CSR Expenses Allowable as Deduction u/s 80G of Income Tax Act: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held Corporate Social Responsibility (CSR) expenses are allowable as a deduction under Section 80G of the Income Tax Act, 1961.

The assessee is a private limited company and is engaged in the business of manufacturing, selling, and in any way dealing with and conducting research and development activities in fermentation and life science products using biotechnology. The return of income was filed declaring a total income of Rs.90,80,08,580, which was later revised under Section 139(5) of the Income Tax Act declaring a total income of Rs.90,25,23,300.

As per the assessee, there is no restriction imposed on claiming deduction under section 80G of the Income Tax Act, even if the expenses have been incurred for the purpose of the Corporate Social Responsibility activity, provided the payment is made to eligible entities as listed in Section 80G of the Income Tax Act.

The Assessing Officer vide order passed under Section 143(3) read with section 144B of the Income Tax Act did not agree with the submissions of the assessee and held that under Section 80G of the Income Tax Act, the sums paid need to be a donation for the purpose of being eligible for deduction under the said section.

The Authorised Representative by placing reliance upon various decisions of the coordinate bench of the Tribunal submitted that CSR expenditure has been held to be allowable under Section 80G of the Income Tax Act.

Further, it was submitted that the CSR expenditure in the present case is for the purpose of education, medical, etc. He referred to the details of donation and payment receipts, forming part of the paper book, to support the submission that the CSR expenditure incurred is covered under the ambit of Section 80G of the Income Tax Act.

The only grievance of the assessee was against the denial of deduction under Section 80G of the Income Tax Act in respect of CSR expenditure. In the present case, it is undisputed that the assessee has not claimed the CSR expenditure under Section 37(1) of the Income Tax Act, and its claim is only restricted to Section 80G of the Income Tax Act.

In the case of Allegis Services (India) Private Ltd. V/s ACIT, in ITA No. 1693/Bang./2019, the deduction in respect of CSR expenditure under Section 80G of the Income Tax Act was denied by the Revenue on a similar basis as in the present case.

The two-bench member comprising of Amarjit Singh (Accountant member) and Sandeep Singh Karhail (Judicial member) held that the claim for deduction under Section 80G of the Income Tax Act in respect of CSR expenses cannot be denied.

Thus, the appeal by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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