Technocraft Industries (India) Ltd Vs ACIT (ITAT Mumbai)
CSR-Related Contribution to Training Trust Allowed as Business Expenditure u/s 37(1) for Pre-2015 Years – ITAT Mumbai Follows Own Earlier Decision
The Mumbai Bench of the ITAT allowed the appeals of Technocraft Industries (India) Ltd. for AYs 2012-13 and 2013-14, deleting the disallowance of ₹2.50 crore claimed as business expenditure under section 37(1). The amount was paid to Shanti Seva Nidhi, a trust imparting technical and vocational training closely linked to the assessee’s manufacturing activities and employee welfare.
The Tribunal noted that in the assessee’s own case for AY 2010-11, a Coordinate Bench had already held similar payments to the same trust to be allowable on grounds of commercial expediency, given the direct nexus with business needs such as availability of skilled manpower, employee welfare, innovation, and improvement in manufacturing processes. Respectfully following this binding precedent, the ITAT held that the expenditure satisfied all conditions of section 37(1).
Importantly, the Tribunal emphasized that the assessment years involved were prior to 01.04.2015, i.e., before the statutory amendment to section 37(1) disallowing CSR expenditure. Hence, the AO’s disallowance treating the payment as CSR was unsustainable in law. The addition of ₹2.50 crore was therefore deleted, and the appeals were allowed on merits. In view of this relief, the Tribunal left the jurisdictional challenge to reopening under section 148 open as academic.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
