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TMI Blog2020 (5) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... egis India" or "the Company" or "the Appellant") respectfully craves, leave to prefer an appeal under Section 253 of the Income-tax Act, 1961 ("the Act") against the order passed by the Commissioner of Income Tax (Appeals) - 1, Bangalore ["the CIT(A)"] dated 27 May 2019, on the following grounds: 1.The learned CIT(A) has erred, in fact and law, by not allowing the eligible deduction of donation amounting to INR 8.40.000 in accordance with section 80G of the Act. 2.The learned CIT(A) has erred. in fact and law, by holding that the donation paid by the Appellant forms part of the mandatory requirement of the Companies Act 2013 and consequently not eligible for deduction under section 80G of the Act. 3.The learned CIT(A) has erred, in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential element to treat the amount as donation. The disallowance made by Ld.AO was therefore upheld. 5. Aggrieved by order of Ld.CIT (A), assessee is in appeal before us now. 6. Ld.AR submitted that all grounds raised are in connection to disallowance of donation under section 80 G of the Act by holding it to be CSR expenses. 7. He submitted that out of total CSR expenses, sum amounting to Rs. 16,80,000/- was eligible for deduction under section 80G of the Act. It has been submitted that, donations made u/s 80G are eligible expenditure under section 80G of the Act, and cannot be denied to assessee for purpose of computing taxable income in the hands of assessee. 8. Referring to section 80 G (2) (iiihk) and (iiihl), Ld.AR submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for the purposes of the business or profession. 11. This amendment will take effect from 1/04/2015 and will, accordingly, apply to assessment year 2015-16 and subsequent years. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head 'Income form Business and Profession'. Further, clarification regarding impact of Explanation 2 to section 37(1) of the Income Tax Act in Explanatory Memorandum to The Finance (No.2) Bill, 2014 is as under: "The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o on intangible assets like know-how, patents, trademarks, licenses. * Section 33 allows development rebate on machinery, plants and ships. * Section 34 states conditions for depreciation and development rebate. * Section 35 grants deduction on expenditure for scientific research and knowledge extension in natural and applied sciences under agriculture, animal husbandry and fisheries. Payment to approved universities/research institutions or company also qualifies for deduction. In-house R&D is eligible for deduction, under this section. * Section 35CCD provides deduction for skill development projects, which constitute the flagship mission of the present Government. * Section 36 provides deduction regarding insurance premium on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, "Income from Business and Profession". 16. For claiming benefit under section 80G, deductions are considered at the stage of computing "Total taxable income". Even if any payments under section 80G forms part of CSR payments( keeping in mind ineligible deduction expressly provided u/s.80G), the same would already stand excluded while computing, Income under the head, "Income form Business and Profession". The effect of such disallowance would lead to increase in Business income. Thereafter benefit accruing to assessee under Chapter V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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