DEUTSCHE INDIA PVT. LTD.(EARLIER KNOWN AS 'DBOI GLOBAL SERVICES PVT. LTD.),MUMBAI V. ACIT-1(3)(1), MUMBAI

ITA 2522/MUM/2022

AI Insights

Deutsche India Pvt Ltd appealed against the final assessment order for the assessment year 2017-18, which included transfer pricing adjustments and disallowed deductions under section 80G for CSR expenditures. The Tribunal dismissed the transfer pricing adjustment grounds following the APA but remitted the CSR deduction issue back to the AO for further verification. The Tribunal also addressed the issue of short TDS credit and directed the AO to verify and adjust accordingly. The Tribunal's decision was influenced by precedents that allowed CSR expenditures as deductions under section 80G, provided the conditions of the section are met.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473721 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 09-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 27-09-2022
• Other Referred Cases: Allegis Services (India) Private Ltd. V/s ACIT, Societe Generale Securities India (P.) Ltd. vs. Principal Commissioner of Income-tax, Alubound Dacs India (P.) Ltd. vs. Deputy Commissioner of Income-tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH
• Assessee Lawyers: J. D. MISTRI
• Keywords: Set aside; Business income; Transfer pricing; International transaction; Business expenditure; Depreciation; Commercial expediency; Principle of natural justice; TDS; Charitable institution; CHAPTER IV
• Section: 32; 13; 234B; 37; 37(1); 80G; 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 2522/Mum./2022 (Assessment Year : 2017–18) Deutsche India Pvt Ltd., (Earlier known as DBOI Global Services Pvt Ltd) Block B-4, Level – 6, Nirlon Knowledge Park Western Express Highway, Goregoan (E) Mumbai 400 063 PAN – AACCD2953L ……………. Appellant v/s The ACIT Circle – 1(3)(1) 5th Floor, Aayakar Bhavan, MK Road Mumbai – 400020. ……………. Respondent Assessee by : Shri J.D. Mistri Revenue by : Ms. Neena Jeph (CIT-DR) Date of Hearing – 09/09/2024 Date of Order – 28/10/2024 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned final assessment order dated 31/07/2022, passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 (“the Act”), pursuant to the directions dated 27/06/2022 passed under section 144C(5) of the Act by the learned Dispute Resolution Panel-1, Mumbai-3 (“learned DRP”), for the assessment year 2017-18. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 2 2. In this appeal, the assessee has raised the following grounds: – “Transfer Pricing Grounds: 1. The Appellant entered into an Advance Pricing Agreement ('APA') with the Central Board of Direct Taxes ('CBDT') on 17 March 2021. The APA covers nine assessment years i.e., AY 2011-12 to AY 2019-20. As per the provisions of Section 92CD(1) of the Income Tax Act, 1961 ('the Act'), the Modified Returns of Income (MROI) are required to be filed within 3 months from the end of the month of signing of the APA. While the Appellants uploaded MROI for one of the APA years pre-launch of New Income Tax Portal (New Portal), post launch of the New Portal, in spite of several attempts the MROI could not be uploaded for the rest of the APA years. However to comply with the requirement, on 15 June 2021 the Appellants filed the MROI via email with the Learned Assessing Officer ('Ld. AO'). The Appellant through continued efforts was successful in uploading the modified returns of income on the Income-tax portal in May 2022. With this background, the Appellant submits that the following grounds of appeal are being taken on a without prejudice basis in case effect is not given to the aforesaid APA as envisaged under Section 92CD of the Act: a. On the facts and in the circumstances of the case and in law, the Ld. AO and Hon'ble Dispute Resolution Panel ('Hon'ble DRP'), erred in not taking cognizance of the modified return of income of AY 2017-18 filed by the Appellant with the Ld. AO vide email dated 15 June 2021. b. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in not taking cognizance of the modified return of income of AY 2017-18 uploaded by the Appellant on the Income-tax portal dated 11 May 2022 and the submission dated 13 June 2022 (acknowledgement dated 15 June 2022) intimating the Hon'ble DRP about the successful uploading of the modified return of income. c. On the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO, erred in not taking cognizance of the APA entered between the Appellant and CBDT dated 17 March 2021 and the arm's length price determined at 17.10 percent as agreed in the APA, in respect of which the Appellant has discharged its taxes. 