Deduction u/s. 80G available on corpus contribution to donee relating to CSR activities

J K Investo Trade (India) Limited Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that deduction u/s 80G of the Income Tax Act duly available irrelevant of the fact that corpus contribution to the donee relates to the CSR activities.

Facts- The assessee company is engaged in the business of manufacturing and wholesale and retail trade and had been deriving income from business and profession. The assessee’s case was selected for complete scrutiny and the assessment order was passed by AO u/s. 143(3) of the Act where the AO made disallowance u/s. 80G of the Act claimed as deduction under Chapter VIA of the Act on the ground that the assessee’s claim of deduction u/s. 80G of the Act pertains to donation related to CSR expenses which was restricted as per the provisions to Explanation 2 to Section 37(1) of the Act.

CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.

Conclusion- Held that we are of the considered view that the assessee is eligible to claim deduction u/s. 80G irrelevant of the fact that the corpus contribution made by the assessee to the donee relates to the CSR activities. The decision relied upon by the assessee on identical facts supports the claim of the assessee. The ld. A.O. is, therefore, directed to allow the claim of the assessee subject to the verification and the genuinety of the fact that the donation made to the donee was eligible for deduction as per the provision of section 80G of the Act.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act’), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.

2. The assessee has challenged the solitary ground of disallowance u/s. 80G of the Act amounting to Rs.2,30,000/-.

3. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and wholesale and retail trade and has been deriving income from business and profession. The assessee had filed its return of income dated 30.10.2018, declaring total income at Rs.Nil and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for complete scrutiny and the assessment order dated 09.04.2021 was passed by the Assessing Officer (‘A.O.’ for short) u/s. 143(3) of the Act where the A.O. made disallowance u/s. 80G of the Act claimed as deduction under Chapter VIA of the Act amounting to Rs.2,30,000/- on the ground that the assessee’s claim of deduction under 80G of the Act pertains to donation related to CSR expenses which was restricted as per the provisions to Explanation 2 to section 37(1) of the Act.

4. The assessee was in appeal before the ld. CIT(A) who dismissed the appeal of the assessee on the ground that there were discrepancies in the factual aspects such as the assessee’s name, the donee’s name as per the receipt and the written submission made by the assessee and also in the A.O.’s finding. The ld. CIT(A) disallowed the claim of the assessee on this ground without getting into the merits of the claim.

5. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).

6. The learned Authorised Representative (‘ld. AR’ for short) contended that the lower authorities have failed to consider the submission made by the assessee wherein the ITR filed by the assessee contains the details of the name change, wherein the erstwhile company was in the name of ‘J K Ansell Pvt. Ltd.’ and at page no. 3 of the paper book, the details of the donation given to the donee CMCA and the amount of donation was Rs.4,60,000/- for which the eligible amount of deduction was Rs.2,30,000/-. Further to this, the ld. AR for the assessee had brought our attention to page no. 5 of the paper book which is a certificate of incorporation pursuant to the change of name substantiated with the written submission made by the A.O. specifying the said details. The ld. AR has also enclosed the donation receipt dated 31.03.2018 filed with the return submission. The ld. AR further contended that the A.O. had rejected the claim of the assessee for the reason that the claim of deduction u/s. 80G of the Act was a corpus contribution to the donee which was towards CSR activities by relying on the provision of Explanation 2 to section 37(1). The ld. AR for the assessee relied on the following decisions to substantiate that the assessee was eligible for deduction u/s. 80G of the Act even in respect of contribution made under CSR scheme which are stated as below:

1. Sling Media (P.) Ltd. vs. Dy. CIT (ITA No. 197/Bang/2020)

2. Infinera India (P.) Ltd. vs. Jt. CIT (IT(TP) Appeal No. 2589 (Bang.) of 2019

3. Schneider Electric IT Business India Pvt. Ltd. vs. Dy. CIT (IT(TP)A No. 679/Bang/2022)

4. First American (India)Priave vs. Asst. CIT (ITA No. 1762/Bang/2019)

5. CIT vs. Peerless General Finance & Investment & Co. Ltd. (IT Appeal Nos. 1469 and 1470 (Kol.) of 2019)

6. HSBC Professional Services (India) Pvt. Ltd. vs. The Pr. CIT (ITA No. 1073/Mum/2022)

7. The learned Departmental Representative (‘ld.DR’ for short), on the other hand, vehemently opposed to the said fact and stated that the first appellate authority has rejected the claim of the assessee on the ground that there were various factual inconsistencies in the claim of the assessee. The ld. DR further stated that the assessee was not entitled to claim deduction under Chapter 80G of the Act where the donation was made to the donee for CSR activities and the same was expressly barred by the provisions of Explanation 2 to section 37(1) of the Act. The ld. DR relied on the orders of the lower authorities.

8. We have heard the rival submissions and perused the materials available on record. It is evident that there are various discrepancies in the factual matters pertaining to the donee’s name in the assessment order where the A.O. has mentioned the donee’s name to be ‘Apex Kidney Foundation’, whereas the receipt enclosed at page no. 9 was received from ‘CMCA’. It is also pertinent to point out that the donor’s name in the receipt is mentioned as ‘J K Ansell Pvt. Ltd.’ and not in the assessee’s name. From the submission made by the ld. AR it is observed that the assessee has given documentary evidences in support of the fact that the erstwhile name of the assessee was ‘J K Ansell Pvt. Ltd.’ and the same was subsequently changed to ‘Raymond Consumer Care Pvt. Ltd.’ and was further changed to ‘J K Investor Trade (India) Limited’ being the successor to ‘Raymond Consumer Care Pvt. Ltd.’ The ld. AR has filed the relevant documentary evidences to substantiate the said facts in the paper book containing 31 pages.

9. From the above fact, we are of the considered opinion that this issue has to be remanded back to the file of the A.O. for the purpose of verification of the said facts and as it is evident that there has been an error crept in the assessment order pertaining to the name of the donee and also to look into the aspect of the issues specified by the ld. CIT(A) in his order dated 28.03.2022. On the merits of the claim of the assessee, we are of the considered view that the assessee is eligible to claim deduction u/s. 80G irrelevant of the fact that the corpus contribution made by the assessee to the donee relates to the CSR activities. The decision relied upon by the assessee on identical facts supports the claim of the assessee. The ld. A.O. is, therefore, directed to allow the claim of the assessee subject to the verification and the genuinety of the fact that the donation made to the donee was eligible for deduction as per the provision of section 80G of the Act.

10. In the result, the appeal filed by the assessee is allowed for statistical purpose.

Order pronounced in the open court on 23.08.2023.