DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), PUNE, PUNE vs. CREDIT SUISSE SERVICES (INDIA) PRIVATE LIMITED , PUNE

PER SATBEER SINGH GODARA, J.M. :

This Revenue’s appeal for assessment year 2020-21,

arises against the CIT(A), Pune-12, Pune's Din and Order No.

ITBA/APL/S/250/2023-24/1057876023(1), dated 10.11.2023, in

proceedings u/s.143(3) of the Income Tax Act, 1961 (in short

“the Act”).

Heard both the parties. Case file perused.

grounds in the instant appeal :

2 ITA.No.44/PUN./2024

1) “On the facts and the circumstances of the case and in

law, the Ld. CIT(A) erred in allowing assessee's ground

challenging the disallowance of deduction of

Rs.4,55,13,521/- u/s 80G of the Income-tax Act, 1961

made by the Assessing Officer. 2) On the facts end the circumstances of the case and in law,

the Ld. CIT(A) erred by setting aside the matter back to the

AO for verification.”

attention to the CIT(A)'s impugned detailed discussion

allowing the assessee’s sec.80G deduction claim as under :

“5. Decision

I have carefully perused grounds of appeal, facts of the

case, submissions made by the Appellant, assessment

order and other evidences on records.

5.1. Ground 1 Vide this Ground, the Appellant has challenged

action of the AO in making the disallowance of

Rs.4,55,13,521/- u/s 80G with respect to the donations

forming part of Corporate Social Responsibility (‘CSR’). In

this regard, the Appellant has submitted that :

• The amount paid to various funds is without

any consideration in return and is in the nature

3 ITA.No.44/PUN./2024

of irrevocable contribution. Thus, such

contributions partake the character of donation • Since, all other requisite conditions under

section 80G have been satisfied and not in

dispute, the Appellant is eligible for deduction

under section 80G of the Act. The institution to

whom the Donations are made are duly

registered under section 80G(5) of the Act • The CSR expenditure is not allowed only for the

purpose of section 37 for computing business

income. If such expenditure is otherwise

allowable as deduction under other provisions

of the Act, the same cannot be disturbed. • The donations/expenditure made by the

Appellant is towards women empowerment,

education, environmental research etc. and

forms part of CSR expenditure as per Schedule

VII of the Companies Act, 2013. • The legislature has restricted the benefit only in

two specific cases being ‘Swachh Bharat Kosh’

(‘SBK’) and ‘Clean Ganga Fund’ (‘CGF’) as per

sub-clause (iiihk) and (iiihl) of section 80G(2)(a)

of the Act, thereby implying that CSR

contribution to other eligible institution qualifies

for deduction under section 80G of the Act. The

4 ITA.No.44/PUN./2024

Appellant has made CSR contribution to funds

other than SBK and CGF, thus, claim under

section 80G of the Act shall be allowed. • The said claim, as discussed above, is

supported by the Explanatory Memorandum to

Finance Bill 2014 with restriction placed only in

relation to specified funds under section 80G,

clarification issued by MCA and multiple

favourable decisions.

I have considered the submissions made by the

Appellant. I find that the issue is covered in favour of

the Appellant by various decisions of Hon’ble

Tribunals. I find that Hon’ble ITAT Bangalore in the

case of Allegi Services (India) Pvt Ltd vs ACIT, (ITA

No.1693/Bangalore/2019) has decided this issue in

favour of the assessee. Relevant part of the said

decision is reproduced as under :

“Brief facts of the case are as under: 2. Assessee is a company and filed its return

of income on 30/11/2016 declaring income of

Rs.73,44,38,310/-. The case was selected for

scrutiny and notice under section 143 (2) and

142 (1) along with questionnaire was issued to

assessee. In response to statutory notices,

5 ITA.No.44/PUN./2024

representative of assessee appeared before

Ld.AO and filed requisite details as called for.

assessee observed that assessee claimed

deduction amounting to Rs.8,40,000/- under

section 80 G of the Act, towards donation paid.

Ld.AO was of the opinion that claim made

under section 80 G of the Act, was not

allowable as the amount was forming part of

CSR expenses debited to profit and loss

account. Ld.AO was of the opinion that donation

made outside CSR expenses was only eligible to

be claimed under section 80 G of the Act.

