Cosmo First Ltd. Vs DCIT (ITAT Delhi)
ITAT Allows Section 80G Deduction as CSR Donations Satisfying Statutory Conditions Remain Eligible; Section 80G Claim Allowed Because CSR Expenditure Continues to Form Part of Total Income: ITAT; ITAT Rejects View That CSR Donations Are Not Voluntary Because Statutory Obligation Alone Does Not Defeat Section 80G Claim; Enhanced Section 80-IA Deduction Remanded Because Additional Evidence Requires Verification.
The appeal was filed against the final assessment order dated 29.10.2024 passed under Sections 143(3), 144C(13), and 144B of the Income Tax Act for Assessment Year 2021-22 pursuant to the directions of the Dispute Resolution Panel (DRP). The appeal involved issues relating to deduction under Section 80G for CSR-related donations, enhanced deduction under Section 80-IA, transfer pricing adjustment on outstanding receivables from associated enterprises, computation of income, deduction under Section 80M, interest under Sections 244A and 234C, and initiation of penalty proceedings under Section 270A.
The primary dispute concerned the disallowance of deduction of Rs. 1.52 crore under Section 80G. The Assessing Officer and the DRP had denied the deduction on the ground that the donations were made to satisfy Corporate Social Responsibility (CSR) obligations under the Companies Act, 2013 and therefore were not voluntary donations eligible for deduction under Section 80G. The assessee argued that there was no correlation between the disallowance of CSR expenditure under Explanation 2 to Section 37(1) and the availability of deduction under Section 80G.
