Trent Limited Vs DCIT (ITAT Mumbai)
Mandatory CSR Not Voluntary? Irrelevant for 80G— Disallowance u/s 37 Doesn’t Block 80G- Tribunal Follows Consistent Mumbai Rulings
Assessee had incurred CSR expenditure of Rs.2.65 crore during FY 2019-20 & claimed Rs.1.28 crore as deduction u/s 80G since the amount was paid to approved charitable institutions. AO disallowed the claim holding that CSR spends are mandatory u/s 135 of Companies Act & hence lack voluntariness, which is an essential ingredient of “donation”; CIT(A) upheld this reasoning.
Before Tribunal, Assessee relied on several Mumbai ITAT rulings (Synergia Lifesciences, Rustomjee Realty, Societe Generale Securities India, Sonata Information) which consistently held that although CSR expenditure is disallowed u/s 37(1), such statutory disallowance does not prevent deduction u/s 80G where payment is made to eligible institutions. Tribunal noted that the AO’s reasoning based on lack of voluntariness had already been rejected in these decisions, & CSR payments made to approved charitable institutions satisfy conditions of s.80G so long as other statutory requirements are met.
Following the binding coordinate bench rulings, Tribunal held that CSR expenditure, if donated to eligible institutions, is allowable u/s 80G. AO was directed to grant deduction of Rs.1,28,00,000 after verifying procedural conditions. Appeal was accordingly allowed.
