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TMI Blog2024 (12) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not on the basis of any reciprocal promise of donee. CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. The Act permits deduction 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 set aside the orders of the authorities below and accordingly decide the issue in dispute in favour of the assessee. - Shri Shamim Yahya, Accountant Member And Shri Sudhir Pareek, Judicial Member For the Appellant : M s. Ananya Kapoor, Adv., Sh. Tarun Chanana, Adv. Sh. Shivam Yadav, Advocate For the Respondent : Ms. Harpreet Kaur, Sr. DR. ORDER PER SHAMIM YAHYA, AM : The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 08.11.2023, relating to assessment year 2020-21 on the following grounds:- 1. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating the penalty proceedings against the assessee under section 270A of the Act. 8. That the documents, explanations filed by the Appellant, and the material available on record have not been properly considered and judicially interpreted and have been wrongly ignored. 2. The brief facts of the case are that the assessee filed its return of income on 10.02.2021 and processing u/s. 143(3) was completed on 20.09.2022. The AO made the disallowance of claimed as donation u/s. 80G amounting to Rs. 2,57,66,663/-, charged interest u/s. 115P amounting to Rs. 5,79,69,120/- and initiated penalty proceedings u/s. 270A of the Act. Against the AO s action, assessee appealed before the Ld. CIT(A). 3. Upon assessee s appeal, Ld. CIT(A) confirmed the AO s order by observing as under:- 5.2 The claim u/s 80G amounting Rs. 2,57,66,663/- has been rightly disallowed, since the same has been mandatorily spent within the threshold limits as mandated in Section 135(5) of the Companies Act 2013. Further, the element of charity is missing in the sum paid by the assessee. The main characteristics of charity is that it is purely voluntary and there is no legal obligation to make that contribution. The amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below. 5.1 At the time of hearing, Ld. AR for the assessee contended that the issue in dispute is squarely covered by the several case laws of the ITAT. In this regard, he referred to the ITAT decisions dated 28.05.2024 passed in ITA No. 95/Del/2024 (AY 2020-21) in the case of Interglobe Technology Quotient Private Limited; Honda Motorcycle and Scooter India Pvt. Ltd. vs. ACIT in ITA No. 1523/Del/2022 (AY 2017-18) dated 22.8.2023; Ericsson India Global Services (P) Ltd. vs. DCIT in ITA No. 1150/Del/2022 (AY 2015-16) dated 05.03.2024. In view of above, he requested to follow the ratio of the aforesaid Tribunal s orders and allow the issue in dispute in favour of the assessee raised in the instant appeal. 5.2 Ld. Sr. DR did not controvert the aforesaid proposition made by the Ld. AR, but he supported the orders of the authorities below. 6. Upon careful consideration, we find considerable cogency in the contention of the Ld. AR that identical issue has been dealt by the Coordinate Bench of ITAT, Delhi vide order dated 28.05.2024 passed in ITA No. 95/Del/2024 (AY 2020-21) in the case of Interglobe Technology Quotient Private Limited, wherein the Coordinate Bench has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness, 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 CSR expenditure referred to in section 135 of the Companies Act, that such expenditure is application of income and not incurred for the purposes of business. We are of considered view that this in itself justifies the grant of deduction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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