Colorcon Asia Pvt. Ltd. Vs DCIT (ITAT Panaji)
Panaji ITAT Allows Section 80G Deduction for CSR Donations: Mandatory CSR Spend Does Not Lose Character of “Donation”; Bar Confined to Swachh Bharat Kosh & Clean Ganga Fund
The Panaji ITAT in Colorcon Asia Pvt. Ltd. v. DCIT considered whether donations made by a company in discharge of its Corporate Social Responsibility (CSR) obligation under section 135 of the Companies Act, 2013 could qualify for deduction under section 80G.
The assessee incurred total CSR expenditure of ₹4.41 crore and claimed deduction of ₹2.09 crore under section 80G in respect of eligible donations forming part of such expenditure. The Revenue denied the deduction on the ground that CSR expenditure is statutorily mandated and therefore lacks the voluntary character of a donation.
The Tribunal rejected this reasoning. It held that while Explanation 2 to section 37(1) prohibits CSR expenditure as a business deduction, that restriction cannot automatically be imported into section 80G. Section 80G itself specifically denies deduction for CSR contributions to Swachh Bharat Kosh and Clean Ganga Fund; apart from these expressly excluded funds, there is no general prohibition against claiming section 80G deduction for CSR donations.
An important aspect of the ruling is the Tribunal’s treatment of the Revenue’s argument that CSR expenditure cannot constitute a “donation” because CSR itself is compulsory.
The Tribunal observed that although a company may be statutorily obliged to incur CSR expenditure, neither section 135 nor Schedule VII requires it to make donations to particular section 80G-approved institutions. There are several permissible modes of satisfying CSR obligations. Therefore, where the company voluntarily chooses to discharge its CSR obligation by donating to an eligible charitable institution, the contribution does not cease to be a donation merely because the overall CSR expenditure is mandatory.
The ITAT further emphasised the principle of strict interpretation of taxing statutes: when Parliament has expressly prohibited section 80G deduction for only specified CSR contributions, courts cannot read a wider prohibition into the provision.
Accordingly, since Colorcon’s section 80G claim did not relate to Swachh Bharat Kosh or Clean Ganga Fund, the Tribunal set aside the CIT(A)’s order and allowed the section 80G deduction.
The assessee had also distributed dividend of ₹108.20 crore to its UK holding company, Colorcon Ltd., and paid Dividend Distribution Tax at 20.56%. Relying upon the Bombay High Court’s judgment in the assessee’s own case, the ITAT held that the dividend was entitled to the 10% rate under Article 11 of the India-UK DTAA and directed the Revenue to refund DDT paid in excess of 10%.
The assessee’s appeal was accordingly allowed in full.
Cases Discussed
- Dana Anand India (P.) Ltd. v. DCIT, [2025] 174 com458 (Pune ITAT)
- DCIT v. Hinduja Global Solutions Ltd., [2025] 213 ITD 453 (Mumbai ITAT)
- DCIT v. Gabriel India Ltd., [2025] 212 ITD 468 (Mumbai ITAT)
- ACG. Pam Pharma Technologies (P.) Ltd. v. PCIT, [2025] 176 com98 (Mumbai ITAT)
- Ampacet Speciality Products Private Limited v. DCIT, ITA No.1987/PUN/2025 (Pune ITAT)
- Advik Hi Tech (P.) Ltd. v. DCIT, [2024] 168 com587 (Pune ITAT)
- CST vs. Modi Sugar Mill, 1961 SCR (2) 189 (SC)
- Tarulata Shyam vs. CIT, (1977) 108 ITR 345 (SC)
FULL TEXT OF THE ORDER OF ITAT PANAJI
The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 07.11.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 15.09.2023 passed u/s.143(3) r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).
