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2021 (12) TMI 547 - AT - Income TaxDeduction u/s 37 in respect of 15% of sale proceeds retained by the CEC [Central Empowered Committee] - sale proceeds of iron ore extractions as a compensatory payment towards damages caused to the environment and forest degradation on account of mining - assessee firm has credited an amount as iron ore sales through e-auction - HELD THAT:- ITAT in assessee’s own case [2021 (2) TMI 1145 - ITAT BANGALORE] had rejected the plea of the assessee that 15% of the sale proceeds retained by the CEC is to be excluded from the total turnover on the principle of diversion of income by way of overriding title. The Tribunal had categorically held that 15% of sale proceeds was payable to SPV account after it accrued to the assessee. However, the ITAT held that 15% of the sale proceeds constitute an allowable business expenditure u/s 37 Observation of the AO and the CIT(A) (ground No.5) that the contribution to SPV is nothing but CSR - As we find that the assessee is a partnership firm, which is not under the statutory obligation for complying with CSR provisions. The Bangalore Bench of the Tribunal in the case of Shri B.Rudragouda [2021 (4) TMI 1249 - ITAT BANGALORE] had held that the assessee being an individual and not a company, is not governed by section 135 of the Companies Act, 2013 and the impugned expenditure incurred by the assessee is not in the nature of CSR expenditure as mentioned in that section and it cannot be disallowed by invoking the provisions of Explanation 2 to section 37 We hold that the assessee is entitled to deduction u/s 37 of the I.T.Act in respect of 15% of sale proceeds retained by the CEC. It is ordered accordingly.
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