CSR Expenses though disallowed u/s 37 are allowable deduction u/s 80G – ITAT

CSR Expenses though not allowed u/s 37 however allowable deduction u/s 80G of the Income Tax Act 1961 – ITAT

In a recent judgment, the ITAT Rajkot has held that CSR Expenses, even though not allowed u/s 37 of the Income Tax Act, however, the CSR expenditure is allowable u/s 80G of the Act.

ABCAUS Case Law Citation:
ABCAUS 4037 (2024) (05) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre (NFAC) in confirming the addition made by the Assessing Officer (AO) by holding claim of the assessee of claiming CSR Expenses under the guise of donation under the u/s 80G of the Income Tax Act, 1961 (the Act) is liable to be rejected.

The appellant assessee was a company. The assessee filed its Return of Income after adding expenditure on donation on account of Corporate Social Responsibility (CSR) debited in the profit and loss accounts u/s 37(1) of the Act read with explanation 2 thereto. However, the assessee claimed its deduction u/s 80G of the Act.

The Return of Income was taken for Scrutiny assessment, the Assessing Officer held the expenses made by the assessee relating to CSR are not allowable under section 80G of the Act and denied the claim u/s 80G of the Act.

Before the Tribunal, the assessee contended that this issue is already covered in favour of the assessee by the various decisions of the Tribunals.

The Tribunal observed that the Co-ordinate Benches of the Tribunal had consistently taken the view in favour of the assessee and held that the CSR Expenses, even though not allowed u/s 37 of the Act, in pursuant to the insertion of the explanation (2) to section 37 vide Finance Act, 2014 w.e.f. 01.04.2015, however, the said expenditure is allowed u/s 80G of the Act.

The Tribunal noted that in a recent decision of the Co-ordinate Bench has discussed in depth, the issue of allowability of CSR expenditure for donation made u/s 80G of the Act and held that the claim for deduction under section 80G of the Act in respect of CSR expenses cannot be denied.

Accordingly, following the judicial precedents, the Tribunal deleted the addition made by the AO and allowed the claim u/s 80G of the Act on the CSR Expenses.

Download Full Judgment Click Here >>

• Non-deduction of TDS does not make transaction as unexplained in the hands of deductee – ITAT
• Last date to submit MEF 2026-27 extended to 09.09.2026
• Validity of demand u/s 156 for default u/s 115-O, if assessment order u/s 143(3) has Nil demand
• Issue already examined and adjudicated by CIT(Appeals), can’t be reopened on same set of facts
• TDS can’t be denied for non deposit of tax deducted by the deductor – High Court