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Facts
The Revenue preferred three appeals against the order of the CIT(A)/NFAC concerning A.Ys 2017-18, 2018-19, and 2020-21. The primary issues involved the eligibility of benefit under Section 10AA of the Income-tax Act and the allowability of deduction under Section 80G for CSR expenses.
Held
The Tribunal held that the assessee is eligible for benefits under Section 10AA based on previous decisions for similar assessment years. Regarding Section 80G, the Tribunal set aside the issue to the Assessing Officer for reconsideration, directing the assessee to furnish necessary details and documentation, as these were not provided to the Tribunal.
Key Issues
Eligibility for deduction under Section 10AA of the Income-tax Act for SEZ units, and allowability of CSR expenses as deduction under Section 80G.
Sections Cited
10AA, 80G
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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI YOGESH KUMAR U.S., & SHRI NAVEEN CHANDRA
preferred against the order of the ld. CIT(A)/NFAC, New Delhi dated 13.02.2025 pertaining to A.Ys 2017-18, 2018-19 and 2020-21.
Page 1 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services 2. Since these three appeals by the Revenue pertain to same assessee and involve common issues, they were heard together and are disposed of by this common order for the sake of convenience and brevity.
Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
At the very outset, the ld. counsel for the assessee vehemently submitted that ground 1 with respect to the issue of eligibility of benefit u/s 10AA of the Income-tax Act, 1961 [the Act, for short] in all the A.Ys under consideration is squarely covered in favor of the assessee and against the Revenue by the decision of the co-ordinate bench in assessee’s own case in earlier assessment years.
Per contra, the ld. DR fairly conceded to the same.
We have heard the rival submissions and have perused the relevant material on record. We find that the co-ordinate bench in assessee’s own case for A.Ys 2014-15 and 2016-17 at paras 7, 8 and 9 vide order and 1068/DEL/2020 has dealt with this issue and has held as under:
“7. We have heard contentions of Ld. Authorized Representatives of both the parties and perused the material available on record. We find that Ld.CIT(A) has reproduced the order of Ld.CIT(A) passed in Assessment Year 2013-14 who has given a clear finding Page 2 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services in respect of eligibility of benefit u/s 10AA of the Act. For the sake of clarity, the relevant contents of the order of Ld.CIT(A) is reproduced as under:- 8. “I have examined the issue at hand. I find that the facts and position of law is same as was obtaining in assessment year 2013- 14 wherein I had adjudicated the appeal in favour of the appellant. I had held in my appeal order dated 15.02.2018 (for A.Y 2013- 14), in paras 5,3 till 5.7 as follows- "5.3. I have examined the facts at hand. The AO has denied exemption u/s 10AA of the I.T. Act, 1961 to the Two SEZ units viz Chennai and Coimbatore unit. While treating the appellant as ineligible within the meaning of section 10AA of the I.T. Act, 1961, the AO has invoked provisions of sub section (4)(iii) of section 10AA. The AO notes at para 4.12 as follows: 4.12. It is pertinent to mention that as per the provisions of sub-section (4)(iii) of section 10AA unit should not formed by the transfer to a new business of machinery or plant previously used for any purposes. But in the instant case as per note 2.24 of the Audited Financials the asset (computed) of value of Rs.40,72,127/- were transferred to the assessee company from an existing business of a company named AXA Business service Ltd. Thus, it is clear that the assessee company violated the conditions laid down for claiming deduction u/s 10AA.
