2023 (8) TMI 1469 - AT - Income Tax

Disallowance of deduction claimed u/s 80G - expenditure incurred in Corporate Social Responsibility ( CSR ) - According to the Revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction u/s 80G - HELD THAT - Coming to the Income Tax Act, 1961, there is no express provision to support the contention of Revenue. On the other hand, section 80G(2)(iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swatch Bharath Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards Swatch Bharath Kosh and Clean Ganga Fund spent as a part of CSR are not qualified for deduction under section 80G of the Act. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act. We hold that inasmuch as the assessee satisfied the conditions of section 80G of the Act, the assessee is entitled to claim deduction under section 80G of the Act in respect of such donations which formed part of the spend towards CSR. Accordingly, we hold Ground No.2 in favour of the assessee. TDS short credit - As submitted that after passing of the rectification order dated 03/09/2022, allowing the TDS credit, an amount relates to Rail Tel Corporation of India was not addressed. We, therefore, direct the AO to verify this issue and grant TDS credit in respect of Rail Tel Corporation of India also in accordance with law. Adjustment to the book profits u/s 115JB and interest under section 234C are pending with the learned Assessing Officer and a direction may be given to the learned Assessing Officer to dispose of that application expeditiously. Since the assessee sought rectification and such a request is pending before the learned AO, AO will verify the record and dispose of such an application as expeditiously as possible.

Summary

Issues Involved:
1. Disallowance of deduction u/s 80G of the Income Tax Act, 1961.
2. TDS short credit.
3. Interest u/s 234B and 234C of the Act.
4. Adjustment to book profits u/s 115JB of the Act.

Summary:

1. Disallowance of Deduction u/s 80G:
The assessee, Optum Global Solutions (India) Private Limited, claimed deductions u/s 80G for donations made as part of their Corporate Social Responsibility (CSR) activities. The Assessing Officer disallowed these deductions, citing that CSR expenditures are not voluntary and thus do not qualify for deductions u/s 80G. The assessee argued that the disallowance was based on a misinterpretation of the law, asserting that CSR expenditures, if made to eligible institutions, should qualify for deductions u/s 80G. The Tribunal agreed with the assessee, noting that the Income Tax Act does not expressly prohibit deductions for CSR expenditures under section 80G, except for donations to Swachh Bharat Kosh and Clean Ganga Fund. Therefore, the Tribunal allowed the deduction u/s 80G for the assessee.

2. TDS Short Credit:
The assessee claimed that an amount of Rs. 55,920/- related to Rail Tel Corporation of India was not addressed in the rectification order. The Tribunal directed the Assessing Officer to verify and grant the TDS credit in accordance with the law.

3. Interest u/s 234B and 234C:
Interest u/s 234B was deemed consequential. The issue of interest u/s 234C was resolved by the rectification order dated 03/09/2022.

4. Adjustment to Book Profits u/s 115JB:
For the assessment year 2018-19, the assessee's rectification application regarding the adjustment to book profits u/s 115JB and interest u/s 234C was pending. The Tribunal directed the Assessing Officer to verify and dispose of the application expeditiously.

Conclusion:
The appeals for both assessment years were partly allowed, with specific directions given for verification and rectification of certain issues. The Tribunal's decision primarily favored the assessee regarding the deduction u/s 80G for CSR expenditures.