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TMI Blog2024 (6) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant with the office of NFAC. The addition upheld by the Ld. CIT(A)/NFAC is unjustified, unwarranted and uncalled for." 2. The Ld. AO has ignored the detailed submissions made against the show cause notice and has rejected the same giving same reasons as raised in the show cause notice. The Ld. AO failed to appreciate the case laws quoted by the appellant and has also ignored the MCA circular submitted Against the show cause notice. The addition made by the A.O. is unjustified, unwarranted and uncalled for." 3. On the facts and circumstances of the case and in law, the Ld. AO has erred in not appreciating that the prescribed form for filing of re-computation has not been made available till the date of passing the order. In the absence of the form, the assessee could not apply for total income and the Ld. AO had made additions to the total income along with initiation of penalty proceeding for under reporting of income. The penalty initiated by the A.O. is unjustified, unwarranted and uncalled for. 4. Disallowance of claim of donation paid u/s. 80G, by ignoring the submissions, judicial decisions and MCA circular without giving any proper justification. Further Initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the income under the head 'Profits and gains of business or profession'. The intent of the Parliament in bringing this amendment is given in the Explanatory Memorandum to the Finance (No.2) Bill, 2014. The essence of the justification given was that: 1. CSR expenditure was an application of income, and could not be said to be incurred wholly and exclusively for the purposes of carrying on business as envisaged in Section 37 of the ITA. 2. If CSR expenditure is allowed as a tax deduction, it would result in subsidizing the CSR contribution by around one-third due to reduced tax expense. Hence, claiming the CSR expenses under section 80G is clearly against the intent of the legislature as it results in subsiding the CSR as well. 3.2.2.3 The question about CSR expenditure and its allowability under the income tax act 1961 has its origins in the companies act 2013. The said act mandated that a company satisfying any of the following criteria during the immediately preceding financial year has to comply with CSR provisions specified under section 135 of the Companies Act, 2013 read with the CSR Rules made thereunder 1. net worth of rupees five hundred crore or more, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies act 2013. This by its very nature distinguishes it from the donation under section 80G of the act which by its very nature is voluntary. This distinction is further borne out by the disclosure as well as accounting requirements for CSR funds. Sub-section (5) of section 135 of the Act has been amended by Companies (Amendment) Act, 2019 whereby, any amount remaining unspent under sub-section (5), pursuant to an activity other than any ongoing project as per section 135(6) has to transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year. As per the said amendment, the company would have an obligation to transfer the unspent amount of "other than relating to an ongoing project" to a specified fund. As per guidance note issued by ICAI, a provision for liability for the amount representing the extent to which the amount is to be transferred, needs to be recognized in the financial statements. The creation of provision by itself brings out its fixed liability status which distinguishes it from the voluntary donation under section 80G. That by itself makes it distinguishable from the 80G donation which is pure vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is different, the nature of both is different. One represents a statutory obligation which is required to be provided for in books of accounts. The other represents a voluntary donation which comes into picture only when profits have been arrived at. CSR expenditure represents a charge on profit, while 80G donations merely represent an application of profit. 3.2.2.4 Further, almost all the case laws quoted by the assessee in support of their claim were either the judgments by CIT(A) or the Tribunal. The department is in appeal in higher appellate authorities and hence the matter has not attained its legal finality." Accordingly, the A.O. vide his order u/s 143(3) r.w.s 144B of the Act, dated 28/09/2022 after, inter alia, declining the assessee's claim for deduction u/s 80G of Rs. 1,15,50,000/- (50 percent of Rs. 2,31,00,000/-), determined its income at Rs. 183,13,97,086/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). Ostensibly, the CIT(Appeals) finding no infirmity in the view taken by the A.O., upheld the disallowance of the assessee's claim for deduction of CSR expenses u/s. 80G of the Act. For the sake of clarity, the observations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he challenged the additions made, without submitting any documentary evidences or counter arguments in support of its claims. Mere claiming that the AO erred in making the additions does not give an edge to the appellant. Keeping in view all the stated facts and discussions, I find no reason in altering the additions made by the AO. In view of the above facts, merit of the case, non-responsive nature of the assessee and failure to carry out its responsibility as an appellant, Thus, I firmly uphold the AO's additions to the appellant's income and dismiss their appeal with unwavering resolve. 07. For statistical purposes, the appeal is summarily and unceremoniously dismissed, reflecting the appellant's complete lack of accountability and sincerity in the face of due process." 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home her contentions. 7. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023 dated 31.08.2023 (ii) Synergia Lifesciences Pvt. Ltd. Vs. DCIT, ITA No.938/Mum/2023 dated 20.06.2023 (iii) Honda Motorcycle and Scooter India Pvt. Ltd. Vs. ACIT, ITA No.1523/Del/2022 dated 22.08.2023 The Ld. AR had specifically drawn our attention to the order of the ITAT, Hyderabad in the case of Power Mech Projects Ltd. Vs. DCIT, Central Circle-1(3), ITA No.155/Hyd/2023, dated 31.08.2023. Elaborating further, it was submitted by the Ld. AR that all the aforementioned judicial pronouncements were pressed into service by the assessee company in its reply dated 19.01.2024 (supra) that was uploaded on the e-portal of the CIT(Appeals) on 19.01.2024 and 28.01.2024. 10. Per contra, the Ld. Departmental Representative ( for short 'DR') relied on the orders of the lower authorities. 11. As is discernible from the record, the assessee company had uploaded its reply/submissions dated 19.01.2024 on the e-portal of the CIT(Appeals) pursuant to the notice of hearing that was issued by the latter on 18.01.2024. As the rar/zip pdfs that were uploaded by the assessee company were damaged, therefore, the CIT(Appeals) vide his letter dated 22.01.2024 directed the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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