Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 12 - AT - Income TaxRevision u/s 263 - royalty to the State Government which is not allowable deduction as per section 40(1)(iib) and the claim towards corporate social responsibility, which is also not an allowable deduction as per explanation 2 of section 37(1) - HELD THAT:- In the instant case there is no dispute that as per the return of income filed, the assessee made the claim under royalty payment to others. Similarly, expenditure was also claimed under Corporate Social Responsibility. Royalty payment to others was stated to be in respect of industrial water purchased by the assessee from the state government and corporate responsibility was stated to be related to the specific scheme formulated by the state government for NTR Sujala Pathakam providing 20 ltrs of water to surrounding areas, thus, claimed the same as business expenditure. Claim of the assessee in respect of purchase of water from the state government needs to be verified in the light of the claim made in the return of income and the actual expenditure incurred. Similarly, in the explanation, the assessee stated that Andhra Pradesh Water Resources Development Corporation was authorized to pass resolution authorizing the Andhra Pradesh Industrial Infrastructure Corporation to levy and collect the industrial water rates as fixed by the government from time to time. Whether the supply of water by the AP Industrial Infrastructure Corporation is on contract basis or outright sale basis also needs verification to ascertain the TDS if any. Only after proper verification of the complete details, the nature of expenditure and it's allowability is to be decided whether it is for purchase of water or royalty payment or supply of water on contract basis. Payment made on account of corporate social responsibility - There is no dispute that the assessee made the claim under Corporate Social Responsibility and the AO has neither collected any information nor verified the genuineness of the expenditure as observed by the Ld. Pr. CIT. Whether the expenditure incurred was related to Corporate Social Responsibility or the business expenditure and the genuineness and correctness of the expenditure also required to be verified. Since the AO failed to verify the above issues, the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue and we hold that the Ld. Pr. CIT rightly taken up the case for revision u/s. 263 and the same is upheld. The appeal of the assessee is dismissed.
|