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CSR may qualify for Deduction under Section 80G of Income Tax Act: ITAT grants relief to Goldman Sachs

ITAT - CSR - Income Tax Act - Goldman Sachs - Taxscan

In a Relief to Goldman Sachs, the Income Tax Appellate Tribunal (ITAT), Bangalore Bench held that Corporate Social Responsibility (CSR) is also eligible for deduction under Section 80G of Income Tax Act subject to assessee satisfying the requisite conditions prescribed for deduction under Section 80G of the Act.

The assessee, M/s. Goldman Sachs Services Pvt. Ltd. is a subsidiary company of Goldman Sachs Mauritius LLC and Goldman Sachs (Mauritius) NBFC LLC and being part of the Goldman Sachs Group. The assessee is engaged in the development of computer software and provides Software Development Services to the Associated Enterprises (AEs) outside India and has Information Technology Enabled Services (ITES) to support the business processes of the Goldman Sachs Group companies and the assessee company is compensated at Cost+ mark up of 16%.

The assessee company filed the Return of Income for the Assessment Year 2015-16 electronically with a total income of Rs.383,05,12,310/-. The case was selected for scrutiny under CASS and Notice under Section 143(2) and 142(1) of the Act were issued. On perusal of the Form No.3CB filed by the assessee, the Assessing Officer found there are international transactions with its AEs, and with prior approval of Prin.CIT-3, the matter was referred to as the Transfer Pricing Officer (TPO) for the determination of Arm’s Length Price (ALP).

The TPO has passed the order disallowance under Section 80G of the Act of Rs.1,12,60,750/- and disallowance under Section 40 (a)(i) of the Act for secondment of employees payment for non-deduction of TDS on Fees for Technical Services (FTS) Rs.48,35,91,738/-.

The Tribunal consisting of an Accountant Member A.K. Garodia and a Judicial Member Pavan Kumar Gadale while directing the matter back to the AO observed that the AO has failed to consider the contributions as not voluntary but a legal obligation and has accepted the genuineness of the contributions.

“We are of the opinion that the matter has to be considered for examination and verification of facts subject to the assessee satisfying the requirements of claim u/s.80G of the Act. Accordingly, we restore the entire disputed issues to the file of A.O. for fresh examination and verification as discussed above and the assessee should be provided the adequate opportunity of hearing and shall cooperate in submitting the information,” the Tribunal said.

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