TMI Blog2023 (12) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts, is accepted. Accordingly, the excess disallowance of Rs. 8,93,606/- retained by Ld. CIT(A) is directed to be deleted. Ground Nos. 1 2 of the appeal are therefore allowed. Disallowance of the deduction claimed u/s 35(2AB) - appellant had incurred scientific research expenditure, both revenue and capital, at their approved in-house R D facility at Bengaluru - HELD THAT:- It is noted that the DSIR has issued Form 3CL dated 31.08.2023, in terms of which, the appellant is entitled to weighted deduction of Rs. 25,89,66,000/- [17,26,44,000 X 150%] u/s 35(2AB) of the Act. The balance sum of Rs. 55,00,605/- [17,81,44,605 17,26,44,000] however is only eligible for normal deduction, as rightly held by the Ld. CIT(A). Accordingly, the total deduction allowable u/s 35(2AB) and 35(1)(i)/(iv) of the Act works out to Rs. 26,44,66,605/- [25,89,66,000 + 55,00,605] as opposed to the deduction of Rs. 26,72,16,908/- claimed by the appellant in the return of income. Accordingly, the disallowance of Rs. 8,90,72,303/- confirmed by the Ld. CIT(A) stands restricted to Rs. 27,50,303/- [26,72,16,908 - 26,44,66,605]. These grounds are therefore partly allowed. Admissibility of claim not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Income. It is also noted that wherever the Legislature intended that CSR contributions to any specific charitable trusts should be denied deduction, necessary provisions were incorporated in the specified subclauses, viz. sub-clauses (iiihk) and (iiihi). It is noted that no such debar has been set out by the Legislature in any other sub-clauses of Section 80G of the Act. As far as the reasoning given by the AO to deny the deduction is concerned, we find the same to be of no relevance as the same is not borne out from the provisions contained in Section 80G of the Act. As decided in JMS Mining Pvt. Ltd. [ 2021 (7) TMI 907 - ITAT KOLKATA ] specific prohibition/restriction has been made for CSR contributions only to two eligible charitable organizations, then it automatically implies that there is no prohibition/restriction in respect of claim of CSR expenses, in any other cases, which are otherwise eligible under Section 80G of the Act. Following the same, this Tribunal in the case of Acme Chem Ltd Vs ACIT [ 2023 (3) TMI 1434 - ITAT KOLKATA] has deleted similar disallowance made by the AO u/s 80G of the Act in relation to the CSR donations made to registered charitable trusts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the weighted component of the deduction claimed u/s 35(2AB) of the Act being Rs. 8,90,72,303/- in terms of the Form 3CL as and when issued by the DSIR. 6. For that on the facts and in the circumstances of the case and in law, the lower authorities erred in not computing the short term capital gain by taking the value of the cost of investments sold in accordance with FIFO Method, as mandated by Section 45(2A) of the Act. 7. For that on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was wholly unjustified on facts and in law in denying the deduction of Rs. 11.07 crores claimed u/s 80G of the Act on the alleged premise that the donation of Rs. 22.14 crores made by the appellant was allegedly involuntary and made to a related entity in violation of the conditions precedent in Section 80G of the Act. 8. For that on the facts and in the circumstances of the case and in law, the reasoning given by the Ld. CIT(A) to uphold the denial of the deduction claimed u/s 80G of the Act was frivolous and did not emanate from the extant provisions of the law and in that view of the matter the disallowance of Rs. 11.07 crores claimed u/s 80G of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omprised of (i) direct expenses i.e. demat charges of Rs. 8,399/- and (ii) disallowance as per Rule 8D(2)(ii) being 1% value of tax-free investments being Rs. 14,10,610/-. It was accordingly claimed that the suo moto disallowance u/s 14A was in accordance with both Rule 8D(2)(i) (ii) and did not solely constitute direct expenses . According to the appellant, therefore, no further disallowance was warranted u/s 14A of the Act in this regard. It is noted that, the Ld. CIT(A) agreed that the appellant had suo moto offered disallowance of Rs. 14,19,009/- under Section 14A of the Act but continued to hold it to be in the nature of direct expenses under Rule 8D(2)(i). The Ld. CIT(A) accordingly restricted the disallowance to Rs. 8,93,606/- [9,80,615 + 13,32,000 14,19,009]. Being aggrieved, the appellant is now in appeal before us. 5. Heard both the parties. It is noted that, the appellant had computed and offered disallowance of Rs. 14,19,009/- under Section 14A in terms of Rule 8D, whose details have been placed at Pages 30 to 39 of the Paper Book-I. Perusal of the same reveals that the disallowance comprised of following :- (i) Direct Expenses [Demat Charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Rules, 1962, in support of the weighted deduction claimed u/s 35 of the Act. Although the appellant submitted the initial approval issued by the DSIR in Form 3CM and the audit report in Form 3CLA filed before DSIR seeking weighted deduction in relation to the expenditure of Rs. 17,81,44,605/-, but it expressed its inability to furnish Form 3CL as the same was pending to be issued by the DSIR. The AO, in the absence of Form 3CL, disallowed the deduction claimed u/s 35(2AB) with the following rider: However, this claim is disallowed with a rider that in due course of time even after the passing of this Assessment Order when