JSW Industrial Gases Limited Vs DCIT (ITAT Bangalore)
Tribunal Holds Double Disallowance Not Intended – CSR Payment Can Get 80G Deduction
Assessee, engaged in manufacture & sale of industrial gases, filed return for A.Y. 2020-21 declaring income of ₹63.79 crores. In computation, it disallowed ₹1 crore debited as CSR expense u/s 37 but claimed same u/s 80G since it was paid to PM Cares Fund, which is an approved institution. AO disallowed claim, treating CSR donation as statutory obligation & not voluntary. CIT(A)/NFAC upheld disallowance, invoking doctrine of per incuriam to disregard earlier ITAT rulings favouring such claims.
Before Tribunal, Assessee argued that Explanation 2 to Sec. 37 only bars CSR expenditure as business deduction but does not preclude claim u/s 80G if donation is made to eligible funds. Reliance was placed on Bangalore ITAT rulings in Peak XV Partners Advisors Pvt. Ltd. & Allegis Services India Pvt. Ltd., which held that CSR contributions to approved funds are eligible u/s 80G.
Tribunal accepted Assessee’s contention. It observed that disallowance under Sec. 37 enhances business income, but thereafter, deduction under Chapter VIA (including Sec. 80G) must be considered separately. Denying such benefit would amount to impermissible double disallowance. Since PM Cares Fund qualifies for 100% deduction u/s 80G(2), Assessee’s claim was fully allowable.
