CSR Donations Eligible for Section 80G Deduction; Belated Form 67 Can’t Defeat FTC: ITAT Mumbai

Reliance Retail Limited Vs ACIT (ITAT Mumbai)

Material Facts

The assessee and the Revenue filed cross-appeals against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 23.10.2025 for Assessment Year (AY) 2020–21.

In its appeal, the assessee challenged:

• The validity of the assessment order under Sections 143(3) read with 144B on the ground that it was barred by limitation under Sections 153(1) and 153(4).
• Disallowance of deduction under Section 80G amounting to ₹25,07,50,000 in respect of donations of ₹50,15,00,000 made towards Corporate Social Responsibility (CSR).
• Denial of an additional Foreign Tax Credit (FTC) claim of ₹54,63,221 on the ground that Form No. 67 had not been filed before the due date of filing the return.
• An alternative claim regarding deduction of sales promotion, advertisement expenses and professional fees.

The Revenue challenged:

• Allowance of deduction under Section 80JJAA despite delayed filing of Form No. 10DA.
• Treatment of expenditure relating to development of the existing e-commerce platform as revenue expenditure instead of capital expenditure.

Procedural History

The Tribunal first considered the assessee’s appeal. The assessee submitted that the issues relating to Section 80G deduction and Foreign Tax Credit were covered by earlier coordinate bench decisions in its own cases for AYs 2019–20 and 2018–19 respectively.

The Revenue’s appeal was then heard with respect to Section 80JJAA deduction and characterization of expenditure.

Legal Issues

• Whether deduction under Section 80G could be denied merely because the donations formed part of CSR expenditure.
• Whether Foreign Tax Credit could be denied solely because Form No. 67 was filed after the due date prescribed under Rule 128.
• Whether deduction under Section 80JJAA could be allowed despite delayed filing of Form No. 10DA.
• Whether expenditure incurred for development of the existing e-commerce platform constituted revenue or capital expenditure.
• Whether the assessment order was barred by limitation.
• Whether the alternative deduction claim for prior-period expenses required adjudication.

Relevant Statutory Provisions

• Sections 143(3), 144B, 153(1) and 153(4) of the Income-tax Act.
• Section 80G.
• Section 80JJAA.
• Section 37(1).
• Rule 128 of the Income-tax Rules, 1962.
• Form No. 67.
• Form No. 10DA.

Parties’ Submissions

The assessee submitted that denial of Section 80G deduction for CSR donations was contrary to the Tribunal’s earlier decision in its own case for AY 2019–20.

For the Foreign Tax Credit claim, the assessee argued that delayed filing of Form No. 67 was merely a procedural lapse and that the issue stood covered by the Tribunal’s earlier order following the Madras High Court decision in Duraiswamy Kumaraswamy.

Regarding the Revenue’s appeal, the assessee relied on Tribunal decisions holding that delayed filing of Form No. 10DA did not disentitle an assessee from claiming deduction under Section 80JJAA and that expenditure incurred for expansion and enhancement of the existing “Ajio.com” e-commerce platform was revenue expenditure.

Tribunal’s Findings and Reasoning

Section 80G Deduction

The Tribunal followed the coordinate bench decision in the assessee’s own case for AY 2019–20. It held that deduction under Section 80G cannot be denied merely because the payment also formed part of CSR expenditure under the Companies Act. Respectfully following the earlier decision and maintaining judicial consistency, it allowed the assessee’s ground.

Foreign Tax Credit

The Tribunal followed its earlier decision for AY 2018–19, which had relied upon the Madras High Court decision in Duraiswamy Kumaraswamy. It held that a legitimate claim for Foreign Tax Credit cannot be denied merely because Form No. 67 was filed belatedly under Rule 128.

The matter was remitted to the Jurisdictional Assessing Officer for limited verification of the relevant records and for allowing the claim in accordance with law. The grounds were allowed for statistical purposes.

Additional Claim for Expenses

The assessee did not press the ground relating to sales promotion, advertisement expenses and professional fees. The Tribunal dismissed that ground as not pressed.

Validity of Assessment

In view of its findings on the substantive issues, the Tribunal held that the grounds challenging the validity of the assessment order did not require separate adjudication at that stage. Those grounds were left open and were not adjudicated.

Revenue’s Appeal – Section 80JJAA

The Tribunal noted that the Revenue had not produced any new facts or material to rebut the findings of the CIT(A). Following the coordinate bench decisions relied upon by the assessee, it declined to interfere with the CIT(A)’s order and dismissed the Revenue’s ground.

