Cosmo First Ltd. Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, partly allowed the assessee’s appeal for Assessment Year 2022-23, involving issues relating to deduction under Sections 80G, 80-IA and 80M of the Income Tax Act, transfer pricing adjustments, interest, and penalty proceedings. The Tribunal followed its earlier decision in the assessee’s own case for Assessment Year 2020-21 on several issues.
The principal dispute concerned the denial of deduction under Section 80G for donations treated as Corporate Social Responsibility (CSR) expenditure. During the year, the assessee contributed ₹3.55 crore towards CSR activities, including ₹2.80 crore to Cosmo Foundation and ₹75 lakh towards social work. The assessee had voluntarily disallowed the CSR expenditure under Section 37(1) but claimed deduction under Section 80G for 50% of the donation made to Cosmo Foundation, which was a trust registered under Section 80G. Referring to its earlier decision and various judicial precedents, the Tribunal held that although CSR expenditure is not allowable as business expenditure under Section 37(1), there is no prohibition on claiming deduction under Section 80G if the statutory conditions are satisfied. Accordingly, it allowed the assessee’s claim under Section 80G.
The Tribunal next considered the claim for enhanced deduction under Section 80-IA in respect of power supplied to captive units. Since the claim was based on the Supreme Court’s decision in CIT v. Jindal Steel and Power Ltd. and required verification of additional evidence, the Tribunal restored the issue to the Assessing Officer for fresh examination and adjudication.
