Krishna Processors & Industries Pvt. Ltd. Vs PCIT (ITAT Mumbai)
CSR Donations can still fetch 80G Relief – ITAT Mumbai Quashes 263 Order
Mumbai ITAT has held that donations made out of Corporate Social Responsibility (CSR) funds to approved charitable institutions can qualify for deduction u/s 80G, provided the stipulated conditions are fulfilled. Consequently, e Tribunal quashed the revisionary order passed by PCIT u/s 263.
Assessee-company had filed its return for AY 2020-21 & the assessment was completed u/s 143(3) r.w.s. 144B, accepting the returned income. During the year, Assessee had spent ₹27.19 lakh towards donations, out of which a deduction of ₹13.59 lakh was claimed u/s 80G. The Pr. CIT, however, initiated revisionary proceedings by invoking section 263, holding that the claim of deduction u/s 80G in respect of CSR expenses was not allowable. According to the Pr. CIT, CSR expenditure being a statutory obligation u/s 135 of the Companies Act, 2013, cannot be said to be voluntary in nature, & therefore, deduction u/s 80G could not be granted. It was further observed that since CSR expenditure is already disallowed as a business deduction u/s 37(1), allowing it again u/s 80G would result in double benefit & unintended subsidization by the Government. The assessment order was thus set aside for fresh verification.
