Plant Lipids Pvt Ltd. Vs DCIT (ITAT Cochin)
The appeal before the Cochin Bench of the Income Tax Appellate Tribunal concerned the disallowance of deduction claimed under Section 80G of the Income-tax Act, 1961, in respect of donations made out of Corporate Social Responsibility (CSR) expenditure for Assessment Year 2020-21.
The assessee, a private limited company engaged in the manufacture and export of spice oils, oleoresins, and related products, filed its return of income declaring total income of ₹160.94 crore. The Assessing Officer (AO) referred the assessee’s international transactions to the Transfer Pricing Officer (TPO), who proposed an adjustment of ₹2.03 crore towards notional guarantee commission on a corporate guarantee provided to a subsidiary. Based on the TPO’s order, a draft assessment order was issued proposing, inter alia, disallowance of deduction under Section 80G amounting to ₹49.34 lakh, being 50% of donations made from CSR expenditure.
The assessee objected before the Dispute Resolution Panel (DRP). The DRP partly reduced the transfer pricing adjustment but upheld the disallowance of the Section 80G claim relating to CSR donations. Consequently, the AO passed the final assessment order disallowing the deduction under Section 80G and assessed the total income at ₹161.49 crore.
Aggrieved, the assessee appealed before the Tribunal, raising a solitary issue: whether deduction under Section 80G could be denied merely because the donations were made as part of CSR expenditure.
