 of the Act, which deals with allowability of expenses incurred in the course of and for the purposes of business, is applicable only to the extent of computation of ‘Business Income’ under Chapter IV-C of the Act. In our view, therefore, the Explanation (2) to Section 37 of the Act which denies deduction for the expenses incurred on CSR initiative Assessment Year: 2020-21 Linde Global Support Services Pvt. Ltd. by way of deduction from computation of ‘Business Income’ cannot be read into Chapter VI of the Act, which is applicable for arriving at taxable income from the Gross Total Income. It is also noted that wherever the Legislature intended that CSR contributions to any specific charitable trusts should be denied deduction, necessary provisions were incorporated in the specified subclauses, viz. sub-clauses (iiihk) and (iiihi). It is noted that no such debar has been set out by the Legislature in any other sub-clauses of Section 80G of the Act. As far as the reasoning given by the AO to deny the deduction is concerned, we find the same to be of no relevance as the same is not borne out from the provisions contained in Section 80G of the Act. Rather, we find the reliance placed by the Ld. AR of the appellant on the decision of this Tribunal at Kolkata in the case of JMS Mining Pvt. Ltd. vs PCIT in dated 1st July 2021 to be relevant. In the instant case also, the Tribunal after considering the provisions of Explanation (2) to Section 37 of the Act and Section 80G of the Act, observed that the Parliament intended restrictions to CSR expenditure spent by way of donations to only two funds/trusts i.e. Swachh Bharat Kosh and Clean Ganga Fund. The Tribunal thus held that, the fact that specific prohibition/restriction has been made for CSR contributions only to two eligible charitable organizations, then it automatically implies that there is no prohibition/restriction in respect of claim of CSR expenses, in any other cases, which are otherwise eligible under Section 80G of the Act. Following the same, this Tribunal in the case of Acme Chem Ltd Vs ACIT in ITA No. 650/Kol/2022 dated 31.03.2023 has deleted similar disallowance made by the AO u/s 80G of the Act in relation to the CSR donations made to registered charitable trusts, by observing as follows :- "60. We fail to find any merit in this action of ld. AO which has been subsequently confirmed by ld. CIT(A) for the reason that CSR expenses incurred by the assessee already stands disallowed in the computation of income. Now, Section 80G of the Act comes into play if any of the donations is eligible for deduction u/s 80G of the Act. It is not in dispute before us that the organizations to which the alleged donation has been given are registered u/s 12A of the Act holds the approval of Section 80G of the Act. This Tribunal in the case of M/s. JMS Mining Pvt. Ltd. vs PCIT in ITA No. 146/KOL/2021 order dated 22.07.2021 has allowed the deduction u/s 80G of the Act on CSR expenses. The relevant finding of this Tribunal is reproduced below: 23. As discussed supra, we concur with the contention of the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under Section 80G of the Act. In this context we find that the assessee has made donation of Rs. 1.25 crores on 20.01.2016 by RTGS dated 19.01.2016 through UCO Bank which is evident from page 18 of PB which is received by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of Rs. 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 & 23 and the approval u/s 80G (5)(vi) of the Act in respect of Pt. Jashraj Music Academy Trust is found placed at page 19 of PB dated 30.03.2012 given by Director of Income Tax (Exemption). Therefore, since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee's claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view and is in line with the ratio of the decision of Tribunal cited (supra). Therefore, we find that the Ld. PCIT has not been able to make out a case that on this issue raised by him, the AO's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking PCIT u/s 263 of the Act is bad in law and therefore need to be quashed and we order accordingly.
Assessment Year: 2020-21 Linde Global Support Services Pvt. Ltd.
In the result, the appeal of the assessee is allowed."
We, therefore, respectfully following the decision referred herein above, are inclined to hold that the assessee is eligible for deduction u/s 80G of the Act at Rs. 17.50 lakh and thus, set aside the finding of ld. CIT(A) and allow ground nos. 8 & 9 raised by the assessee for AY 2017-18.” Since the facts of the instant case before us is substantially similar vis-a-vis order passed by the Co-ordinate Bench, we therefore, respectfully following the same, set aside the order passed by the DRP/AO and direct to allow the deduction u/s 80G of the Act. In the result, the appeal of the assessee is allowed. 5.