Case Law Details
Garden Reach Ship Builders & Engineers Ltd. Vs PCIT (ITAT Kolkata)
The issue under consideration is whether the CSR expenses were deductible as business expenses under Section 37?
ITAT states that, the Assessing Officer had called for and obtained explanation for CSR expenses incurred by the assessee. The explanation given by the assessee before the AO is extracted by it, in its reply to the Principal Commissioner of Income Tax u/s 263 of the Act. This is not a case where there was no enquiry on this issue by the A.O. It is also not a case of non-application of mind nor in the case where the Assessing Officer had not examined these particular expenses claimed by the assessee, as alleged in point No. (ii) of the show cause notice by the Pr. CIT. Though the Pr. CIT had made this allegation in his Show Cause Notice, no such finding has been given by the Pr. CIT in his order u/s 263 of the Act. Admittedly, the expenditure in question is audited and is allowable as deduction.
The amendment brought about by way of Explanation 2 to section 37 by Finance Act, 2014, was only with effect from 01.04.2015. In the case of Misrilall Mines Pvt. Ltd. ITA No. 738/Kol/2017 and in the case of ACIT vs Jindal Power Ltd., Raipur Bench, ITA No. 99/BLPR/2012 order dated June 23rd, 2016, the ITAT held that the amendment in question is not retrospective. Expenditure incurred in CSR in accordance with guidelines issued by the Govt. of India is allowable as a deduction for both A.Y. 2013-14 and A.Y. 2014-15. In the result, both the appeals of the assessee are allowed.
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