The Hyderabad bench of the Income Ta Appellate Tribunal (ITAT) held that the deduction under Section 80G of the Income Tax Act, 1961 can be claimed when the assessee satisfies all the conditions.
The name of the company was changed from QSSI Technologies India Private Limited to Optum Global Solutions (India) Private Limited. While scrutinizing the return of income the Assessing Officer made certain additions which include the disallowance of the deduction under section 80G of the Income Tax Act.
The Assessee donated Rs. 1,11,46,000/- to the Prime Minister’s National Relief Fund which is eligible for 100% deduction under Section 80G of the Income Tax Act, and another sum of Rs. 2,66,54,000/- to the institutions Smile Foundation, Vidya Comfort School, Parikrama Humanity Foundation, Helpage India, Udayan Care, Narayana Hrudayalaya Charitable Trust and Sewa International, which are eligible for 50% deduction under Section 80G of the Income Tax Act. Accordingly, the assessee claimed a deduction of Rs. 1,33,27,000/-.
The Assessing Officer disallowed the deduction under Section 80G of the Income Tax Act stating that CSR expenditure incurred under Section 135 of the Companies Act is categorically disallowed under Section 37 of the Income Tax Act, and, therefore, on similar logic deduction under Section 80G cannot be allowed.
The Authorized Representative submitted that the Assessing Officer failed to consider the view taken by the ITAT. It was further submitted that on a complete misunderstanding of the circular, the Assessing Officer concluded that when the law explicitly states the CSR spending can be allowed only if covered under section 30 to section 36 only and not otherwise, the assessee cannot Suo-moto expand the scope of such a law to imply Section 80G of the Income Tax Act.
The Departmental Representative submitted that when the assessee spends some amount in discharge of their CSR, such spending cannot be said as voluntary and it is only under the compulsion of law. Since the element of voluntariness is missing in this case, the said spending does not fall in the ambit of section 80G of the Income Tax Act.
It was further submitted that the assessee cannot claim compliance of the provisions under Section 135 of the Companies Act at the same time when such payments are claimed as donations under Section 80G of the Income Tax Act.
The Two-member bench comprising of Rama Kanta Panda (Vice-President) and K. Narasimha Chary (Judicial member) held that the assessee satisfied the conditions of Section 80G of the Income Tax Act, the assessee is entitled to claim deduction under Section 80G of the Income Tax Act in respect of such donations which formed part of the spend towards CSR. Thus, the appeal of the assessee was allowed.
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