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TMI Blog2018 (6) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee upto the assessment year 2014-2015 is an allowable business expenditure u/s 37 of the I.T.Act. A.O. had taken a possible view and the assessment order cannot be stated to be erroneous or prejudicial to the interest of the Revenue, warranting interference u/s 263 of the I.T.Act. Therefore, we set aside the impugned order of the CIT passed u/s 263 of the I.T.Act. - Decided in favour of assessee. - ITA No.123/Coch/2017 - - - Dated:- 11-6-2018 - Shri Chandra Poojari, AM And Shri George George K, JM For The Appellant : Sri. Govind Sastry For The Respondent : Sri.A.Dhanaraj, Sr.DR ORDER Per George George K., JM This appeal at the instance of the assessee is directed against the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring, the appellant prays that the appeal be allowed. 3. The brief facts of the case are as follows: The assessee is a company. For the assessment year 2012-2013, return was filed declaring an income of ₹ 29,26,21,280, which was subsequently revised to ₹ 22,88,55,880. The assessment u/s 143(3) of the I.T.Act was completed on 19.03.2015 determining a total income of ₹ 23,88,46,210. In the assessment completed u/s 143(3) of the I.T.Act, the Assessing Officer had allowed deduction of Corporate Social Responsibility (CSR) expenses to the tune of ₹ 44.69 lakh. 4. The Principal Commissioner of Income-tax issued notice u/s 263 of the I.T.Act, since according to him, the A.O. allowed deduction of CSR expenses wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T.Act on 09.02.2017. The CIT set aside the assessment order u/s 143(3) for fresh examination on the limited issue of deduction of ₹ 44.69 lakh claimed as CSR expenses. 7. Aggrieved by the order of the CIT passed u/s 263 of the I.T.Act, the assessee has filed the present appeal before the Tribunal. The learned AR has filed paper book comprising of 55 pages including the ledger account. Copy of the CSR expenditure, copy of the Guidelines issued by the Central Government and judicial pronouncements relied on by the assessee before the lower authorities. 8. The learned Departmental Representative, on the other hand, supported the order of the CIT passed u/s 263 of the I.T.Act. 9. We have heard the rival submissions and per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction provide that any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . It is proposed to insert a new Explanation in subsection (1) of section 37 so as to clarify that for the purpose of sub-section (1) of the said section, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l orders. The relevant findings of the Hon ble jurisdictional High Court reads as follows :- Being a company under the control of the Government, it is bound to comply with all the Government orders and the Board of Directors itself is constituted with the Government secretaries and other nominees as members. Therefore, the claim of deduction has to be considered with reference to the peculiar circumstances of the company which has no discretion in regard to the payment of the service charges to the government as it is bound to comply with the government orders. So much so, we are of the view that the parameters applicable in the case of a private company that too with respect to the claim for business expenditure, are exactly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c finding to the effect that the said CSR expenditure is allowable as business expenditure . In the above mentioned case, the Apex court has not given any decision on merits of the case. It had only given an observation and remitted the issue back to the Tribunal to give specific finding to the effect that the said CSR expenditure is allowable as business expenditure. 9.8 Since, the assessee had incurred CSR expenses to comply with the directions of Govt. of India, following the above observations made by High Court of Kerala and ITAT, Mumbai Bench, the expenditure incurred is incidental to the assessee s business and ought to be allowed as deduction u/s 37 of the I.T.Act. 9.9 Therefore, the A.O. had taken a possible view and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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