Donations to Charitable Institutions not Deductible as CSR Expenses: Delhi HC [Read Order]

The Delhi High Court in a recent ruling held that Donations to Charitable Institutions are not Deductible as (Corporate Social Responsibility) CSR Expenses.

The appellant, Vedanta Limited has proposed the following question of law whether on the facts and in the circumstances of the case and in law, the ITAT erred in upholding the disallowance of claim of Corporate Social Responsibility ('CSR')?

The AO disallowed a sum of Rs. 50,36,663/- claimed by the Assessee as expenditure on account of Corporate Social Responsibility (CSR). The learned counsel for the respondent states that to qualify for deduction as CSR, the expenditure must fall in one of the categories enlisted in Schedule (VII) of the Companies Act, 2013, whereas admittedly, none of the institutions to whom donations have been made by the Assessee fall in the said category.

The AO after examination of the record held that the said amount has not been incurred for the purpose of business and therefore does not fall within the provisions of Section 37 of the Act. The ITAT after perusing the details of the expenditure incurred by the Assessee on account of CSR returned a finding that the said expenses are not in the nature of CSR. The ITAT held that in fact, the payment details show that these were in fact, in the nature of charity and donations made to the third parties listed therein and therefore, the same do not merit to be claimed as an expenditure.

The Bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “The appellant has failed to show any infirmity in the said finding of fact of the ITAT and therefore, in our opinion the question does not arise for consideration and we decline to entertain the appeal on the said question.”

To Read the full text of the Order CLICK HERE

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