TMI Blog2021 (7) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... r deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view - PCIT has not been able to make out a case that on this issue raised by him, the AO's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. - Decided in favour of assesee. - I.T.A. No. 146/Kol/2021 - - - Dated:- 22-7-2021 - Shri P. M .Jagtap, Vice-President (KZ) And Shri A. T. Varkey, JM For the Appellant : Shri S. K. Tulsiyan, Advocate For the Respondent : Shri Dinesh Aibor Jayal Sawkuie, CIT ORDER PER SHRI A. T. VARKEY, JM: This is an appeal filed by the Assessee against the order of Ld. PCIT, Kolkata- 2, Kolkata dated 30.03.2021 passed u/s 263 of Income Tax Act, 1961 (hereinafter referred to as the Act) for Assessment year 2016-17. 2. By preferring this appeal, the assessee has challenged the invocation of jurisdiction by the Ld. PCIT u/s 263 of the Act without satisfying the essential condition precedent as prescribed in Section 263 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of benefit of deduction under Chapter-VIA amounting to ₹ 72,60,000/- on both Donation and GSR expenses also[50 /o of ₹ 1,45,20,000/- (Donation ₹ 10,20,000/- + Rs. Expenses on CSR activities ₹ 1,35,00,000/-)]. The Assessing Officer accepted and allowed the assessee s claim u/s. 80G of I.T. Act while completing assessment u/s 143(3). As per the above provision of Section 37 of the Income Tax Act, any amount of GSR expenses whether it is made for donation or for other purposes is not an allowable expense. Therefore, the claim of deduction on CSR expenses amounting to ₹ 67,50,000/- (50% of ₹ 1,35,00,000/-) is required to be disallowed and added Back to the total income of the assessee. Therefore, the assessment completed appears to be erroneous in so far as it is prejudicial to the interest of revenue. 2. Having regard to the facts and circumstances of the case and in law and in accordance with the provisions of Section 263(1) of the I. T. Act, 1961 you are hereby given an opportunity of being heard to show cause as to why the impugned assessment order passed u/s 143(3) by the DCIT, Circle - 12(1), Kolkata on 03/12/2018 for AY 2016-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 37(1) which states that For removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed, to be an expenditure incurred by the assessee for the purposes of the business or profession. However, Sub section- (1) of Section 80G of the Income Tax Act provides that In computing the total income of the assessee, there shall be deducted, in accordance with and subject to the provisions of this_section,-14. Further Sub section (5)(vi) of the section provides that In computing to donations made after the 31st day of March, 1992,-the institution or fund is for the time being approved by the Commissioner in accordance with the rules- made in this behalf . In compliance with the above provisions, we have claimed the Donations amounting to ₹ 1,35,00,000/-made to Charitable Trusts under Section 80G as the Trust were approved under section 80G(5)(vi) by the Commissioner of Income Tax, in this behalf. Neither there is any express provision nor any of the explanations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donees along with PAN and address and donation receipts. Further the donation receipts are self- explanatory and are eligible for deduction under Section 80G of the Act. We find that the CSR expenses are required to be incurred by companies as per Section 135 of the Companies Act and the deduction u/s. 37(1) of the Act, is not available from Assessment Year 2015-16 as per the Explanation 2 to Section 37(1) of the Act inserted by the Finance Act No.2. 2014.Whereas, the assessee company has made a claim for deduction of CSR expenses u/s. 80G of the Income Tax Act,1961.But the assessing officer has rejected the assesses claim without verifying the nature of contributions and observed that it is not a donation, and was not spent voluntarily for the eligibility of claim u/s.80G of the Act but due to legal obligation prescribed u/s. 135 r.w. Schedule VII of Companies Act, 2013.We find that the A.O has allowed deduction u/s.80G of the Act in respect of contribution made to PM Relief Fund which is not disputed. We are of the opinion that the A.O. has not made his observations clear that no CSR expenses are eligible for deduction u/s. 80G of the IT(TP)A No.2355/Bang/2019 Act. We consider i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for computing 'Total Taxable Income . If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. 19. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. 8. The Bangalore Tribunal in the case of FNF India Pvt. Ltd. vs. ACIT (ITA No. 1565/Bang/2019) reported in 2021-TIOL-319-ITAT-BANG pronounced on January,05,2021 held as under: Similar issue came up for consideration before this Tribunal in the case of Allegis Services (India) Pvt. Ltd. wherein it was held that 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 held income from Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und,. 11. According to Ld. A.R. when the Parliament has expressly made two exceptions in Section 80G of the Act in respect of donation classified as CSR expenses incurred by an assessee company u/s 135(5) of the Companies Act, the other donation which are classified as CSR expenses to any other Fund or Institution as provided in sub-clause (iv) of clause (a) to sub-section 2 of section 80G of the Act is eligible for deduction u/s 80G of the Act [after the donee satisfies the requisite condition prescribed for deduction u/s 80G of the Act]. It was pointed out by the Ld. A.R. that by enacting the aforesaid exceptions in respect of CSR expenses incurred for two projects i.e. Swachh Bharat Kosh and Clean Ganga Fund, the donation given by an assessee (like the assessee M/s JMS Mining Pvt. Ltd.) to other Funds or Institution enumerated u/s 80G(2)(a)(iv) of the Act are eligible for deduction u/s 80G of the Act. Thus, it was contended that there is no prohibition spelled out by the Parliament in respect of any other CSR expenditure when it otherwise qualifies/eligible for deduction u/s 80G of the Act. 12. Therefore, according to Ld. A.R. since the donations were made by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him;[ because AO has to discharge dual role of an investigator as well as that of an adjudicator ]then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Meaning that the order has been passed by the A.O. without making enquiries or verification and therefore he interfered with the assessment order and has set aside the same and directed AO to pass fresh assessment order taking note of the contents of show cause notice which he has reproduced in para 2 of his impugned order (supra). 