ABIS Export India Pvt Ltd Vs DCIT (ITAT Raipur)
The dispute arose when the Assessing Officer (AO) disallowed ABIS’s deduction under Section 80G, citing that CSR expenditures, although mandatory under the Companies Act 2013, do not qualify as voluntary donations eligible for tax benefits under 80G. The AO’s decision was based on the Finance (No.2) Act, 2014, which explicitly disallows CSR expenses for tax deductions under certain conditions.
ABIS argued that the mandatory nature of CSR does not preclude its eligibility under 80G, supported by legal precedents and the legislative intent analysis. They pointed out that CSR expenses, despite being mandatory, align with the spirit of charitable contributions as defined under 80G, thus warranting deduction.
During the appeal before the CIT(Appeals), the contention remained unresolved, leading ABIS to appeal further to the Income Tax Appellate Tribunal (ITAT) in Raipur. The ITAT reviewed previous judicial decisions and the legislative framework to assess the eligibility of CSR expenses under Section 80G. It acknowledged ABIS’s arguments and directed the CIT(A) to reconsider the case, emphasizing procedural fairness and the need for a comprehensive review of evidence.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 02.02.2024, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s. 144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 28.09.2022 for the assessment year 2020-21. The assessee company has assailed the impugned order on the following grounds of appeal:
“1. On the fact and in the circumstances of the case, the Ld. Commissioner of Income Tax-Appeals (NFAC) has erred in upholding the assessment order passed by the Assessment Unit-Income Tax Department without considering the detailed submissions made by the appellant with the office of NFAC. The addition upheld by the Ld. CIT(A)/NFAC is unjustified, unwarranted and uncalled for.”
2. The Ld. AO has ignored the detailed submissions made against the show cause notice and has rejected the same giving same reasons as raised in the show cause notice. The Ld. AO failed to appreciate the case laws quoted by the appellant and has also ignored the MCA circular submitted Against the show cause notice. The addition made by the A.O. is unjustified, unwarranted and uncalled for.”
3. On the facts and circumstances of the case and in law, the Ld. AO has erred in not appreciating that the prescribed form for filing of re-computation has not been made available till the date of passing the order. In the absence of the form, the assessee could not apply for total income and the Ld. AO had made additions to the total income along with initiation of penalty proceeding for under reporting of income. The penalty initiated by the A.O. is unjustified, unwarranted and uncalled for.
4. Disallowance of claim of donation paid u/s.80G, by ignoring the submissions, judicial decisions and MCA circular without giving any proper justification. Further Initiation of penalty proceedings for under reporting of income when the form for applying for re-computation was not made available. “The addition made by the A.O. and upheld by the Ld.CIT(A) is unjustified, unwarranted and uncalled for.”
5. The assessee reserves the right to add, amend or alter any grounds of appeal at any time of hearing.”
2. Succinctly stated, the assessee company which is engaged in the business of manufacturing and trading of poultry feeds, cattle feed, pet feed, aqua feed and soya value-added products and poultry equipment, etc., had filed its return of income for A.Y.2020-21 on 05.02.2021, declaring an income of Rs.180,24,05,350/-. Thereafter, the assessee company revised its return of income on 08.02.2021 declaring the same income as was originally returned. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act.
