TMI Blog2021 (1) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D is not sustainable. AO without bringing on record an iota of evidence if assessee has incurred expenses to earn the dividend income proceeded to invoke the provisions contained under section14A r/w Rule 8D(2)(iii) mechanically which is not permissible. Addition of expenditure made towards Corporate Social Responsibility (CSR) and sustainable development - HELD THAT:- Expenses claimed by the assessee company have been incurred as per guidelines of the Ministry concerned with approval of the Board to the best business interest of the assessee company. So AO, without examining the nature of the expenses, disallowed the claim mechanically even by ignoring the rule of consistency. Moreover, CSR expenses have been incurred by the assessee on the direction of the Government of India and identical issue has been decided by the coordinate Bench of the Tribunal in case of M/s. HLL Lifecare Ltd. [ 2018 (6) TMI 552 - ITAT COCHIN] - no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition made by the AO on account of disallowance of CSR expenditure - Decided in favour of assessee. - ITA No.6447/Del./2017, ITA No.6448/Del./2017, CO No.78/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Department of Public Enterprise, Ministry of heavy industries, the same are allowable U/S 37 of the Income Tax Act, 1961. (iv) That even otherwise, the Ld. CIT(A) having deleted disallowance of CSR expenses, there was not ground or justification for upholding impugned disallowance of Sustainable development expenses particularly when the nature of these expenses is same. 2. That orders of the lower authorities are not justified on facts and same are bad in law. 4. At the very outset, ld. AR for the assessee submitted that there is a delay of 49 days in filing the cross objection before the Tribunal and sought to condone the delay. Keeping in view the reasonable cause given in the condonation application, the delay of 49 days in filing the present cross objection is hereby condoned. 5. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessing Officer (AO) disallowed an amount of ₹ 1,15,21,250/- ₹ 13,21,75,000/- by invoking the provisions contained u/s 14A of the Income-tax Act, 1961 (for short the Act ) for Assessment Years 2013-14 2014-15 respectively. AO also made addition of ₹ 7,21,34,499/- ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to record his dissatisfaction that claim of the assessee as to not incurring any expenses is not correct. So, without recording proper satisfaction, disallowance under Rule 8D is not sustainable. 11. AO without bringing on record an iota of evidence if assessee has incurred expenses to earn the dividend income proceeded to invoke the provisions contained under section14A r/w Rule 8D(2)(iii) mechanically which is not permissible. Ld. CIT (A) decided this issue in favour of the assessee by relying upon the decisions rendered by Hon ble Delhi High Court in cases of Pradeep Khanna vs. ACIT in ITA 953/2015 order dated 11.08.2016, CIT vs. Taikisha Engineering Private Limited 370 ITR 338 (Del.) and Maxopp Investment (P) Ltd. s. CIT 347 ITR 272 (Del.) . 12. Identical issue has been decided in favour of the assessee by the coordinate Bench of the Tribunal in assessee s own case in ITA No.2826/Del/2014 ITA No.3026/Del/2014 order dated 24.04.2017. In the appeal at hand, it is admitted fact that substantial portion of the investments are made in the earlier years. 13. In these circumstances, finding no illegality or perversity in the deletion made by the ld. CIT (A) u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the expenses incurred with reference to section 135 of the Companies Act, 2013 that too after 01.04.2015, so Explanation (2) to section 37(1) of the Act is not applicable to the present case also. Moreover, expenses claimed by the assessee company have been incurred as per guidelines of the Ministry concerned with approval of the Board to the best business interest of the assessee company. So AO, without examining the nature of the expenses, disallowed the claim mechanically even by ignoring the rule of consistency. 18. Moreover, CSR expenses have been incurred by the assessee on the direction of the Government of India and identical issue has been decided by the coordinate Bench of the Tribunal in case of M/s. HLL Lifecare Ltd. vs. ACIT in ITA No.123/Coch/2017 for AY 2012-13 order dated 11.06.2018 by returning following findings :- 9.5 The CSR expenses has been incurred as per the directions of Government of India. The Hon'ble Kerala High Court in the case of Travancore Titanium Products Ltd. (supra) had held that a Government Undertaking is duty bound to comply with Governmental orders. The relevant findings of the Hon'ble jurisdictional High Court re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and remitted the issue back to the Tribunal to give specific finding to the effect that the said CSR expenditure is allowable as business expenditure. 9.8 Since, the assessee had incurred CSR expenses to comply with the directions of Govt. of India, following the above observations made by High Court of Kerala and ITAT, Mumbai Bench, the expenditure incurred is incidental to the assessee's business and ought to be allowed as deduction u/s 37 of the I.T.Act. 19. Identical issue has also been decided by the coordinate Bench of the Tribunal in Hindustan Petroleum Corporation Ltd. vs. DCIT (2005) 96 ITD 186 (Mum.) by returning following findings:- It had been held by the Karnataka High Court in the case of Mysore Kirloskar Ltd. v. CIT [1987J 166 ITR 836/ 30 Taxman 467. that while 'the basic requirements for invoking sections 37(/) and 80G are quite different', but nonetheless the two sections are not mutually exclusive. Thus, there are overlapping areas between the donations given by the assessee and the business expenditure incurred by the assessee. In other words, there can be certain amounts. though in the nature of donations, and nonetheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligations towards society as a responsible corporate citizen. [Para 10] 20. So, we find no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition made by the AO on account of disallowance of CSR expenditure for AYs 2013- 14 2014-15. Ground No.2 of both the appeals filed by the Revenue are determined against the Revenue. GROUND NO.1(i), (ii), (iii) (iv) OF CO NO.78/Del./2019 (AY 2013-14) FILED BY THE ASSESSEE 21. Ld. CIT (A) has upheld the disallowance of ₹ 77,18,481/- made by the AO on account of disallowance of claim of sustainable development expenses. Ld. AR for the assessee contended that these expenses were incurred exclusively for the purpose of business and is allowable u/s 37 of the Act. It is further contended by the ld. AR for the assessee that during the earlier year, this claim of the assessee company has been duly accepted. 22. Ld. CIT (A) has upheld the disallowance of ₹ 77,18,481/- being claim of sustainable development expenses by simply recording the fact that assessee has not adduced any cogent argument for deleting the sustainable development expenses , without going into t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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