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TMI Blog2025 (5) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of cigarettes, tobacco and chewing products, tea and retail products. During the year under consideration, the Assessee has shown income from sales at Rs. 44,53,11,79,000/-, other income at Rs. 32,77,55,000/- and net profit has been computed at Rs. 271,39,88,000/- in Profit and Loss Account. The return of income was e-filed on 30/11/2025, declaring total income of Rs. 262,49,40,650/-. The return was processed under Section 143(1) of the Act. Notice u/s. 143(2) was issued on 06/04/2016 and thereafter notice under Section 143(1) was issued on 16/09/2016 and 18/05/2017 along with questionnaire and in response the Assessee Company filed/furnished the details called for. Accordingly, assessment under Section 143(3) of the Act was carried out vide Assessment Order dated 30/10/2017. However, on perusal of the assessment records of the Assessee for Assessment Year 2015-2016,it was noticed from the computation of income that Assessee Company has added donation and CSR expenses of Rs. 5,66,35,988/-(-) (Rs.91,62,920/- + 4,74,73,068) and claimed deduction under Section 80G of Rs. 2,67,51,534/- which was allowed. It is further observed that since both CSR expenses and 80G donations are two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as expenses made as Corporate Social Responsibility (CSR) were added to the total income. 3. Aggrieved by the said Assessment order, the assessee filed appeal before ld. CIT(A). The assessee in appeal before the ld. CIT(A), has challenged the reopening of the assessment as well as addition made of the amount claimed under Section 80G of the Act. The ld. CIT(A) has dismissed both the grounds upholding reassessment and confirming the addition made vide assessment order dated 30.03.2022. 4. Aggrieved by the impugned order of the ld. CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal "GROUND NO. I: REOPENING OF ASSESSMENT IS BAD IN LAW 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-26, New Delhi ("the Ld. CIT(A)") erred in upholding the action of the Additional/Joint/ Deputy/ Assistant Commissioner of Income Tax/Income-tax Officer, National Faceless Assessment Centre, Delhi (" the Ld. AO") of re-opening of the assessment u/s. 147 of the Income Tax Act ("the Act"). WITHOUT PREJUDICE TO GROUND NO. I GROUND NO. II: DISALLOWANCE OF DEDUCTION U/S 80G OF THE ACT AMOUNTING OF Rs. 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed. 7. The Ld. DR on the other hand supported the judgment of ld. CIT(A) and submitted that the reassessment has been done on the valid grounds as there was sufficient material to suggest that the appellant/assessee has failed to disclose fully and truly all the material facts necessary for assessment which resulted into escapement of income from tax. 8. We have considered the rival submission and examined the impugned order. The ld. CIT(A) has dealt with the objections and arguments to the reopening of the assessment in para no.5.2 to 5.2.1 and the same are extracted below. "5.2 I have considered the fact of the case and submissions filed by the appellant. The appellant contented that the reasons are only based on information already on record like return of income, computation of income, annual report, tax audit report and other documents filed and the replies filed during the assessment proceedings does not hold ground as if the assessment order is non- speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Hon'ble Delhi High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the issue raised by the appellant found to be meritless. Hence, this ground of appeal raised by the appellant is hereby dismissed." 9. We have also examined the original assessment order dated 30/10/2017.On perusal of the same, we have noticed that there is nothing to suggest that the ld. AO has examined the issue of deduction claimed under Section 80G on the funds which were also claimed to be spent for the purpose of CSR. We have also examined the reasons for reopening and approval given by the ld. PCIT. We do not find any reason to disbelieve the opinion of the ld. CIT(A) as extracted above and the approval given by the ld. PCIT u/s. 151 of the Act. The issue whether the amount claimed under as contribution towards social responsibility (CSR) expenses can also be claimed by deduction under Section 80G of the Act was not brought to the notice of the ld. AO in the original assessment order and for reason that opening of the assessment, in our opinion, is neither bad in law nor void as is being claimed by the assessee. The finding recorded by the ld. CIT(A) as extracted above are found to be apt and opposite which is based on said legal principle and settled precedents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be treated as deductible donations. 11. It is therefore submitted on behalf of the revenue that disallowance of CSR expenditures claimed u/s. 80G by the assessee need to be upheld and the order of the ld. CIT(A) be confirmed. 