2. Without prejudice, on the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer ('Ld. TPO') / the Ld. AO and the Hon'ble DRP confirming the actions of the Ld. TPO, erred in making a Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 3 transfer pricing addition of INR 5,359,512,242 to the Appellant's total income based on the provisions of Chapter X of the Act. In this regard, grounds of appeal are as follows: a. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in disregarding the detailed functional, asset andersk analysis carried out by the Appellant and arbitrarily classifying the rule-based back- office support services rendered by the Appellant as High-End Information Technology Enabled Services. b. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in arbitrarily disregarding the benchmarking analysis and comparable companies selected by the Appellant based on the contemporaneous data in the transfer pricing study report maintained as per Section 92D of the Act read with Rule 10D of the Income- tax Rules, 1962 ('the Rules') and various submissions made by the Appellant, without providing any cogent reasons. c. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in applying a set of inappropriate additional filters without finding any deficiency in the filters applied by the Appellant. d. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in arbitrarily cherry-picking company without conducting a systematic and detailed search process, thereby violating the principles of natural justice with a pre-determined mind set of making an adjustment. Thus, the Appellant prays that the benchmarking analysis conducted by the TPO be quashed or alternatively ignored. e. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in selecting functionally non-comparable companies (Infosys BPO Limited and MPS Limited), thereby ignoring the criteria laid down in Rule 10B(2) and (3) of the Rules governing comparability analysis. f. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in not allowing appropriate adjustment as per Rule 10B(1)(e)(iii) of the Rules for the differences in risk profile of the Appellant vis-à-vis alleged comparable companies selected by the TPO. g. On the facts and in the circumstances of the case and in law, the Ld. TPO / the Ld. AO and Hon'ble DRP erred in not demonstrating that the motive of the Appellant was to shift profits outside India by manipulating the prices charged in its international transactions; a pre-requisite condition to make any adjustment under the provision of Chapter X of the Act. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 4 h. Without prejudice, the Ld. TPO erred in computing the transfer pricing adjustment on all the transactions of the Appellant instead of restricting it to the international transaction, i.e., transaction with non-resident associated enterprises. i. Without prejudice, on the facts and in the circumstances of the case and in law, the Ld. TPO and Hon'ble DRP erred in not appreciating that the Appellant and Deutsche Bank AG, India Branches ('DB India') i.e., an associated enterprise of the Appellant, are both assessed to tax in India, and in fact, DB India is assessed to tax at a higher rate (@41.82%) than the Appellant. Thus, the transfer pricing adjustment should be restricted to the international transactions entered into by the Appellant with the non- resident AEs not taxed in India, as the Appellant has no incentive and intention to shift profits outside India in respect of the international transaction with DB India. Corporate Tax Grounds a. The Assistant Commissioner of Income Tax, Circle 1(3)(1), Mumbai (herein after referred to as 'the AO') while passing the order dated 31 July 2022 (DIN: ITBA/AST/S/143(3)/2022-23/1044380603(1)) under section 143(3) r.w.s. 144C(13) of the Income tax Act, 1961 (hereinafter referred to as \"the Act\"), pursuant to the directions of the DRP, erred in denying deduction of Rs. 1,31,34,075 claimed under section 80G of the Act by holding that it was Corporate Social Responsibility ('CSR') expenditure on which deduction under section 80G is not allowable. b. Without prejudice to the above, AO erred in not appreciating the fact that the donation paid of Rs.1,00,000 was not a part of the CSR expenditure of Rs.3,69,04,854 debited to the profit and loss account. 