Revenue’s Appeal – Revenue or Capital Expenditure

The Tribunal followed its earlier decision in the assessee’s own case for AY 2018–19, which had held that expenditure incurred for expansion and enhancement of the existing “Ajio.com” e-commerce platform was allowable as revenue expenditure under Section 37(1). Finding no new material from the Revenue, the Tribunal dismissed this ground as well.

Final Ruling

• Section 80G deduction in respect of eligible CSR donations was allowed.
• The Foreign Tax Credit issue was remanded to the Jurisdictional Assessing Officer for limited verification and grant of the claim in accordance with law; the grounds were allowed for statistical purposes.
• The assessee’s ground relating to sales promotion, advertisement expenses and professional fees was dismissed as not pressed.
• The challenge to the validity of the assessment order was left open and not adjudicated.
• The Revenue’s challenge to deduction under Section 80JJAA was dismissed.
• The Revenue’s challenge to treatment of expenditure as revenue expenditure was dismissed.
• The assessee’s appeal was partly allowed and the Revenue’s appeal was dismissed.

Cases Discussed

• Expert Global Solutions (P.) Ltd. v. DCIT (Pune – Trib.), [2026] 185 taxmann.com 524 (Pune – Trib.)
• Tarasafe International (P.) Ltd. v. DCIT (Kolkata – Trib.), [2024] 168 taxmann.com 514 (Kolkata – Trib.)
• Duraiswamy Kumaraswamy v. PCIT (Madras High Court), [2024] 460 ITR 615 (Mad)
• Interglobe Technology Quotient Pvt. Ltd. v. ACIT, ITA No. 95/Del/2024
• FNF India Pvt. Ltd. v. ACIT, 133 com 251 (Bangalore ITAT)
• Sling Media Pvt. Ltd. v. DCIT, 194 ITD 1 (Bangalore ITAT)
• Infinera India Pvt. Ltd. v. JCIT, 194 ITD 463 (Bangalore ITAT)
• National Seeds Corporation Ltd. v. ACIT (Delhi ITAT)
• M/s. Naik Seafoods Pvt. Ltd. v. Pr. CIT, ITA No. 490/Mum/2021
• First American (India) Pvt. Ltd. v. ACIT, ITA No. 1762/Bang/2019
• Allegis Services (India) Pvt. Ltd. v. ACIT, ITA No. 1693/Bang/2019

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The present appeal and cross-appeal are filed by the assessee and the Revenue against the order of the NFAC, Delhi, dated 23.10.2025, pertaining to Assessment Year (AY) 2020–21.

2. Firstly, we shall take up the appeal of the assessee, i.e., ITA No. 8742/Mum/2025 for AY 2020-21. The grounds raised by the assessee are as follows:

Validity of assessment order dated 30 September 2023 passed under section 143(3) r.w.s. 144B of the Act

1. Erred in passing the order u/s 143(3) r.w.s. 144B of the Act on 1 October 2023 as per affixed digital signature and also duly served on the Appellant on 1 October 2023 without appreciating the fact that the same is beyond the limitation period prescribed under section 153(1) r.w.s. 153(4) of the Act;

2. Failed to appreciate that the due date for completion of the assessment proceedings for AY 2020-21 as per section 153(1) r.w.s. 153(4) of the Act is 30 September 2023 and thereby the assessment order passed is barred by limitation, hence it is bad in law and liable to be quashed.

Without prejudice to the above Grounds, Grounds of appeal in respect of the additions made by the learned AO are as under:

Allowability of deduction under section 80G in respect of contributions towards Corporate Social Responsibility (‘CSR’): Rs. 25,07,50,000

3. Erred in confirming disallowance of deduction claimed u/s 80G of Rs. 25,07,50,000 in respect of donation amounting to Rs. 50,15,00,000 given to entities registered u/s 80G to meet Corporate Social Responsibility.

Additional claim of foreign tax credit not granted: Rs. 54,63,221

4. Erred in disallowing the additional claim of foreign tax credit of Rs. 54,63,221 on the ground that the Appellant did not file the Form 67 before the due date of filing the Return of Income (‘ROI’);

5. Erred in not entertaining the additional claim made by the Appellant of foreign tax credit, merely due to procedural delay in filing Form 67 by the Appellant and disregarding the fact that the Appellant had duly complied with the conditions prescribed under Rule 128 of the Income-tax Rules, 1962 and as such was eligible for the additional claim.

