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TMI Blog2023 (8) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act. We hold that inasmuch as the assessee satisfied the conditions of section 80G of the Act, the assessee is entitled to claim deduction under section 80G of the Act in respect of such donations which formed part of the spend towards CSR. Accordingly, we hold Ground No.2 in favour of the assessee. TDS short credit - As submitted that after passing of the rectification order dated 03/09/2022, allowing the TDS credit, an amount relates to Rail Tel Corporation of India was not addressed. We, therefore, direct the AO to verify this issue and grant TDS credit in respect of Rail Tel C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80G of the Act qua expenditure incurred in Corporate Social Responsibility ( CSR ) is concerned, plea of the assessee is that the assessee donated/ contributed Rs. 3,79,83,500/- towards CSR during the financial year 2016-17 which was debited to P L account. Out of the aforesaid CSR amount, contributions/donations amounting to Rs. 3.78 crores were made to the institutions/organisations registered under section 80G of the Act. Assessee donated Rs. 1,11,46,000/- to the Prime Minister's National Relief Fund ('PM Relief Fund') which is eligible for 100% deduction u/s 80G of the Act, and another sum of Rs. 2,66,54,000/- to the institutions Smile Foundation, Vidya Comfort School, Parikrama Humanity Foundation, Helpage India, Udayan Care, Narayana Hrudayalaya Charitable Trust and Sewa International, which are eligible for 50% deduction u/s 80G of the Act. Accordingly, assessee claimed deduction of Rs. 1,33,27,000/-. 5. Learned Assessing Officer, however, disallowed the deduction under section 80G of the Act stating that CSR expenditure incurred u/s 135 of Companies Act is categorically disallowed under section 37 of the Act, and, therefore, on similar logic deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come cannot be denied merely for the reason that such payments formed part of CSR expenditure. 7. Learned AR further argued that there is no bar on claiming CSR expenditure as deduction if it falls within the scope of section 30 to 36 of the Act or qualifies for deduction under Chapter VI-A. CBDT Circular No. 01/2015 dt. 21/01/2015 in fact supports the position of assessee inasmuch as it specifically provides that there is no estoppel to claim CSR expenditure as deduction if it is of the nature described in section 30 to 36 of the Act; that neither Explanation 2 nor the Circular cast any restriction qua allowability of CSR expenditure as deduction under section 80G of the Act; that Section 80G and section 37 of the Act are independent; that only in case of specific exclusion provided under clauses (iiihk) and (iiihl) of section 80G(2) of the Act stipulate that such contributions shall be other than the sums spent by the assessee in pursuance of CSR under section 135(5) of the Companies Act. 8. Learned AR placed reliance on FAQ No. 6 in the General Circular No. 01/2016 dated 12/01/2016 issued by Ministry of Corporate Affairs. Lastly, he placed reliance on the decisions of the Co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated under section 37(1) of the Act, no other expenditure is allowable and this position is made amply clear by insertion of Explanation-2 to section 37(1) of the Act. It says that any expenditure incurred towards the activities relating to CSR, shall not be deemed to be an expenditure incurred for the purpose of business. 11. It is, therefore, clear that the question that is relevant to be answered on this issue is whether the donations given for compliance with the provisions under section 135 of the Companies Act, to the institutions mentioned in section 80G(2) of the Act are qualified for deduction under section 80G of the Act also. 12. Explanation-2 to section 37(1) of the Act says that any expenditure relatable to the discharge of CSR, is not a business expenditure and cannot be allowed as such. On this aspect, there is no contradiction of the fact submitted by the learned AR that in compliance with this requirement, the assessee does not claim any deduction of such amount spent as CSR under any of the provisions between 30 and 36 of the Act, and sue moto disallowed the same by adding it back to the P L account. It is only thereafter the business income of the assessee is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80G of the Act we note that deduction under this section has to be made in accordance with and subject to the provisions of this section i.e. section 80G of the Act. As per this section i.e. section 80G of the Act, an amount equal to fifty percent (50%) of the aggregate of the sums specified in sub-section 2 [refer subclause (iv) of Clause (a) of Sub-section 2 of section 80G of the Act read with section 80G (1) (ii)] which allows the donation given to any other Fund or any institution to which this section applies and if it satisfies the requirement of sub-section (5) of section 80G of the Act, then 50% of the donation is allowable expenditure [refer section 80G (1) (ii)]even if the assessee has included the expenditure as CSR Expenditure because there is no prohibition or restriction placed by the Parliament on such a donation even if shown as CSR expenditure. The reason for saying so is that in section 80G of the Act certain restrictions in respect of deduction in respect of two (2) donations are expressly seen in this Section. So the Parliament has expressed its intention clearly by bringing in restriction in respect of expenditure classified by an assessee company while cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be safely inferred that when the Legislature in particular has provided for only the above referred two specific exceptions in Section 80G, then it is the implied intent of the Legislature to permit deduction u/s 80G in respect of CSR contributions made to funds/organizations referred to in all other sub-clauses of Section 80G [other than (iiihk) and (iiihl)] of the Act. The above analysis made by us, can be cumulatively illustrated by the following examples for ease of understanding purpose only and should not be cited for making claim which should be made subject to the facts and law involved in each case and also subject to section 80G(4) of the Act: Example: A company has reported eligible net profit u/s 135 of Companies Act, 2013 at Rs.100 crores. The minimum CSR contribution of 2% under Section 135(5) of the Act works out to be Rs. 2 crores. Situation 1 : The company has been spent the required minimum CSR contribution of Rs 2 crores towards construction of roads schools in the vicinity of the backward area where the factory is located. 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) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of Rs. 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 23 and the approval u/s 80G (5)(vi) of the Act in respect of Pt. Jashraj Music Academy Trust is found placed at page 19 of PB dated 30.03.2012 given by Director of Income Tax (Exemption). Therefore, since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee s claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view and is in line with the ratio of the decision of Tribunal cited (supra). Therefore we find that the Ld. PCIT has not been able to make out a case that on this issue raised by him, the AO's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. Therefore, the usurpation of jurisdiction by Ld. PCIT u/s 263 of the Act is bad in law and therefore need to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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