16. We find in this regard that the assessee pursuant to show cause notice (SCN) (supra) had duly replied to the Ld. PCIT which fact has been acknowledged by the Ld. PCIT in para 3 of the impugned order, wherein he says that in response to the SCN the assessee has submitted reply dated 24.03.2021 which has been found placed at page 10 to 16 of the PB. From a perusal of the same, we note that the assessee specifically brought to the notice of the Ld. PCIT that the AO had specifically raised question about assessee s claim of deduction of CSR expenses under Chapter VIA of the Act vide his notice u/s 142(1) of the act dated 01.08.2018 by preferring question no (v) and the ibid notice of AO was attached as annexure along with reply given by assessee on this issue for the perusal of Ld. PCIT. The aforesaid query no (v) raised u/s 142(1) of the Act by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to in Section 135 of the Companies Act, 2013 shall not be allowed as business expenditure and shall be deemed to have not been incurred for purpose of business. The embargo created by this Explanation 2 inserted in Section 37 of the Act by the Finance (No.2) Act, 2014 was to deny deduction for CSR expenses incurred by companies, as and by way of regular business expenditure while computing Income under the head Business . 18. So, it can be clearly seen that this Explanation 2 to Section 37(1) of the Act which denies deduction for CSR expenses by way of business expenditure is applicable only to the extent of computing 'Business Income' under Chapter IV-D of the Act. The said Explanation according to us cannot be extended or imported to CSR contributions which is otherwise eligible for deduction under any other provision or Chapter, to say donations made to charitable trusts registered u/s 80G of the Act for the reasons cited infra. 19. In the facts of the present case, it is an admitted position that the donation of ₹ 1.35 crores was disallowed and suo-moto added back by the assessee in terms of Explanation 2 to Section 37(1) while computing Income und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed in India for a charitable purpose and if it fulfills the following condition namely: (i) . (a) . (b) (c) (ii) (vi) in relation to donations made after the 31st day of March, 1992 , the institution or fund is for the time being approved by the PCIT or Commissioner in accordance with the rules 3 made in this behalf. 22. From a bare reading of the section 80G of the Act we note that deduction under this section has to be made in accordance with and subject to the provisions of this section i.e. section 80G of the Act. As per this section i.e. section 80G of the Act, an amount equal to fifty percent (50%) of the aggregate of the sums specified in sub-section 2 [refer sub-clause (iv) of Clause (a) of Sub-section 2 of section 80G of the Act read with section 80G (1) (ii)] which allows the donation given to any other Fund or any institution to which this section applies and if it satisfies the requirement of sub-section (5) of section 80G of the Act, then 50% of the donation is allowable expenditure [refer section 80G (1) (ii)]even if the assessee has included the expenditure as CSR Expenditure because there is no prohibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing excludes all others. This is one of the rules used in interpretation of Statutes. The phrase indicates that items not on the list are assumed not to be covered by the Statute. When something is mentioned expressly in a Statute, it leads to the presumption that the things not mentioned are excluded. This is an aid to the construction of Statutes. Applying the legal maxim 'expressio unius est exclusio alterius', it can be safely inferred that when the Legislature in particular has provided for only the above referred two specific exceptions in Section 80G, then it is the implied intent of the Legislature to permit deduction u/s 80G in respect of CSR contributions made to funds/organizations referred to in all other sub-clauses of Section 80G [other than (iiihk) and (iiihl)] of the Act. The above analysis made by us, can be cumulatively illustrated by the following examples for ease of understanding purpose only and should not be cited for making claim which should be made subject to the facts and law involved in each case and also subject to section 80G(4) of the Act: Example: A company has reported eligible net profit u/s 135 of Companies Act, 2013 at ₹ 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under Section 80G of the Act. In this context we find that the assessee has made donation of ₹ 1.25 crores on 20.01.2016 by RTGS dated 19.01.2016 through UCO Bank which is evident from page 18 of PB which is received by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of ₹ 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 23 and the approval u/s 80G (5)(vi) of the Act in respect of Pt. Jashraj Music Academy Trust is found placed at page 19 of PB dated 30.03.2012 given by Director of Income Tax (Exemption). Therefore, since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee s claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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