CSR Expenditure Eligible for S. 80G Deduction if Supported by Donation Receipts and 80G Certificates: ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Corporate Social Responsibility (CSR) expenditure is eligible for deduction under Section 80G of the Income Tax Act, 1961, provided the assessee furnishes valid donation receipts and 80G certificates from registered entities.

Delhi Duty Free Services Pvt. Ltd. filed an appeal for assessment years 2017-18, 2018-19, and 2020-21, where the Assessing Officer had disallowed the company’s claim of deduction on CSR donations by holding that such expenditure, being mandatory under Section 135 of the Companies Act, was not voluntary and thus outside the scope of Section 80G.

The assessee, a prominent duty-free retailer operating at Delhi’s Indira Gandhi International Airport, had made CSR contributions aggregating ₹1.90 crore and claimed a deduction of ₹95.10 lakh under Section 80G.

The Assessing Officer rejected the claim on the ground that CSR outlays, being statutory in nature, could not be treated as voluntary donations, which are alone eligible under Section 80G.

The Commissioner (Appeals) upheld the disallowance, reasoning that CSR expenditure could not automatically be treated as donations merely because it was paid to charitable organizations.

Before the Tribunal, the assessee contended that the donations were made to institutions duly registered under Section 80G and that the contributions were genuine, supported by proper receipts.

The assessee relied on the decision of the Delhi ITAT in InterGlobe Technology Quotient Pvt. Ltd. v. ACIT (2024), where it was held that CSR contributions made to 80G-approved entities are eligible for deduction, subject to verification of conditions prescribed under the Act.

It was further argued that denial of such deduction merely because the expenditure was mandatory under the Companies Act would defeat the intent of promoting charitable spending.

The Tribunal observed that several coordinate benches, including in the case of Max New York Life Insurance Co. Ltd., had already clarified that deduction under Section 80G is allowable for donations that satisfy the statutory criteria, irrespective of whether the expenditure was classified as CSR in the books.

The Bench, comprising Satbeer Singh Godara (Judicial Member) and Naveen Chandra (Accountant Member), said that an assessee becomes eligible for deduction once it demonstrates that the payments were made to registered 80G institutions and substantiated through authentic donation receipts and certificates.

Accordingly, the ITAT remitted the issue to the Assessing Officer for verification of the requisite documents, directing that if the assessee produces valid donation receipts and 80G certificates issued by the donee entities, the deduction should be allowed in accordance with law.

The bench said that “we set aside the issue of claim of CSR expense to be considered for deduction u/s 80G, to the file of the Assessing Officer, with the direction that as the requisite details as required by section 80G has not been furnished before us, the assessee shall furnish the relevant information before the AO to claim for deduction under section 80G of the Income Tax Act along with all donation receipts and the 80G certificates issued by the Donee to the assessee. The Assessing Officer shall verify the detail in accordance with the law and if found proper, shall allow the CSR expense for deduction u/s 80G.”

The Tribunal made it clear that CSR expenses cannot be disqualified from deduction solely because they are statutorily mandated, provided the donations fulfill the parameters of Section 80G.

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