…………………………

section 30 to 36 are claimed while computing

income under the head, ‘Income form Business

and Profession”, where as monies spent under

section 80G are claimed while computing ‘‘Total

Taxable income” in the hands of assessee. The

point of claim under these provisions are

different.

clear and unambiguous, since expenditure

6 ITA.No.44/PUN./2024

incurred under section 30 to 36 are excluded

from Explanation 2 to section 37(1) of the Act,

they are specifically excluded in clarification

issued. There is no restriction on an expenditure

being claimed under above sections to be

exempt, as long as it satisfies necessary

conditions under section 30 to 36 of the Act, for

computing income under the head, “Income from

Business and Profession”.

deductions are considered at the stage of

computing “Total taxable income”. Even if any

payments under section 80G forms part of CSR

payments ( keeping in mind ineligible deduction

expressly provided u/s.80G), the same would

already stand excluded while computing,

Income under the head, “Income form Business

and Profession". The effect of such disallowance

would lead to increase in Business income.

Thereafter benefit accruing to assessee under

Chapter VIA for computing “Total Taxable

Income” cannot be denied to assessee, subject

to fulfillment of necessary conditions therein.

7 ITA.No.44/PUN./2024

arguments advanced by Ld.Sr.DR.

that all payments forming part of CSR does not

form part of profit and loss account for

computing Income under the head, “Income from

Business and Profession”. It has been

submitted that some payments forming part of

CSR were claimed as deduction under section

80G of the Act, for computing “Total taxable

income”, which has been disallowed by

authorities below. In our view, assessee cannot

be denied the benefit of claim under Chapter VI

A, which is considered for computing ‘Total

Taxable Income”. If assessee is denied this

benefit, merely because such payment forms

part of CSR, would lead to double disallowance,

which is not the intention of Legislature.

view, authorities below have erred in denying

claim of assessee under section 80G of the Act.

We also note that authorities below have not

verified nature of payments qualifying

exemption under section 80G of the Act and

8 ITA.No.44/PUN./2024

quantum of eligibility as per section 80G(1) of

the Act.

remitting the issue back to Ld.AO for verifying

conditions necessary to claim deduction under

section 80G of the Act. Assessee is directed to

file all requisite details in order to substantiate

its claim before Ld.AO. Ld.AO is then directed to

grant deduction to the extent of eligibility.

Accordingly grounds raised by assessee stands

allowed for statistical purposes.

In the result appeal filed by assessee stands

allowed."

In view of the above facts and respectfully

following the decision of Hon’ble ITAT Bangalore in

the case of Allegi Services (India) Pvt Ltd (supra), I am

of the considered view that the appellant is entitled

to claim deduction u/s 80G with respect to the

donations forming part of CSR expenses. However, in

this regard, I direct the AO to verify whether the

Appellant satisfies the requisite conditions prescribed

for deduction u/s 80G. In case it satisfies the

conditions for deduction u/s 80G, the claim of Rs.

4,55,13,521/- has to be allowed. If found contrary,

9 ITA.No.44/PUN./2024

the stand of the AO stands confirmed. The AO is

directed to give effect by passing a speaking order.

The Appellant is directed to furnish all relevant

details online before the AO for verification. Ground

is, thus, allowed for statistical purpose.”

Revenue’s pleadings that the Ld. CIT(A)'s herein has erred in

law and on facts in accepting the assessee’s sec.80G deduction

claim of Rs.4,55,13,521/- qua “CSR expenditure” not exigible

for relief u/sec.37 of the Act.

CIT(A)'s above extracted detailed discussion.

foregoing rival stands and find no merit in the Revenue’s

instant sole substantive grievance. Suffice to say, the

Revenue’s only argument is that once the impugned

expenditure is not allowable u/sec.37 of the Act; the same is

also not exigible to sec.80G deduction as well. We find no

substance in Revenue’s instant sole substantive grievance as

the Ld. CIT(A)'s detailed discussion has considered a catena of

case law of various judicial forums (supra) already accepting

the very issue in assessee’s favour and against the

department. We thus adopt judicial consistency herein as well

10 ITA.No.44/PUN./2024

to uphold the Ld. CIT(A)'s detailed discussion accepting the

assessee’s sec.80G deduction claim. Rejected accordingly.

No other ground or argument has been pressed

before us.

Order pronounced in the open Court on 15.05.2024.

Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] VICE PRESIDENT JUDICIAL MEMBER

Pune, Dated 15th May, 2024

VBP/-

Copy to

//By Order//

//True Copy //

Sr. Private Secretary, ITAT, Pune Benches, Pune.