9911796707
TMI Blog2024 (8) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80G. As CSR expenditure is application of income of the assessee under the Income Tax Act, that means it continues to form part of the Total income of the assessee. Section 80G(1) of the Act provides that in computing the total income of an assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Further, section 80G(2) lists down the sums on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CSR funds is absolutely illegal and uncalled for in law as well as on facts. 2. Briefly stated, facts are that the assessee paid Rs. 25,00,000/- to a trust named Saint Francis Home (Regd.) Society Pathankot. The amount of Rs. 25,00,000/- paid out of CSR obligation was claimed as deduction u/s. 80G of the Act. On such payments of Rs. 25,00,000/-, the assessee claimed deduction u/s. 80G of the Act. The Assessing Officer did not allow the deduction u/s. 80G as it was CSR expenditure which is not allowable under the Act. 3. Aggrieved with the above order of the AO, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions of the assessee, dismissed the appeal of the assessee by way of confirming the action of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the plea of learned counsel on the basis of case law cited, denial of CSR expenditure u/s 37(1) of the Act is not embargo to claim deduction u/s 80G of the Act. 7.1 Further, we like to observe that as a matter of fact as per Section 135 of the Companies Act, 2013 ('CA 2013), the qualifying Companies as mentioned therein are required to spend certain percentage of profits of last three years on activities pertaining to Corporate Social Responsibility (CSR). The expenditure on CSR, could be by way of expenditure on projects directly undertaken by said companies, such as setting up and running schools, social business projects, etc. Such expenditure would include expenditure otherwise falling for consideration under section 37(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly and exclusively for the purposes of carrying on business, As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for .computing the taxable income of the company, Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one-third of such expenses by the Government by way of tax expenditure. (emphasis supplied) 7.4 The aforesaid explanatory memorandum categorically expresses the legislative intent and the rationale of disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of donations as per Section 80G of the Act, even though, assessee is not gaining any benefit out of any reciprocity from donee. Similar is the case of CSR expenditure. Thus the reasoning of learned Tax Authority, the CSR expenditure is mandatory, does not justify disallowance of these expenditures u/s 80G, if other conditions of section 80G are fulfilled. There is no allegation of Revenue that other conditions of Section 80G are not fulfilled. We, thus sustain the ground. 7. After perusing the aforesaid findings, we find that the facts of the present case are identical to that of the aforesaid case of other assessee, hence, the issue in dispute involved in the instant appeal is squarely covered in favour of the assesee. Therefore, re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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