TMI Blog2020 (3) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... educational facilities to the children etc. The expenses incurred by the assessee were on welfare schemes only which are for malaria eradication, distribution of mosquito nets, construction of mandaps etc. Therefore, these expenses were wholly and exclusively for the business purpose. We are of the view that the CSR expenditure incurred prior to asst. Year 2015- 16 are allowable business expenditure as the same are wholly and exclusively incurred for the purpose of business. The explanation to section 37 of the Act restricting the allowance of CSR expenditure is prospective in nature and has no application prior to asst. Year 2015-16. For that we rely on the judgment of the co-ordinate Bench of ITAT Raipur in the case of ACIT, Circle 1( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Development Expenses of the concerned district as per verification from the chairman and collector of Periphery Development society. As per mining provisions, Periphery Development Expenses are incurred on the nearby people of mining region and the assessee could not furnish and establish that these expenses are related to business activity as per the mining provisions. 2. The ld. CIT(A) has erred in judging the Sec. 37(1) in its full applicability. 3. The appellant craves leave to make any addition, alteration or modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings. 3. Brief facts qua the issue are that the assessee company filed its return of income showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Assessing Officer. As per the ledger copy of the expenses another fact was noticed by Assessing Officer that as per mining provision periphery development expenses is an expense that would be expenses on the territorial jurisdiction of the mining in lieu of excretion of mineral. The periphery development expenses should be incurred on the jurisdiction of the nearby mining people. However, Assessing Officer noticed from the ledger copy of periphery development expenses that most of the 85% expenseswererelated to Odisha Flood Relief and rest of the 15% expenses related to construction of Temple and Road. Therefore, AO noticed that excess periphery development expenses were not related to any business activity of the assessee. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 135 of Companies Act, 2013 provides that any company having Net Worth of Rs.500 crores or more, or turnover of Rs. 1000 crores or more, or Net Profit of Rs.5 crores or more is required to spend 2 per cent of average net profit earned in the immediately preceding 3 financial years, for Corporate Social Responsibility (CSR).However, w.e.f. asst. year 2015-16, an explanation to section 37(1) of the I.T. Act has been added which provides that the above mentioned expenditure on CSR activities shall not be considered as expenditure incurred for the purpose of business or profession. As such, such expenditure shall not be allowed as deduction u/s 37(1) of the Act for computing income under the head Business or Profession. Therefore, the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure on account of the provisions of Income Tax Act, 1961. He has stated that expenditure above 5% is not permitted. 8. I am afraid the stand of the Assessing Officer cannot be accepted. The Periphery Development Expenses, if incurred have to be taken as a business expenditure. The maximum that was to be explained as per the ld. Assessing Officer was 5%. He has sort of accused the assessee for spending more that 5%. This stand of the ld. Assessing Officer cannot be accepted inasmuch as how much the assessee spends legitimately is the decision of the assessee. The Revenue cannot question this expenditure as per the decision of the Apex Court in 288 ITR 1. I may clarify that the decision in Thakur Prasad Sao and sons Pvt. Ltd. was o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