Page 3 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services
5.4. The AO is of the view that fixed assets valuing to Rs. 40,72,127/- were transferred to the appellant from an existing Page | 4 business entity- M/s AXA Business Service Ltd. The AO has inferred that these old fixed assets were used (finding mention in the audited balance sheet at para 2.24) in the formation of new SEZ Units at Chennai and at Coimbatore. However, the AO has not specified as to how and what all assets were used in the two new SEZ undertakings. The appellant has pointed out that the assets of the value of Rs. 40,72,127/- were acquired as part of running business unit of M/s AXA Business Service Pvt. Ltd vide agreement dated 13.04.2012. Para 3.5 of this agreement dated 13.04.2012 reads as follows: 3.5. Subject to the provisions of this Agreement, the Purchaser hereby agrees to purchase and the Vendor hereby agrees to sell, assign, transfer and convey to the Purchaser on the Transfer Date (in the manner and to the extent indicated in Clause 3.7), the Business, free from all Encumbrances, as a slump rate of a going concern, at and for an aggregate purchase price of INR 105, 000, 000 (Purchase Price") (Rupees One Hundred Five Million Only). Such Purchase Price to be reduced with the Working Capital" as determined close to the Transfer Date." 5.5. It has been informed by the appellant that this unit (ie. the acquired unit) is located elsewhere and was acquired as a running unit and continued operations as a non SEZ unit. The AO notes at para 4.6 of the assessment order as hereinafter4.6. Vide show
Page 4 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services cause notice dated 21.03.2016, the assessee was asked to furnish the justification of claim of deduction u/s 10AA alongwith justification of compliance of all the conditions laid down for this purpose. In response to the same the assessee has submitted its reply vide letter dated 28.03.2016 stated that “The assessee company fulfills all the requisite conditions mentioned under section 10AA of the Act for the purpose of claiming exemption. Sub-section (4) to section 10AA list out following conditions to be eligible to claim exemption. Clause of Summary of section Our Reference section submissions 10AA(4) It has begun to provide The assessee Refer From-56F services during the company has certified by the previous year relevant to begun its Chartered the assessment year operations during Accountant-Copy commencing on or after the year under enclosed as April, 01 2006 in any SEZ consideration Annexure A 4 and from the SEZ B 4. It is not formed by the The assessee company has initiated its splitting up or the separate business. reconstruction of a business already in existence It is not formed by the The assessee Details of new transfer to a new business company assets are of machinery or plant purchased all of previously used for any the new assets in enclosed purposes. its 10AA units
5.6. The appellant before me has taken an alternative plea that even if it is assumed that the computers acquired were used for the Chennai SEZ unit or Coimbatore SEZ unit, the percentage of existing plant and machinery would be 11.15% Page 5 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services or 16.72% respectively. On this basis also the appellant cannot be denied eligibility for the purposes of section 10AA of the IT. Act, 1961. 5.7. In light of the aforesaid analysis, I hold that the appellant with regard to units at Chennai and at Coimbatore SEZ is eligible for benefits within the meaning of section 10AA of the IT. Act, 1961. Accordingly grounds 3, 3.1. 3.2 and 3.3 are adjudicated in favour of the appellant."
9. Thus, on the basis of precedence as available, in the form of my own appeal order for A.Y. 2013-14, I adjudicate this issue in favour of the appellant.”
In view of the finding of Ld.CIT(A), even if it is assumed that existing plant & machinery was used at Chennai SEZ or Commercial SEZ even then the value would be lower than 50%. This finding is not controverted by the Revenue. Therefore, we do not find any merit in the appeal of the Revenue, the same is hereby dismissed. Grounds raised
by the Revenue are accordingly, dismissed.
9. In the result, the appeal of the Revenue is dismissed.” “8. In view of the finding of Ld.CIT(A), even if it is assumed that existing plant & machinery was used at Chennai SEZ or Commercial SEZ even then the value would be lower than 50%. This finding is not controverted by the Revenue. Therefore, we do not find any merit in the appeal of the Revenue, the same is hereby dismissed. Grounds raised by the Revenue are accordingly, dismissed.
9. In the result, the appeal of the Revenue is dismissed.”
Page 6 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services 7. Finding parity of facts, respectfully following the decision of the coordinate bench (supra), we direct the Assessing Officer to delete the addition. Ground Nos. 1 and 2 in A.Y 2017-18, Ground No. 1 in A.Y 2018- 19 and Ground No. 1 in A.Y 2020-21 is dismissed in all the three years under consideration.