12. The ld. AR on the other hand argued that from the plain reading of Section 80G of the Act, the contention made by the appellant are covered within the ambit of Section 80G of the Act. The Ld.AR has referred to Explanation 2 Section 37(1) of the Act and submitted that there is no correlation between 37(1) and Section 80G of the Act. He further argued that Memorandum to Finance Act 2014 has clarified that no deduction will be allowed for CSR expenses as business expenditure, but it make no reference to the ineligibility or restriction in claiming deduction under Section 80G for CSR amount spent in the Companies Act, 2013‟s obligations. 13. Regarding the reliance by the learned DR on the of the judgment of the Hon'ble Supreme Court in Commissioner of Expenditure Tax Vs. PVG Raju, Raja of Vizianagaram [(1976 SCR (1) 1017)] and Honourable Delhi Tribunal in case of Agilent Technologies (International) (P) Ltd. Vs. ACIT [(2024) 160 taxmann.com 238 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR. We have noticed that learned Delhi Tribunal in the case of Interglobe Technology Quotient Private Limited, ITA No.95/Del/2024 dated 28/05/2024 has dealt with argument raised on behalf of the revenue before us and the finding of Delhi Tribunal in paragraph 6.5 to 7.5 are relevant and extracted as under: 6.5. Reliance was also placed on the decision of Mumbai Bench of the Tribunal in the case of Synergia Lifesciences Pvt Ltd vs DCIT: ITA No. 938/Mum/2023 Mum Trib), which has relied on the decision of Bangalore bench of the Tribunal in the case of Allegis (supra) and held that "the claim for deduction under section SOG of the Act in respect of CSR expenses cannot be denied". The Tribunal, however, remitted the issue to the file of the assessing officer with the directions to allow deduction under section 80G of the Act is the conditions specified therein are satisfied. He also cited the following decisions for the same proposition of law. - FNF India Private Limited vs ACIT: 133 taxmann.com 251 (Bang Trib.) - Infinera India (P.) Ltd vs. JCIT: 194 ITD 463 (Bang Trib.) - First American (India) Private Limited: ITA No. 1762/Bang/2019 (Bang. Trib) - Sling Media (P) Ltd v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by an assessee on the activities relating to CSR referred to in section 135 of the CA 2013, shall not be deemed to be an expenditure incurred by an assessee for the purpose of business or profession and shall not be allowed as deduction under section 37(1) of the IT Act. The intent of Parliament in bringing the aforesaid provision is given in the Explanatory Memorandum to the Finance (No.2) Bill, 2014 and is reproduced as under: "CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for. computing the taxable income of the company, Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one-third of such expenses by the Government by way of tax expenditure." (emphasis supplied) 7.4 The aforesaid explanatory memorandum categorically expresses th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt towards CSR expenditure. Finding of Mumbai Tribunal in paragraph 8-13 are relevant and extracted as under: "8. Ground no. 2 pertains to the disallowance of Rs. 15 lacs u/s. 80G of the Act towards CSR expenses. The Id. A.O. has rejected the claim of the assessee for the reason that the CSR expenses is not a voluntary donation but is merely a statutory obligation u/s. 135 of the Companies Act, 2013 read with Schedule VII of the Companies Rules, 2014. The Id. A.O. has also relied on the insertion of Explanation 2 to section 37(1) of the Act vide Finance (No.2) Act, 2014 where the CSR expenses incurred by the Companies Act shall not be allowed as 'business expenditure' as per the said provision. The Id. A.O. relied on the decision of the Hon'ble Apex Court in the case of Commissioner of Expenditure - Tax vs. PVG Raju, Raja of Vizianaram [1967] SCR (1)1017C which has held that donation has to be voluntary for it to satisfy the test of voluntariness. The Id. CIT(A) upheld the order of the Id. A.O. holding that the reasoning given by the Id. A.O. was justifiable. 9. The learned Authorised Representative (ld. AR for short) for the assessee contended that the issue of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(1) of the Act, the CSR expenses referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of business or profession. It is observed that the said expenses pertaining to CSR has been claimed as deduction u/s. 80G of the Act which claim was perennially rejected by the Revenue for the reason that only donations which are voluntary in nature will come under the purview of section 80G of the Act and donation towards CSR was merely a statutory obligation on companies as per section 135 of the Companies Act, 2013. It is pertinent to point out that the intention of the legislature was clear when the same was clarified by the Finance (No.2) Act, 2014 that CSR expenses will not fall under the business expenditure and also there has been an express bar specified in sub clause (iiihk) and (ihl) of section 80G(2)(a) of the Act that any sum paid by the assessee as donation to Swatch Bharat Kosh and Clean Ganga Fund will not come under the purview of deduction u/s. 80G of the Act subject to certain conditions. This justifies the fact that the other donations specified u/s. 80G of the Act would be entitled to deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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