9911796707
TMI Blog2022 (11) TMI 1514X X X X Extracts X X X X X X X X Extracts X X X X ..... . from 1st August, 2015 cannot be held to be retrospective in operation. Therefore, the expenditure incurred by assessee on account of CSR as envisaged u/s. 135 of the Companies Act, 2013 need to be allowed as deduction. Therefore, the CSR expenditure which the assessee company was obliged to discharge because it was a statutory obligation upon the assessee company so, the deduction should have been allowed as per the law in force for this assessment year and we direct the AO to allow the expenditure. Therefore, the appeal of assessee is allowed. - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER For the Appellant : Shri Devesh Poddar, Advocate For the Respondent : Shri Sanjay Mukherjee, CIT, D.R ORDER PER SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 37(1) of the Act (hereinafter referred to as the Act ) to the tune of Rs. 2,02,04,000/-. 3. Brief facts of the case are that on perusal of accounts submitted by the assessee, during the course of assessment proceedings, the AO observed that an amount of Rs. 2,02,04,000/- have been debited under the head Corporate Social Responsibility (CSR). On a specific query raised by AO on this issue, the assessee in its submission dated 29.12.2016 submitted as follows: Regarding CSR expenses: CSR expense/fund is earmarked wholly and exclusively for carrying out CSR activities/programme undertaken by the company from time to time. This fund is non-lapsable fund and unspent amount is to be carried forwarded in the books of the company. Hence, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and added back the same to the total income of the assessee. 5. Aggrieved by the above order, assessee preferred an appeal before the ld. CIT(A) and confirmed the action of the AO and dismiss the appeal of the assessee. 6. Aggrieved assessee is in appeal before us. 7. We have heard the rival submission and gone through the facts and circumstances of the case, we note that the AO after taking note that the assessee had debited under the head CSR an amount of Rs. 2,02,04,000/- and ask the assessee as to why the amount should not be disallowed because according to him this expenditure is not wholly and exclusively for the purpose of the assessee s business. Pursuant to this query of the AO, the assessee explained that payments under the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Venkata Satyanarayna Rice Mill Contractors Co. v. CIT [1997] 223 ITR 101, Hindustan Petroleum Corporation Ltd Vs DCIT [(2005) 96 ITO 186 (Bom)] (iii) The amendment in the scheme of Section 37(1), which has been introduced with effect from 1st April 2015, cannot be construed as to disadvantage to the assessee in the period prior to this amendment. This disabling provision, as set out in Explanation 2 to Section 37(1), refers only to such corporate social responsibility expenses as under Section 135 of the Companies Act, 2013, and, as such, it cannot have any application for the period not covered by this 'statutory provision which itself came into existence in 2013. Explanation 2 to Section 37(1) is, therefore, inherently incapable of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n imposes a liability or a burden, the effect of such a legislative provision can only be prospective. We have also noted that the amendment in the scheme of Section 37(1) is not specifically stated to be retrospective and the said Explanation is inserted only with effect from 1st April 2015. In this view of the matter also, there is no reason to hold this provision to be retrospective in application. As a matter of fact, the amendment in law, which was accompanied by the statutory requirement with regard to discharging the corporate social responsibility, is a disabling provision which puts an additional tax burden on the assessee in the sense that the expenses that the assessee is required to incur, under a statutory obligation, in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in Jindal Power Ltd., (supra), has already held that the introduction of explanation 2 to sec. 37(1) of the Act w.e.f. from 1st August, 2015 cannot be held to be retrospective in operation. Therefore, the expenditure incurred by assessee on account of CSR as envisaged u/s. 135 of the Companies Act, 2013 need to be allowed as deduction. Therefore, the CSR expenditure which the assessee company was obliged to discharge because it was a statutory obligation upon the assessee company so, the deduction should have been allowed as per the law in force for this assessment year and we direct the AO to allow the expenditure. Therefore, the appeal of assessee is allowed. 9. In the result, the appeal of the assessee is allowed. Order is pronounced i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
