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2024 (10) TMI 1648 - AT - Income TaxDeduction claimed u/s 80G - contributions made by a company towards Corporate Social Responsibility (CSR) - HELD THAT - We find that an identical issue came up for consideration in the case of Credit Suisse Services (India) Private Limited 2024 (5) TMI 1542 - ITAT PUNE wherein the Tribunal dismissed the appeal of the Revenue relying on the decision of Allegi Services (India) Pvt. Ltd. 2020 (5) TMI 378 - ITAT BANGALORE wherein it was held that the assessee is entitled to claim deduction u/s 80G with respect to donations forming part of CSR expenses. Appeal of assessee is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issue in this judgment revolves around whether contributions made by a company towards Corporate Social Responsibility (CSR) can be claimed as a deduction under Section 80G of the Income Tax Act, 1961. The specific questions considered include:
2. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The legal framework involves Section 80G of the Income Tax Act, which allows deductions for donations to certain funds and charitable institutions, and Section 135 of the Companies Act, 2013, which mandates CSR expenditures for certain companies. The Finance Act, 2014, clarifies that CSR expenditures do not qualify as business expenditures under Section 37 of the Income Tax Act. Court's interpretation and reasoning: The Tribunal analyzed whether CSR expenditures could be considered donations under Section 80G. The Tribunal noted that the dictionary meaning of "donation" implies a voluntary act without consideration, which is not the case for mandatory CSR expenditures. However, the Tribunal also considered precedents where CSR contributions were allowed as deductions under Section 80G. Key evidence and findings: The Tribunal referenced multiple judicial precedents where similar issues were decided in favor of allowing deductions for CSR expenditures under Section 80G. The Tribunal particularly relied on the decision of the ITAT Bangalore in Allegi Services (India) Pvt. Ltd. v. ACIT, which supported the taxpayer's position. Application of law to facts: The Tribunal applied the legal principles established in previous cases to the facts of the present case. It considered the nature of the payments made by the assessee and whether they met the conditions for deductions under Section 80G. Treatment of competing arguments: The Tribunal addressed the Revenue's argument that CSR expenditures, being mandatory, do not qualify as donations. It also considered the assessee's argument that the absence of a specific prohibition in Section 80G for CSR expenditures implies eligibility for deduction, except for specific exclusions noted in the statute. Conclusions: The Tribunal concluded that CSR expenditures could qualify for deductions under Section 80G, provided they meet the necessary conditions and are not specifically excluded by the statute. The Tribunal directed the Assessing Officer to verify the conditions for deduction under Section 80G and allow the claim if satisfied. 3. SIGNIFICANT HOLDINGS The Tribunal upheld the principle that CSR expenditures can be eligible for deductions under Section 80G, aligning with prior judicial decisions. It emphasized the distinction between the disallowance of CSR expenditures under Section 37 and the potential allowance under Section 80G, provided statutory conditions are met. Core principles established:
Final determinations on each issue: The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and allowed the appeal of the assessee, directing the Assessing Officer to verify the conditions for deduction under Section 80G and grant the deduction if the conditions are satisfied.
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