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TMI Blog2023 (12) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has made payment to the approved gratuity fund which need to be verified by the AO. Thus we set aside the impugned order of Ld. CIT(A) and restore this issue back to the file of AO for the limited purpose of verification whether sum paid to the approved gratuity fund on or before the due date of filing of return; and the AO after verification find the claim to be correct to allow it. Disallowing deduction u/s 80G - CSR expenditure - HELD THAT:- Since the facts have not been verified by the AO (whether donees enjoyed certificate u/s 80G of the Act, the amount of donation etc need to be verified), the AO to do so and after the ratio of the aforesaid judicial precedent (supra) is applied to the facts of the case, to allow the same in accordance to law. Appeal of the assessee is allowed for statistical purposes. - SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM For the Assessee : Shri Yogesh Thar/Chaitanya Joshi For the Revenue : Shri Ram Krishna Kedia ( Sr. AR ) Shri Virabhadra Mahanjan ( SR. AR ) ORDER PER ABY T. VARKEY, JM : This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax-50, Mumbai da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn filed by it. However, it raised additional claim before the AO which was not accepted by him by citing the decision of the Hon ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) (284 ITR 323) wherein it was held by the Hon ble Apex Court that the AO can entertain a new claim only if an assessee files a revised return of income. Therefore, he rejected the claim of the assessee. Before the Ld. CIT(A), the assessee filed copy of TAR (tax audited report) and submission, which shows that an amount of Rs.1,19,07,199/- was paid before the due date of furnishing the return of income u/s 139(1) of the Act by reflecting the nature of liability as gratuity in para 26(i)(B)(a) of the Act in the return of income (Refer page 74 of PB). The Ld. CIT(A) noted that appellant had made the claim for deduction of balance gratuity expenses of Rs.83,69,981/- by claiming it to be gratuity paid and contended before him that the same is part of the total expenditure of Rs.1,41,57,199/-, part of which is Rs.22,50,000/- which amount has been paid during the year under consideration and the balance of Rs.1,19,07,199/- has been paid before the date of filing of return hence the same is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seen from a perusal of note 35 placed at page no. 49 PB classified as re-measurements of the defined benefit plans . According to the Ld. AR, the following chart will demonstrate the deduction claimed by assessee which reads as under : - Particulars Amount Amount debited to Profit Loss A/c 57,87,218 Amount debited to other Comprehensive Income A/c (OCI) 83,69,981 Total 1,41,57,199 Amount paid during the year 22,50,000 Amount paid before due date for filing of ROI 1,19,07,199 Total 1,41,57,199 6. Thus, according to Ld. AR, a perusal of the chart would re-concile the claim of deduction made by assessee. The Ld. AR also brought to our notice that the AO allowed similar claim for AY. 2019-20, AY. 2020-21 AY. 2021-22 by allowing similar claim of deduction to the tune of Rs.1,01,17,988/-, Rs.27,97,595 and Rs.90,01,492/- respectively in assessment framed u/s 143(3) of the Act aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. 8. The assessee s case is that an amount of Rs.83,69,981/- has been paid as gratuity before the due date in filing of return of income to approved gratuity fund accordingly the said amount was allowable u/s 36(1)(v) r.w.s 43B of the Act. 9. Section 40A of the Act reads as under: - Expenses or payments not deductible in certain circumstances 40A. (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head profits and gains of business or profession . (2)(a) . (7)(a) Subject to the provisions of clause (b), no deduction shall be allowed in respect of any provision (whether called as such or by any other name) made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason. (b) Nothing in clause (a) shall apply in relation to any provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court in the case of Goetze (India) Ltd. (supra). On appeal, the Ld. CIT(A) noted that during year assessee had spent Rs.46,10,000/- including an amount of donations of Rs.45,50,000/- towards Corporate Social Responsibility (CSR) which amount (Rs.46,10,000/-) was added back in the computation of income. However, the assessee made the claim for deduction u/s 80G of the Act and submitted copy of certificate u/s 80G of the Act of the donees. However, since the claim was made before the AO after time limit for filing of revised return, the assessee made the claim as well as filing the relevant details, summary of the list of the donations and copy of the list including the certificate of the donees to support its claim u/s 80G of the Act. The Ld. CIT(A) noted that the claim of Rs.45,50,000/- (in respect of claim of additional deduction of Rs.22,75,000/-) has been spent as part of the CSR activities. And therefore, according to him it cannot be allowed in term of Explanation-2 u/s 37(1) of the Act which stipulated as under: - [Explanation 2,- For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee Company as per Section 135 of the Companies Act are not entitled to deduction u/s 37(1) of the Act for A.Y 2015-16 by virtue of the fetter placed by Explanation 2 to Section 37(1) of the Act which was inserted by the Finance Act vide no. 2.2014. The relevant provisions of Explanation 2 to Section 37(1) of the Act read as follows: Explanation 2. -For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013)27 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession From a plain reading of the above provision shows that, any expenditure incurred towards CSR activities as referred to in Section 135 of the Companies Act, 2013 shall not be allowed as business expenditure and shall be deemed to have not been incurred for purpose of business. The embargo created by this Explanation 2 inserted in Section 37 of the Act by the Finance (No.2) Act, 2014 was to deny deduction for CSR expenses incurred by companies, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear as donations to (i) .. (ii) (iiihk). The Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under subsection (5) of Section 135 of the Companies Act, 2013 (18 of 2013); or (iiihl). The Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under Sub-section (5) of Section 135 of the Companies Act, 2013) (18 of 2013). (iv). Any other fund or any institution to which section applies; or (3) . (4) . (5) This Section applies to donations to any institution or fund referred to in Sub-clause (iv) of Clause (a) of Sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following condition namely: (i) . (a) . (b) (c) (ii) (vi) in relation to donations made after the 31st day of March, 1992 , the institution or fund is for the time being approved by the PCIT or Commissioner in accordance with the rules 3 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80G (4)]. However, such a restriction in respect of expenditure made by an assessee to any other fund or institution as referred to in sub clause (iv) of clause (a) of sub-section 2 of section 80G of the Act had not been placed by the Legislature. And if the Parliament desired, it could have been made such kind of restriction or any restriction like in the case of donation to Swach Bharat Kosh Clean Ganga Fund. So the assertion of Ld. PCIT that AO could not have allowed deduction u/s 80G of the Act to an assessee on the CSR expenditure/donation to an institution u/s 80G(2)(a)(iv) which is enjoying certificate 80G(5)(vi) of the Act, is erroneous and therefore cannot be accepted. For this, we rely on the interpretation maxim Expressio Unius Esl Exclusio Alterius which is a Latin phrase that means express mention of one thing excludes all others. This is one of the rules used in interpretation of Statutes. The phrase indicates that items not on the list are assumed not to be covered by the Statute. When something is mentioned expressly in a Statute, it leads to the presumption that the things not mentioned are excluded. This is an aid to the construction of Statutes. Applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 : The company has contributed Rs.1 crore to Prime Minister's National Relief Fund and Rs. 1 crore to any other charitable trust registered u/s 80G(5) of the Act. Tax Treatment: The entire CSR expenditure of Rs.2 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act. The company can claim deduction for hundred percent of the donation of Rs. 1 crores paid to Prime Minister's National Relief Fund u/s 80G(2)(iiia) read with Section 80G(1)(i) of the Act. The company claim deduction to the extent of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act. 23. As discussed supra, we concur with the contention of the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under Section 80G of the Act. In this context we find that the assessee has made donation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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