Assessee eligible for deductions u/s 80G for donations out of CRS funds, if condition of sections 80G are satisfied – ITAT
In a recent judgment, ITAT Mumbai has held that assessee would be eligible for claim of deductions u/s 80G for eligible donations out of the CRS funds, if the stipulated condition of sections 80G are duly satisfied.
ABCAUS Case Law Citation:
4713 (2025) (08) abcaus.in ITAT
Important Case Laws relied upon by Parties:
Saluja Fabrics Ltd. Vs. Dy. CIT
CIT Vs. Green World Corporation
In the instant case, the assessee had challenged the revisionary order passed u/s 263 of the Income Tax Act, 1961 (the Act) by the PrCIT holding that assessee was not entitled to deductions u/s 80G towards donations made out of the CRS funds.
The assessment in the case of the appellant assessee was completed u/s 143(3) r.w.s. 144B of the Act wherein the returned income declared by the assessee had been accepted by the Assessing Officer (AO) as assessed income.
Subsequently, the case of the assessee was picked up revisionary proceedings invoking the provision of section 263 of the Act by the jurisdictional Pr. CIT. The PrCIT raised the issue qua the justification assessee’s claim for deduction u/s. 80G on payment of donation to charitable institutions made from the funds allocated in accordance with the mandatory requirement of the Companies Act, 2013 towards Corporate Social Responsibility (CSR).
The Pr. CIT observed that the assessee had made payments to various foundation, Sangh, Institute etc. and had claimed 50% of the same as deduction u/s. 80G of the Act.
The PrCIT further noted that the expenditure for which deduction was claimed were purely CSR expenditure on which 80G deduction was not allowable. The PrCIT opined that CSR expenditure by the assessee forms part of the mandatory requirement of the section 135 of the Companies Act, 2013 and consequently not eligible for deduction u/s. 80G of the Act. Allowing deduction under section 80G will result in subsidizing these expenses incurred by the corporate which is not the intent of the legislature.
Accordingly, the PrCIT held that assessment order suffered from infirmity and was erroneous in so far as it is prejudicial to the interests of the revenue. Accordingly, a notice u/s. 263 of the Act, was issued to the assessee.
In response to aforesaid notice, the assessee stated that the amount for CSR expenses can be utilized towards payment for charity and donation and also the assessee is entitled to claim deduction u/s. 80G of the Act if the stipulated conditions of Section 80G of the Act are satisfied.
To support its submission, the assessee placed reliance on a catena of decisions and stated that view so adopted by the AO was duly backed by various decisions of the Tribunals and a plausible view and merely because the Commissioner does not agree with the view of AO the action u/s 263 would be unjustified.
However, Pr. CIT held that funds allocated for CSR expenses cannot be utilized for granting of donations eligible for deduction u/s. 80G of the Act and that if CRS funds are utilized for charitable donations, claim of deduction u/s. 80G could not be allowed. Accordingly, PrCIT set aside the assessment holding that the order passed by the AO was erroneous in so far it was prejudicial to the interest of the revenue for allowing ineligible claim of deduction u/s. 80G of the Act.
Before the Tribunal the assessee submitted that the issue in hand and the sole controversy is covered by the various decision of the Tribunal including jurisdictional Tribunal and there is no contrary decisions of the Hon’ble High Courts or of Hon’ble Apex Court, therefore, the issue being covered in favour of the assessee has to be decided in favour of the assessee.
The Tribunal observed that the issue regarding allowability of 80G deduction, if the eligible donation are made from the funds allocated for CSR had already been deliberated upon and decided by the Tribunal in favour of the assessee, extending the finding that if the stipulated condition of Section 80G are satisfied, the assessee would be entitled to claim deduction u/s. 80G in respect of eligible donations which forms part of the amount sanctioned towards CSR activities.
The Tribunal noted that the Co-ordinate Bench had thoroughly discussed this issue and held that the provisions of section 37 is computation provision whereas section 80G is a beneficial provision which allows deduction towards payments made by the assessee for charitable purposes and therefore these two sections are independent of each other. It was held that CSR expenditure is not allowable as deduction while computing the business income under the provision of Section 28-44DB, whereas deduction u/s.80G is allowed while computing the total income under Chapter VIA. There is no precondition that claim for deduction u/s.80G on a donation should be voluntary. It is independent of computation of business income as it is allowed from Gross Total Income.
In view of the above, the Tribunal opined that the reason for which revisionary jurisdiction was invoked by the Pr. CIT, that whether the claim of expenses under CSR cannot be utilized for donation to claim deduction u/s. 80G was bereft of substance, since the issue has been answered by the coordinate benches of this Tribunal in various decisions .
Accordingly, the Tribunal held that the assessee would be eligible for claim of deductions u/s 80G for eligible donations out of the CRS funds, if the stipulated conditions of sections 80G are duly satisfied.
As a result, grounds of appeal raised by the assessee were allowed.
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