Additional claim on allowability of Sales promotion & advertisement expenses and Professional fees: Rs. 1,24,45,500

6. Without prejudice to the claim for allowability of Sales Promotion and Advertisement Expenses and Professional Fees in Assessment Year 2021-22, the said expenses should be allowed as a deduction in Assessment Year 2020-21, in case same are disallowed in Assessment Year 2021-22 alleging it being prior period expenses.

The appellant craves leave to add, to amend, vary or alter including by substitution any of the grounds of appeal as they or their representatives may think fit at any time before or during the hearing of the above appeal and further craves leave to consider each of the grounds of appeal as without prejudice to each other.

3. Firstly, we take up Ground No. 3. This ground raised by the assessee relates to challenging the order of the Ld. CIT(A) in denying deduction under Section 80G of the Act in respect of contributions made towards Corporate Social Responsibility (CSR) expenditure.

4. In this regard, the Ld. AR submitted at the bar that this issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the ITAT in the assessee’s own case, i.e., ITA No. 3510/Mum/2025 and ITA No. 4244/Mum/2025 (A.Y. 2019-20), wherein the operative findings are contained in paragraphs 106 to 116 and the same is reproduced herein below:

106. We have carefully considered the rival submissions of the parties, perused the orders of the lower authorities and examined the material placed on record.

107. After examining the statutory provisions and the contentions of both the parties, we are unable to concur with the view taken by the lower authorities. At the outset, it is necessary to note that Explanation 2 to section 37(1) merely clarifies that expenditure incurred on CSR activities shall not be deemed to be expenditure incurred for the purposes of business or profession and therefore cannot be allowed as deduction while computing income under the head “Profits and gains of business or profession.” The said Explanation does not impose any restriction on deductions allowable under other provisions of the Act. Section 80G, on the other hand, falls under Chapter VI-A and provides for deduction in respect of sums paid as donations to specified funds and institutions while computing total income. Therefore, the two provisions operate in distinct fields.

108. In the present case, the assessee has admittedly disallowed the entire CSR expenditure while computing business income, and the claim under section 80G has been made only while computing total income under Chapter VI-A. In such circumstances, denial of deduction under section 80G would effectively result in double disallowance, which does not appear to be the legislative intent.

109. A careful reading of section 80G further shows that the legislature has expressly excluded only certain CSR contributions from the ambit of deduction. Specifically, section 80G(2)(a)(iiihk) and 80G(2)(a)(iiihl) provide that contributions made to Swachh Bharat Kosh and Clean Ganga Fund shall not qualify for deduction if such payments are made in pursuance of CSR obligations.

The presence of such specific exclusions indicates that the legislature was conscious of CSR-related contributions and deliberately chose to restrict deduction only in respect of the aforesaid funds. If the intention of Parliament was to deny deduction under section 80G for all CSR-related payments, it would have enacted a general prohibition. The absence of such a restriction clearly supports the assessee’s contention.

110. We also find merit in the submission of the assessee that the mandatory nature of CSR expenditure does not alter the intrinsic character of the payment as a donation, particularly when the payment is made to an eligible charitable institution and no reciprocal benefit is received from the donee. The concept of voluntariness, in the context of donations under section 80G, must be understood with reference to the absence of quid pro quo and not merely with reference to the statutory framework governing CSR obligations.

111. This view finds support from several judicial precedents relied upon by the assessee. In Interglobe Technology Quotient Pvt. Ltd. v. ACIT (ITA No. 95/Del/2024), the Delhi Tribunal held that the mandatory nature of CSR spending does not disentitle an assessee from claiming deduction under section 80G where the other statutory conditions are fulfilled. Similarly, in First American (India) Pvt. Ltd. v. ACIT (ITA No. 1762/Bang/2019) and Allegis Services (India) Pvt. Ltd. v. ACIT (ITA No. 1693/Bang/2019), the Bangalore Bench of the Tribunal held that denial of deduction under Chapter VI-A merely because the payment forms part of CSR expenditure would lead to double disallowance, which is not contemplated by the Act.

112. Further support is derived from decisions such as FNF India Pvt. Ltd. v. ACIT (133 com 251] (Bangalore ITAT), Sling Media Pvt. Ltd. v. DCIT [194 ITD 1] (Bangalore ITAT), Infinera India Pvt. Ltd. v. JCIT [194 ITD 463] (Bangalore ITAT), National Seeds Corporation Ltd. v. ACIT (Delhi ITAT), and DCIT v. Peerless General Finance & Investment Co. Ltd. (Kolkata ITAT), wherein the Tribunal has consistently taken the view that deductions allowable under Chapter VI-A cannot be denied merely because the expenditure was disallowed while computing business income.

