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TMI Blog2025 (4) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the deduction claimed by the Appellant under section 80G of the Act amounting to INR 34,69,235 (being 50% of INR 69,38,470) by alleging that amount spent as part Corporate Social Responsibility (CSR) activity lacks voluntary character and the same cannot be considered as donation for the purpose of section 80G of the Act. 3. On the facts, in the circumstances of the case and in law, the Ld. AO has grossly erred in short grant TDS credit to the extent of INR 17,31,025 vis-à-vis INR 27,44,93,733 as claimed by the Appellant in the return of income basis Form 26AS of the subject year. 4. On the facts, in the circumstances of the case and in law, the Ld. AO has grossly erred in non-grant of TCS credit for the subject year amounting to INR 27,750. 5. On the facts, in the circumstances of the case and in law, the Ld. AO has grossly erred in non-grant of self-assessment taxes paid by the Appellant for the subject year amounting to INR 1,00,05,008. 6. On the facts, in the circumstances of the case and in law, the Ld. AO has grossly erred in charging and computing interest under section 234B and 234C of the Act. That the above grounds of appeal are mutually exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation 9,15,045 4,57,523 93 of paperbook 3 Aident Social Welfare Association 27,51,400 13,75,700 94 of paperbook 4 Sama Foundation 7,72,025 3,86,013 95 of paperbook 5 Sama Foundation 12,000 6 Sama Foundation 2,50,000 7 Don Bosco Selfemployment Institute 2,10,000 Total 74,10,470 34.69,235 5. It was further submitted that the Appellant claimed deduction of INR 34,69,235 (being 50% of Rs. 69.38,470) under section 80G(1)(ii) read with Section 80G(2)(a)(iv) of the Act from the gross taxable income of the subject your and such eligible amount of deduction under section 80G of the Act was duly verified and reported by auditors in clause 33 of tax audit report of relevant year. 6. The Ld. AO observed in draft assessment order that the sum paid by the assessee cannot be considered as "donation" for the purpose of section 80G of the Act. Relevant para 4.7 and 4.8 of the order is furnished as below: "4.7 In the case under consideration, the amount has not been paid by the Assessee voluntarily to become eligible for entity specified under Section 80G of the Act. But the same has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofession' while Section 80G falls under Chapter VI-A of the Act which provides the deductions that can be claimed by assessee after the computation of 'total income' to arrive at the 'total taxable income'. 9. It is also contended that the Explanation (2) to Section 37 of the Act stipulates CSR expenditure shall not be eligible for deduction as business expenditure. Hence, the Appellant has itself disallowed CSR expenses while computing taxable income However, there is no reference to a similar ineligibility or restriction in claiming deductions under section 80G of the Act for donations made pursuant to section 135 of Companies Act, 2013. Similarly, the CSR expenditure which fall within the ambit of section 30 to 36 can be claimed while computing income under the head Profits and gains of business or profession and also submitted that in relation to the contention of ld. AO that expenditure incurred by the Appellant is not voluntary in nature, donation is said to be voluntary in nature because it is not done on the basis of any reciprocal promise of donee. Similarly, in CAR activities the Appellant does not gain any benefit from the donee. Therefore, denying a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Social Responsibility (CSR) activity lacks voluntary character and the same cannot be considered as donation for the purpose of section 80G of the Act, and whereas the Ld. CIT(DR) relied upon the orders of the authorities below, 13. From the perusal of material available on record, it exhibit that the assessee filed objection before Dispute Resolution Panel (DRP) and as the Ld. DRP granted relief on the transfer pricing issues but upheld the disallowance made by the Ld. AO with respect to the claim made under section 80G of the Act, and consequently the final assessment order passed on dated July 31, 2022. 14. The Ld. AR relied upon the order of the Co-ordinate Bench of ITAT order dated 28.05.2024 in the case of Interglobe Technology Quotient (P) Ltd. vs. ACIT [2024] 163 taxmann.com 542(Delhi- Trib.)/, in which held that mandatory nature of CSR expenditure does not justify disallowance of the same u/s 80G, if other conditions of section 80G are fulfilled. The relevant para 7.3 to 7.5 are as under: "7.3 As we take notice of the fact that Parliament legislated that CSR expenses would not be eligible for deduction as business expenditure under section 37 of the Act by inserting E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation between suo-moto disallowance in section 37(1) and claim of deduction under section 80G of the Act. 7.5 As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of donee. The 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 expenditure e 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." 15. Also relied upon the order of Co-ordinate Bench of Delhi, ITAT in the case of Cheil India P. Ltd. vs. DCIT (2024) 169 taxmann.com 507 (Delhi), of which relevant para 8 as under: "8. Upon careful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, companies, to give institutions that are engaged in undertaking such projects, which is also a recognized way of compliance of CSR obligation. 7.2 The assessing officer and CIT(A) have relied upon General Circular 14/2021 dated 25.08.2021 issued by MCA and "Explanatory Notes to the provisions of the Finance (No.2) Act, 2014" to hold that donations made as part of CSR expenditure are not allowable as deduction. The foundation of their reasoning being that the donation is voluntary in nature, while CSR expenditures are under statutory obligations. 7.3 As we take notice of the fact that Parliament legislated that CSR expenses would not be eligible for deduction as business expenditure under, section 37 of the Act by inserting Explanation 2 to section 37(1) vide the Finance (No.2) Act, 2014 (applicable from the assessment year 2015-16), which provided that any expenditure incurred by an assessee on the activities relating to CSR referred to in section 135 of the CA 2013, shall not be deemed to be an expenditure incurred by an assessee for the purpose of business or profession and shall not be allowed as deduction under section 37(1) of the IT Act. The intent of Parliament in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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 assessee. Therefore, respectfully following binding precedent (supra), we delete the addition sustained by the Ld. CIT(A) and accordingly, allow the ground of appeal raised by the Assessee. 8. In the result, appeal of the assessee is allowed." 16. In conclusion, we respectfully following the precedent as above cited, and set aside the impugned orders of the authorities below. Hence, appeal of the assessee deserves to be allowed. 17. Consequently, appeal of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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