First American (India) Pvt. Ltd. Vs ACIT (ITAT Bangalore)
The appeal concerned the disallowance of a deduction of ₹90,81,516 claimed under Section 80G of the Income-tax Act for Assessment Year 2016-17. The assessee, engaged in BPO operations, software services, and IT infrastructure development and sales, had incurred expenditure towards Corporate Social Responsibility (CSR) activities and claimed a portion of those payments as eligible donations under Section 80G.
During assessment proceedings, the Assessing Officer (AO) observed that the deduction claimed under Section 80G related to amounts that formed part of the CSR expenditure debited to the profit and loss account. The AO held that only donations made outside CSR expenditure could qualify for deduction under Section 80G and consequently disallowed the claim. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the disallowance, holding that a donation must be voluntary to qualify under Section 80G and that CSR expenditure, being obligatory in nature, could not be treated as a voluntary donation.
Before the Tribunal, the assessee argued that out of the total CSR expenditure of ₹1,81,63,031, an amount of ₹90,81,516 represented donations eligible for deduction under Section 80G. It was contended that there was no general restriction in Section 80G against claiming deduction merely because the expenditure formed part of CSR obligations. The assessee further relied on Section 80G(2)(iiihk) and Section 80G(2)(iiihl), submitting that only certain specifically identified CSR-related contributions were excluded from deduction under Section 80G, while other qualifying donations remained eligible.
