Source Hov India Private Limited Vs DCIT (ITAT Chennai)
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that Corporate Social Responsibility (CSR) donations made to the Prime Minister’s National Relief Fund (PMNRF) qualify for deduction under Section 80G of the Income Tax Act. The case involved Source Hov India Private Limited, which claimed a deduction of ₹38.54 lakh under Section 80G for its CSR contribution. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] denied the deduction, arguing that CSR spending is a mandatory obligation rather than a voluntary act, making it ineligible for tax benefits.
The tribunal analyzed the legal provisions and noted that while Explanation 2 to Section 37(1) of the Act prohibits CSR expenditure from being considered as a business expense, there is no such restriction under Section 80G. The Finance Act, 2014, clarified that CSR expenses are ineligible for deduction under Section 37, but deductions under other sections, including 80G, are permissible if the conditions are met. The ITAT found that contributions to PMNRF are explicitly recognized under 80G for a 100% deduction, distinguishing this case from the Delhi Tribunal’s decision in Agilent Technologies International P. Ltd. (160 Taxmann.com 238), which had denied deductions for CSR-related donations.
