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TMI Blog2021 (1) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... hat authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) - we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. Considering new claim of the assessee without any revised return by FAA - Non-grant of deduction for gratuity - assessee submitted before the CIT(Appeals) that it had created a provision for gratuity - HELD THAT:- As rightly pointed out by the ld. AR, the first appellate authority has powers to entertain additional claims, even if the same was not made in the return of income. This was fortified by the judgment of the Hon ble Bombay High Court in of Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] - Being so, in our opinion, the assessee in principle is entitled to claim deduction of gratuity paid before the appellate authorities. Accordingly, we remit this issue to the file of AO to quantify the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for deduction under Section 80G of the Act. The meaning of word 'donation' has not been given in the Act. The dictionary meaning of the word 'donation' is that it is a gift for charity, humanitarian aid, or to benefit a cause. A donation may take various forms, including money, alms, services, or goods such as clothing, toys, food, or vehicles. A donation may satisfy medical needs such as blood or organs for transplant. However for the purpose of Section 80G of the Act, it is the donations which are in nature of 'sum paid' or money which are relevant. Further the dictionary meaning of the word donation refers to an amount paid voluntarily by a person and that too without any consideration as the donation is gift . The voluntary act on the part of donor is thus an essential element to treat the amount paid as a donation. In the case under consideration the amount has not been paid by the assessee to the eligible entity specified in Section 80G of the Act on a voluntary basis. But the same has been paid by it as the assessee was mandatorily required to spend such an amount for specified activities as per the provisions of Section 135 of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expenditure incurred by the assessee for the purposes of the business or profession. 11. This amendment will take effect from 1/04/2015 and will, accordingly, apply to assessment year 2015-16 and subsequent years. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head Income form Business and Profession . Further, clarification regarding impact of Explanation 2 to section 37(1) of the Income Tax Act in Explanatory Memorandum to The Finance (No.2) Bill, 2014 is as under: The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditure cannot be allowed under the existing provisions of section 37 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which deduction is available. a) Certain donations, give 100% deduction, without any qualifying limit like Prime Minister's National Relief Fund, National Defence Fund, National Illness Assistance Fund etc., specified under section 80G(1)(i) b) Donations with 50% deduction are also available under Section 80G for all those sums that do not fall under section 80G(1)(i). Under Section 80G(2) (iiihk) and (iiihl) there are specific exclusion of certain payments, that are part of CSR responsibility, not eligible for deduction u/s80G. 14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, Income form Business and Profession , where as monies spent under section 80G are claimed while computing Total Taxable income in the hands of assessee. The point of claim under these provisions are different. 15. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Coordinate Bench in the case of Allegis Services (India) Ltd. (supra) , taking a consistent view, we remit the issue back to the file of the Assessing Officer with similar directions as contained in the aforesaid order of the Tribunal and for decision afresh in accordance with law. 11. The next ground is with regard to non-grant of deduction for gratuity amounting to ₹ 17,87,315. The brief facts are that the AO denied deduction of gratuity paid. The assessee submitted before the CIT(Appeals) that it had created a provision for gratuity amounting to ₹ 1,4769,903 and that ₹ 44,22,139 was actually paid to the employees. In its return of income, the assessee had erroneously claimed deduction to the extent of ₹ 26,34,825 only and the net provision of ₹ 1,21,35,078 was disallowed in the computation. During the pendency of the assessment proceedings, the same was brought to the notice of the AO, however, the AO has not granted deduction towards the balance amount of gratuity paid of ₹ 17,87,315 and prayed that the same may be allowed. 12. The CIT(Appeals) observed that undisputedly the above claim was not made by the assessee in its retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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