113. The decision of the Co-ordinate Bench in M/s. Naik Seafoods Pvt. Ltd. v. Pr. CIT (ITA No. 490/Mum/2021) also supports the principle that deductions under Chapter VI-A must be considered independently of the computation of income under other heads, subject to fulfilment of statutory conditions.

114. In the present case, the learned AR has also invited our attention to Paper Book pages 137 to 139, wherein the donation receipts issued by Reliance Foundation have been placed on record. These documents establish that the payment was actually made to an institution duly registered under section 80G.

Importantly, the genuineness of the donation and the eligibility of the donee institution under section 80G have not been disputed by the Assessing Officer.

115. In view of the above factual and legal position, we are of the considered opinion that the deduction claimed by the assessee under section 80G cannot be denied merely on the ground that the payment also formed part of CSR expenditure under the Companies Act.

116. Accordingly, we hold that the disallowance of Rs. 10,53,00,000/- made by the Assessing Officer and confirmed by the learned CIT(A) is not sustainable in law. The addition is therefore deleted and Ground No. 4 raised by the assessee is allowed.

5. Accordingly, considering the totality of the facts and circumstances discussed above, and respectfully following the decision of the Coordinate Bench of the ITAT in the assessee’s own case in ITA No. 3510/Mum/2025 and ITA No. 4244/Mum/2025 (A.Y. 2019-20), as well as keeping in view the doctrine of binding precedent and the need to maintain judicial consistency, we hold that deduction under Section 80G of the Act cannot be denied merely on the ground that the payment also formed part of CSR expenditure under the Companies Act.

6. Accordingly, Ground No. 3 raised by the assessee is allowed.

7. Ground Nos. 4 and 5 raised by the assessee relates to challenging the order of the Ld. CIT(A) in disallowing the claim of Foreign Tax Credit (FTC) on the ground that Form No. 67 was not filed before the due date prescribed for filing the return of income.

8. In this regard, the Ld. AR submitted at the bar that the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the ITAT in the assessee’s own case, i.e., ITA No. 4251/Mum/2024 and C.O. No. 194/Mum/2024 (A.Y. 2018-19), wherein the operative findings are contained in paragraphs 12 to 12.1. The Coordinate Bench, in turn, followed the decision of the Hon’ble Madras High Court in the case of Duraiswamy, wherein it was held that the claim of Foreign Tax Credit cannot be denied solely on the ground of delayed filing of Form No. 67. The operative portion of the ITA No. 4251/Mum/2024 and C.O. No. 194/Mum/2024 (A.Y. 2018-19) is reproduced herein below:

12. In respect of claim of foreign tax credit of Rs. 74,92,559/-, the authorities below observed that for the claiming of foreign tax credit, the assessee is supposed to comply with the conditions as laid down in Rule 128 of the IT Rules. As per Rule 128(9), assessee has to file Form 67 claiming foreign tax credit within the due date of filing of return of income u/s. 139(1). From the perusal of details, it is seen that the assessee filed Form 67 through e-filing on 28.04.2022 which is beyond the due date as required under Rule 128. The due date for filing the return was 30.09.2018. Accordingly, authorities below did not allow the claim of foreign tax credit to the assessee for which assessee is in cross objection before the Tribunal.

12.1. Claim of the assessee is that merely on account of procedural reasons of delay in filing of Form 67, the legitimate claim cannot be denied. It is an undisputed fact that Form 67 is on record. We find that this issue is no longer res integra as held in favour of the assessee by the Hon’ble High Court of Madras in the case of Duraiswamy Kumaraswamy v. PCIT [2024] 460 ITR 615 (Mad) where in it held that where assessee claimed foreign tax credit (FTC) and filed Form-67 after due date specified for furnishing return under section 139(1) but before completion of assessment proceedings, rejection of assessee’s FTC claim was not proper. Respectfully following the aforesaid jurisprudence, in the given set of facts, we remit the matter back to the file of ld. Jurisdictional Assessing Office (JAO) for the limited purpose of verification of the records to allow the claim of the assessee. Accordingly, grounds raised by the assessee in its cross objection are allowed for statistical purposes.