assessee received Form No. 3CL from DSIR for AY 2018-19, assessee can move in a request for Rectification under Section 154 of the Income Tax Act, 1961 and due consideration should be given to the Rectification plea of the assessee. Allowance of expenditure under Section 35(2AB) for AY 2018-19 should be allowed to the assessee based on Form 3CL once the assessee is in receipt of the same. 8. Aggrieved by the above order, the appellant preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) is noted to have upheld the finding of the AO tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndated that the profit/gain arising on sale of listed investments shall be determined on the basis of First-In First-Out (FIFO) Method. The appellant accordingly furnished a revised working statement in which the short term capital gain which was originally computed at Rs. 20,32,04,468/- stood revised to Rs. 20,31,33,803/-. The AO is however noted to have rejected the claim since it was not raised in the original return of income. Aggrieved by this action of Ld. AO, the appellant went in appeal before the Ld. CIT(A) who also did not interfere with the order of AO. Now the appellant is in appeal before us. 12. Heard both the parties. The first issue which arises for our consideration is, whether the claim made by the appellant regarding re-computation of STCG on sale of investments on FIFO basis in the course of assessment, is admissible in absence of such claim being raised in the return of income. For this, we gainfully refer to the decision rendered by the Hon ble jurisdictional Calcutta High Court in the appellant s own case which is reported in 396 ITR 677. In the decided case the Hon ble Court after considering the decision of Hon ble Supreme Court in the case Goetze (India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable business income. However, as the sum contributed qualified for specific deduction u/s 80G of the Act, the appellant is noted to have claimed the same in the manner as prescribed therein, i.e. 50% of the donation being Rs. 11,06,85,217/-. Before the AO, complete details in support of the deduction claimed u/s 80G of the Act was provided. It is however noted that, the AO denied the deduction so claimed by observing that the donation was not made voluntarily, and that the appellant had chosen to make the same to related concerns covered u/s 80G of the Act. On appeal, the Ld. CIT(A) is noted to have confirmed the order of the AO, aggrieved by which, the appellant is now in appeal before us. 15. Assailing the action of Ld. CIT(A), the appellant submitted that the reasoning given by the lower authorities for making the impugned disallowance was extraneous and did not emanate from the extant provisions of Section 80G of the Act. The Ld. AR pointed out that, nowhere did the provisions of Section 80G of the Act provide that, the pre-condition to claim deduction is that, the sums paid to charitable trusts is required to be demonstrated to have been paid voluntarily. Also, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 80G of the Act. Rather, we find the reliance placed by the Ld. AR of the appellant on the decision of this Tribunal at Kolkata in the case of JMS Mining Pvt. Ltd. vs PCIT in ITA No. 146/Kol/2021 dated 1st July 2021 to be relevant. In the instant case also, the Tribunal after considering the provisions of Explanation (2) to Section 37 of the Act and Section 80G of the Act, observed that the Parliament intended restrictions to CSR expenditure spent by way of donations to only two funds/trusts i.e. Swachh Bharat Kosh and Clean Ganga Fund. The Tribunal thus held that, the fact that specific prohibition/restriction has been made for CSR contributions only to two eligible charitable organizations, then it automatically implies that there is no prohibition/restriction in respect of claim of CSR expenses, in any other cases, which are otherwise eligible under Section 80G of the Act. Following the same, this Tribunal in the case of Acme Chem Ltd Vs ACIT in ITA No. 650/Kol/2022 dated 31.03.2023 has deleted similar disallowance made by the AO u/s 80G of the Act in relation to the CSR donations made to registered charitable trusts, by observing as follows :- 60. We fail to find an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voking revisional jurisdiction. Therefore, the usurpation of jurisdiction by Ld. PCIT u/s 263 of the Act is bad in law and therefore need to be quashed and we order accordingly. 24. In the result, the appeal of the assessee is allowed. 61. We, therefore, respectfully following the decision referred herein above, are inclined to hold that the assessee is eligible for deduction u/s 80G of the Act at Rs. 17.50 lakh and thus, set aside the finding of ld. CIT(A) and allow ground nos. 8 9 raised by the assessee for AY 2017-18. 17. Respectfully following the above decisions (supra), we are inclined to hold that the assessee is eligible for deduction of Rs. 11,06,85,217/- claimed u/s 80G of the Act. We accordingly set aside the order of the lower authorities in this regard and allow Ground Nos. 7 8 raised by the appellant. 18. Ground Nos. 9 10 relate to non-granting of credit for dividend distribution tax paid u/s 115-O and levy of interest u/s 115P of the Act. At the time of hearing, the Ld. AR brought to our notice that the JAO had rectified this error by passing rectification order dated 19.05.2023 u/s 154 of the Act, copy of which was placed before us. Having r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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