The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed the (Assessing Officer) to verify the genuineness of facts holding that the corpus contribution to the donee related to Corporate Social Responsibility (CSR) activities were eligible to deduction under Section 80G of the Income Tax Act 1961.
The assessee,J K Investo Trade (India) Limited company was engaged in the business of manufacturing and wholesale and retail trade and had been deriving income from business and profession. The assessee’s case was selected for complete scrutiny and the assessment order dated 09.04.2021 was passed by the Assessing Officer (A.O) under Section 143(3) of the Income Tax Act.
The A.O. made disallowance under Section 80G of the Income Tax Act claimed as deduction under Chapter VIA of the Income Tax ActAct on the ground that the assessee’s claim of deduction under Section 80G of the Income Tax Act pertained to donation related to CSR expenses which was restricted as per the provisions to Explanation 2 to Section 37(1) of the Income Tax Act.
Madhur Agarwal, on behalf of the assessee contended that the lower authorities had failed to consider the submission made by the assessee wherein the income tax return filed by the assessee contained the details of the name change, wherein the erstwhile company was in the name of J K Ansell Pvt. Ltd and details of the donation given to the donee and the amount of donation was for which the eligible amount of deduction.
He further contended that the A.O. had rejected the claim of the assessee for the reason that the claim of deduction under Section 80G of the Income Tax Act was a corpus contribution to the donee which was towards CSR activities by relying on the provision of Explanation 2 to section 37(1) of the Income Tax Act.
Uodol Raj Singh, on behalf of the revenue vehemently opposed to the said fact and stated that the first appellate authority had rejected the claim of the assessee on the ground that there were various factual inconsistencies in the claim of the assessee. He stated that the assessee was not entitled to claim deduction under Chapter 80G of the Income Tax Act where the donation was made to the donee for CSR activities and the same was expressly barred by the provisions of Explanation 2 to Section 37(1) of the Income Tax Act.
The two-member Bench of Om Prakash Kant, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) observed the rival submissions and perused the materials available on record. It was evident that there were various discrepancies in the factual matters pertaining to the donee’s name in the assessment order where the A.O. had mentioned the donee’s name to be ‘Apex Kidney Foundation’, whereas the receipt enclosed was received from Children’s Movement for Civic Awareness (CMCA).
It was also pertinent to point out that the donor’s name in the receipt was mentioned as ‘J K Ansell Pvt. Ltd.’ and not in the assessee’s name. From the submission made by assessee it was observed that the assessee had given documentary evidence in support of the fact that the erstwhile name of the assessee was ‘J K Ansell Pvt. Ltd.’ and the same was subsequently changed to ‘Raymond Consumer Care Pvt. Ltd.’ and was further changed to ‘J K Investor Trade (India) Limited’ being the successor to ‘Raymond Consumer Care Pvt. Ltd.’
The Bench held that the assessee was eligible to claim deduction under Section 80G of the Income Tax Act was irrelevant of the fact that the corpus contribution made by the assessee to the donee related to the CSR activities and AO was directed to allow the claim of the assessee subject to the verification and the genuinity of the fact that the donation made to the donee was eligible for deduction as per the provision of Section 80G of the Income Tax Act.
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