9. Accordingly, considering the totality of the facts and circumstances discussed above, and respectfully following the decision of the Coordinate Bench of the ITAT in the assessee’s own case in ITA No. 4251/Mum/2024 and C.O. No. 194/Mum/2024 (A.Y. 2018-19), as well as keeping in view the doctrine of binding precedents and the need to maintain judicial consistency, we hold that a legitimate claim of Foreign Tax Credit cannot be denied merely on account of delay in filing Form No. 67 under Rule 128 of the Income-tax Rules, 1962.

10. Accordingly, we remit the matter back to the file of the Jurisdictional Assessing Officer (JAO) for the limited purpose of verification of the relevant records and to allow the claim of the assessee in accordance with law. Consequently, Ground Nos. 4 and 5 raised by the assessee are allowed for statistical purposes.

11. The Ld. AR further submitted at the bar that Ground No. 6 was not being pressed. Accordingly, Ground No. 6 raised by the assessee is dismissed as not pressed.

12. In view of our findings recorded while adjudicating Ground Nos. 3 to 5, Ground Nos. 1 and 2 do not require separate adjudication at this stage. Accordingly, the same are left open and are not being adjudicated upon.

We now take up the appeal filed by the Revenue i.e. 8850/Mum/2025 (AY: 2020-21). The Revenue has raised following grounds:

1. “Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in allowing the deduction u/s.80JJA of the Act when the addition was rightly made in light of the assessee failing to discharge the onus with adequate evidence in order to substantiate the claim with documents and reconciliation and also to justify the claim about the fulfilment conditions laid down therein?”

2. “Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in treating the Capital Expenditure incurred by the assessee company as Revenue expenditure although the assessee has incurred the expenses of an intangible asset under development and the same is developed for the enduring benefit of the business of the assessee company?”

13. Ground No. 1 raised by the Revenue relates to the challenging the order of the Ld. CIT(A) allowing deduction under section 80JJAA of the Act, despite the fact that Form No. 10DA was filed belatedly for A.Y. 2018-19.

14. In this regard, the Ld. AR submitted that the issue is squarely covered in favour of the assessee by the decisions in Tarasafe International (P.) Ltd. v. DCIT [2024] 168 taxmann.com 514 (Kolkata – Trib.) and Expert Global Solutions (P.) Ltd. v. DCIT [2026] 185 taxmann.com 524 (Pune – Trib.), wherein it was held that the requirement of filing Form No. 10DA before filing the return of income is directory in nature and, therefore, delayed filing of the said form would not disentitle the assessee from claiming deduction under section 80JJAA of the Act.

15. No new facts, circumstances, or material have been brought on record by the Ld. DR to controvert or rebut the findings recorded by the Ld. CIT(A). Therefore, we see no reason to interfere with or deviate from the findings so recorded by the Ld. CIT(A).

16. Accordingly, considering the totality of the facts and circumstances discussed above, and respectfully following the decisions of the Coordinate Benches of the Tribunal, as well as keeping in view the doctrine of binding precedents and the need to maintain judicial consistency, we dismiss this ground raised by the Revenue.

17. Ground No. 2 raised by the Revenue relates to the challenge against the order of the Ld. CIT(A) in treating the expenditure incurred by the assessee as revenue expenditure, whereas the Revenue contends that the expenditure was capital in nature, having been incurred towards the development of an intangible asset.

18. In this regard, the Ld. AR submitted that the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in the assessee’s own case in ITA No. 4251/Mum/2024 and C.O. No. 194/Mum/2024 for A.Y. 2018-19. The operative portion of the said order is contained in paragraphs 6 to 11, wherein the Coordinate Bench held that the expenditure was incurred for the expansion and enhancement of the existing e-commerce platform, namely ‘Ajio.com’, and was therefore allowable as revenue expenditure under section 37(1) of the Act.

19. No new facts, circumstances, or material have been brought on record by the Ld. DR to controvert or rebut the findings recorded by the Ld. CIT(A). Therefore, we see no reason to interfere with or deviate from the findings so recorded by the Ld. CIT(A).

20. Accordingly, considering the totality of the facts and circumstances discussed above, and respectfully following the decision of the Coordinate Bench of the Tribunal in the assessee’s own case in ITA No. 4251/Mum/2024 and C.O. No. 194/Mum/2024 (A.Y. 2018-19), as well as keeping in view the doctrine of binding precedents and the need to maintain judicial consistency, we dismiss this ground raised by the Revenue.

21. In the result appeal filed by assessee stands partly allowed and the appeal filed by the Revenue stands dismissed,