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2024 (6) TMI 8 - AT - Income TaxDenial of deduction u/s 80G - donations made as part of CSR expenditure were considered - Admittedly the donations made as part of CSR expenditure were suo-motu disallowed by the appellant u/s 37(1) - HELD THAT - As CSR expenditure is application of income of the assessee under the Income Tax Act, that means it continues to form part of the Total income of the assessee. Section 80G(1) of the Act provides that in computing the total income of an assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Section 80G(2) lists down the sums on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no correlation between suo-moto disallowance in section 37(1) and claim of deduction under section 80G of the Act. As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of donee. CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. The Act permits deduction of donations as per Section 80G of the Act, even though, assessee is not gaining any benefit out of any reciprocity from donee. Similar is the case of CSR expenditure. Thus the reasoning of Tax Authority, the CSR expenditure is mandatory, does not justify disallowance of these expenditures u/s 80G, if other conditions of section 80G are fulfilled. There is no allegation of Revenue that other conditions of Section 80G are not fulfilled. We, thus sustain the ground. Not allowing credit of TDS - HELD THAT - DR could not dispute the fact that the aforesaid issue now stands covered in favour of the applicant vide order dated 07.06.2022 passed by Tribunal in the case of applicant's group company, viz Inter Globe Enterprises Ltd 2022 (8) TMI 98 - ITAT DELHI wherein the Co-ordinate bench has categorically held that the credit of TDS should be allowed in the same year in which the income has been claimed to have accrued / arisen and included for determination of taxable income. The income was offered to tax in the year under consideration i.e., assessment year 2020-21, so the appellant had rightly claimed credit of TDS in the year under consideration and the action of the assessing officer/ CIT(A) in not allowing the credit deserves to be reversed. Appeal of assessee is allowed.
Issues Involved:
1. Denial of personal hearing by CIT(A). 2. Disallowance of deduction claimed u/s 80G of the Act. 3. Non-allowance of credit of TDS. 4. Levy of interest u/s 234A/B/C of the Act. Summary: 1. Denial of Personal Hearing by CIT(A): The appellant contended that the CIT(A) erred in passing the order without granting a personal hearing, violating principles of natural justice and provisions of section 250 of the Income Tax Act, 1961, and the faceless appeal scheme. The Tribunal noted that nothing was submitted regarding this ground during the hearing. 2. Disallowance of Deduction Claimed u/s 80G of the Act: - The appellant claimed a deduction u/s 80G for donations made till 30th July 2020. The CIT(A) disallowed the deduction for donations made after 31.03.2020, not considering the extended deadline under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. - The CIT(A) also disallowed deductions for donations forming part of CSR expenditure, holding them as non-voluntary and thus not eligible u/s 80G. The Tribunal disagreed, citing multiple judgments, including those from the Bangalore and Delhi Benches, which held that CSR expenditures, if meeting the conditions of section 80G, are eligible for deduction to avoid double disallowance. - The Tribunal directed the AO to allow the deduction u/s 80G after verifying that the payments qualify as donations under that section. 3. Non-Allowance of Credit of TDS: - The appellant followed an accrual system of accounting and claimed TDS credit for income offered to tax in the year under consideration, despite the TDS being reflected in the Form 26AS for the subsequent year. - The Tribunal noted that the AO and CIT(A) did not provide an opportunity to reconcile the TDS and corresponding income. It held that as per section 199 of the Act read with Rule 37BA, TDS credit should be allowed in the year the income is offered to tax. - The Tribunal referenced a similar case involving the appellant's group company, where the Co-ordinate Bench allowed TDS credit in the year the income was reported. Thus, the Tribunal directed to allow the TDS credit of Rs. 3,87,50,028 in the year under consideration. 4. Levy of Interest u/s 234A/B/C of the Act: The Tribunal did not specifically address this issue in the judgment, focusing instead on the primary grounds of appeal. Conclusion: The appeal of the assessee was allowed, with directions to the AO to allow deductions u/s 80G after verification and to grant TDS credit in the year the income was offered to tax. The order was pronounced in open court on 28.05.2024.
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