DCIT Vs Honeywell Automation India Limited (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT), Pune adjudicated an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)/NFAC] for Assessment Year 2020–21 concerning disallowance of deduction under Section 80G on Corporate Social Responsibility (CSR) expenditure.
The assessee had incurred CSR expenditure amounting to ₹18.99 crore and, in compliance with Explanation 2 to Section 37(1), had added back such expenditure while computing business income. However, it claimed deduction under Section 80G for donations made to an eligible institution registered under Section 80G. The Assessing Officer (AO) disallowed 50% of the eligible deduction, holding that CSR expenditure, being obligatory in nature, lacked the element of charity and could not qualify for deduction under Section 80G.
On appeal, the CIT(A) deleted the disallowance, holding that there is no statutory bar on claiming deduction under Section 80G for CSR contributions, provided the donations satisfy the conditions prescribed under that section. It was observed that restrictions exist only for specific funds such as Swachh Bharat Kosh and Clean Ganga Fund, and no general prohibition applies to other eligible donations.
The Revenue challenged this finding before the Tribunal. The Tribunal examined the issue and noted that several coordinate benches had consistently held that CSR expenditure, though disallowed as business expenditure under Section 37(1), can still qualify for deduction under Section 80G if it meets the prescribed conditions. It referred to multiple judicial precedents, including decisions where similar claims were allowed.
