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TMI Blog2023 (6) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... al Member For the Assessee : Shri Rashmikant C. Modi a/w Ms. Ketaki Rajeshrike For the Revenue : Shri Anil Kumar Das ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 21/02/2023, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [ learned CIT(A) ], for the assessment year 2020-21. 2. In this appeal, the assessee has raised the following grounds:- (A) Denial of Deduction u/s. 80G 1) The learned Commissioner of Income Tax (Appeals) [CIT(A)] erred on facts and in law in confirming the order passed by the DCIT Assessment Unit (AO) rejecting the appellant's claim of deduction u/s. 80G. 2) The learned CIT(A) erred in fact law by not appreciating that the deduction of the items covered under Part No. A B under of Chapter VIA was allowed in AY 2020-21, under the then existing provision of Section 115BAA. 3) The learned CIT(A) erred on facts and in law in not appreciating the fact that the amendment in the provisions of Section 115BAA disallowing deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Social Responsibility ( CSR ) activity, provided the payment is made to eligible entities as listed in section 80G of the Act. The assessee suo moto disallowed CSR expenses under section 37(1) of the Act, however, claimed deduction under section 80G of the Act. 5. The Assessing Officer ( AO ) vide order dated 08/09/2022 passed under section 143(3) read with section 144B of the Act did not agree with the submissions of the assessee and held that under section 80G the sums paid need to be donation for the purpose of being eligible for deduction under the said section. It was further held that the amount paid by the assessee should be voluntary to become eligible for deduction under section 80G of the Act. However, in the present case, the same was paid by the assessee as a mandatory requirement as per section 135 of the Companies Act, 2013. The AO further held that there should be an element of charity and voluntary for being considered as a donation for the purpose of claiming deduction under section 80G of the Act, which is missing in the present case. Accordingly, the AO disallowed the deduction claimed by the assessee under section 80G of the Act. 6. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Income-tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clare that for the purposes of section 37(1) any expenditure incurred by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, Income from Business an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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