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2022 (12) TMI 640 - AT - Income TaxDisallowance of Corporate Social Responsibility (CSR ) expenses - allowable expenses u/s 37(1) - Expenses incurred under the directions of DPE Govt. of India requiring Companies to spend a prescribed percentage of its profits on CSR-and also made mandatory under the Companies Act 2013 - HELD THAT - Respectfully following the order of coordinate bench of ITAT Delhi for A.Y. 2013-14 - We hold that the Explanation 2 to section 37(1) of the Act is applicable from A.Y. 2015-16 and onwards and not prior to the amendment including A.Y. 2014-15, therefore ground no. 1.1 1.2 are allowed. Charging of interest u/s. 234 A - Assumption of date of filing of return - HELD THAT - On carefully consideration of submissions of the assessee undisputedly assessee company is a joint venture company owned equally 50% each by Steel Authority of India Ltd (SAIL) and Damodar Valley Corporation Ltd (DVC) which are Central Public Sector undertakings. Therefore due date for filing of return as per Explanation 2 to section 139(1) of the Act for A.Y. 2015-16 was 30.09.2015. This fact has been controverted by the Ld. Senior D.R. that the company has electronically uploaded its return of income and from 3CEB on 30.09.2015, as also has been mentioned in assessment order para 1. Therefore interest u/s. 234A of the Act is not liable of the assessee hence ground no 2 is allowed.
Issues:
1. Disallowance of Corporate Social Responsibility (CSR) expenses for Assessment Years 2014-15 & 2015-16. 2. Disallowance of interest charged under section 234A for Assessment Year 2015-16. Analysis: Issue 1: Disallowance of CSR Expenses The assessee appealed against the disallowance of CSR expenses of Rs. 95.10 lakhs for both years under the directions of DPE Govt. of India and Companies Act 2013. The assessee argued that Explanation 2 to Section 37(1) was not applicable to years till A.Y. 2015-16. The Tribunal noted that in a previous case for A.Y. 2013-14, a similar issue was decided in favor of the assessee. The Tribunal held that as a public sector undertaking (PSU), the assessee was directed by the Government of India to spend a specified percentage of profits on CSR, which was in line with national objectives. Various High Court judgments and ITAT decisions supported the allowability of such expenses as business expenditure. The Tribunal ruled that Explanation 2 to Section 37(1) applied from A.Y. 2015-16 onwards, not for prior years, and directed the deletion of the disallowance. Issue 2: Disallowance of Interest under Section 234A Regarding the interest charged under section 234A for Assessment Year 2015-16, the assessee contended that the company uploaded Form 3CEB and the Income Tax Return on 30th November 2015, within the due date of 30th September. The Tribunal considered that the assessee, a joint venture of two Central Public Sector undertakings, had met the due date requirements as per Explanation 2 to section 139(1) of the Act. The Senior D.R. argued otherwise but failed to provide evidence to contradict the filing date. Consequently, the Tribunal allowed the appeal, ruling that interest under section 234A was not applicable to the assessee. In conclusion, the Tribunal allowed the appeals of the assessee concerning the disallowance of CSR expenses and the interest charged under section 234A for Assessment Year 2015-16. The judgments were based on the applicability of Explanation 2 to Section 37(1) and the timely filing of necessary documents by the assessee.
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