8. Ground No. 2 in A.Y 2018-19 relates to allowing of depreciation by the ld. CIT(A) in the absence of separate books of account for respective units has also been decided by the CIT(A) in favour of the assessee and confirmed by the aforesaid ITAT decision. In view of the same, the ground is dismissed.
The only other issue left for our adjudication vide Ground No. 2 in A.Y 2020-21 relates to the action of the ld. CIT(A) in allowing relief u/s 80G of the Act amounting to Rs. 1,14,37,082/-.Brief fact on this issue is that the assessee has claimed deduction on amount paid to HCL Foundation u/s 80G of the act amounting to 1,14,37,082/- out of CSR expense amounting to Rs. 2,28,74,164/- which was disallowed on the ground that the CSR expenses are mandatory while donation are voluntary to be eligible for deduction u/s 80G.
The ld AR of the assessee relied on the decision of ITAT ‘C’ Bench Delhi in the case of Interglobe Technology Quotient (P) Ltd vs ACIT:
[2024] 163 taxmann. com 542 (Del Trib.) dated 28/05/2024 where the Page 7 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services ITAT has allowed the deduction u/s 80G in the case of contribution towards CSR. The ld AR also relied on the decision of ITAT Delhi “B”
Bench in the case of Cheil India (P.) Ltd. Vs. Deputy Commissioner of (Delhi) OF 2024[A.Y.-2020-21] Dated 28/10/2024.
Per contra, the ld DR relied heavily on the orders of the AO.
We have heard the rival submissions and have perused the relevant material on record. We find that the issue of allowability of CSR expense as donation u/s 80G is squarely covered in favour of the assessee and against the Revenue by the order of the co-ordinate bench. There are however, certain conditions enumerated in section 80G of the Act which are to be fulfilled before deduction are claimed and allowed. The co- ordinate Delhi bench in order dated 22.04.2019, in the case of Max New York Life Insurance Company for A.Y 2006-07 has captured the conditions and held as under:
“41. The 2nd additional ground is with respect to the claim of deduction u/s 80G of the income tax act with respect to the donation disallowed in the hands of the assessee. As the donation expenditure has been disallowed in the hands of the assessee and added to the total income of the assessee naturally, the assessee is entitled to deduction under Chapter VI-A of the income tax act with respect to the donation u/s 80G of the act. As the requisite details as required by that section has not been furnished before Page 8 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services us we direct the assessee to furnish the relevant information before the assessing officer in accordance with the law to claim any deduction under section 80G of the income tax act along with all donation receipts and the 80G certificates issued by the Donee to the assessee within one month of this order. The learned assessing officer may verify the detail in accordance with the law and if found proper, may grant the deduction. Accordingly, the 2nd additional ground of the appeal of the assessee is allowed with above direction.”
In view of the fact that deduction u/s 80G is dependent on meeting certain criteria as provided in law, we set aside the issue of claim of CSR expense made to HCL Foundation to be considered for deduction u/s 80G, to the file of the Assessing Officer, with the direction that as the requisite details as required by section 80G has not been furnished before us, the assessee shall furnish the relevant information before the AO to claim for deduction under section 80G of the Income Tax Act along with all donation receipts and the 80G certificates issued by the Donee to the assessee. The Assessing Officer shall verify the detail in accordance with the law and if found proper, shall allow such CSR expense for deduction u/s 80G. We accordingly allow the ground Nos 2 with the above directions.
Page 9 of 11 to 2504/DEL/2025 [A.Y. 2017-18, 2018-19 and 2020-21] Statestreet Corporate Services 14. In the result, the appeals of the Revenue in: is dismissed. is partly allowed for statistical purposes.
The order is pronounced in the open court on 27.10.2025.