3. The AO erred in granting credit for TDS of Rs.6,32,01,974 as against Rs.6,40,75,417 claimed by the Appellants in the modified return of income thereby granting short credit of TDS amounting to Rs. 8,73,443. The appellants pray that AO be directed to grant balance TDS credit of Rs.8,73,443. 4. The AO erred in charging interest of Rs.1,26,28,36,544 under section 234B of the Act. The appellants pray that the AO be directed to recompute interest under section 234B and delete the excess interest charged. 5 The AO erred in charging interest of Rs.63,19,467 under section 234C of the Act as against 41,58,357 chargeable per modified return of income. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 5 The appellants pray that the AO be directed to compute interest under section 234C at Rs.41,58,357 as per the modified return of income and delete the excess interest charged. The Appellants crave leave to add to, alter, amend, vary, omit or substitute the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as they may be advised.” 3. During the hearing, the learned Sr. Counsel, at the outset, referred to the letter dated 05/08/2024 filed by the assessee seeking withdrawal of the grounds no. 1 and 2, raised in assessee’s appeal, pertaining to transfer pricing adjustment in view of the Advance Pricing Agreement (“APA”) entered with the CBDT on 17/03/2021, which also covers the year under consideration. From the perusal of the afore-noted letter, we find that in order to give effect to the APA provision contained in the agreement, the assessee submits that it has filed the modified return of income and accordingly requests for withdrawal of grounds pertaining to transfer pricing adjustment. Accordingly, in view of the above, grounds no.1 and 2 raised in assessee’s appeal are dismissed as withdrawn. 4. The issue arising in Corporate Tax grounds no.(a) and (b), raised in assessee’s appeal, pertains to the denial of deduction claimed under section 80G of the Act on Corporate Social Responsibility (“CSR”) expenses. 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, upon perusal of the assessee submissions and other information, it was observed that during the year, the assessee has incurred CSR expenditure amounting to INR 3,69,04,854 and debited the same to the statement of profit and loss for the Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 6 year under consideration. In this regard, the assessee submitted that it has suo moto added back the entire CSR expenditure amounting to INR 3,69,04,854 under section 37(1) of the Act while computing its income, however, claimed deduction under section 80G of the Act in respect of the CSR expenditure of INR 1,30,84,074. Accordingly, the assessee was asked as to why the deduction claimed under section 80G of the Act not be disallowed. In response, the assessee submitted that the donation paid by the assessee does not fall within the specific exclusions provided under section 80G of the Act and hence the deduction should be allowed. It was further submitted that the donation amounting to INR 2,61,68,149 was paid to the institutions/foundation/organisations, which are covered under section 80G(2) of the Act and the donation paid to such institutions, etc., are eligible under section 80G of the Act. The Assessing Officer (“AO”), vide draft assessment order dated 23/09/2021 passed under section 144C(1) of the Act, disagreed with the submissions of the assessee and held that under section 80G the “sums paid” need to be “donation” for the purpose of being eligible for deduction under the said section. It was further held that the amount paid by the assessee should be voluntary to become eligible for deduction under section 80G of the Act. However, in the present case, the same was paid by the assessee as a mandatory requirement as per section 135 of the Companies Act, 2013. The AO further held that there should be an element of charity and voluntary for being considered as a donation for the purpose of claiming deduction under section 80G of the Act, which is missing in the present case. Accordingly, the AO disallowed the deduction of Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 7 INR 1,31,34,075 claimed by the assessee under section 80G of the Act on CSR expenditure. 6. The learned DRP vide its directions dated 27/06/2022, inter-alia, rejected the objections filed by the assessee and held that the claim of the assessee under section 80G of the Act in respect of CSR expenditure is not acceptable. The relevant findings of the learned DRP are as follows: - “7.2 Findings of DRP: We have considered the submission of the assessee. The assessee is treating Rs 2,61,68,149/- as CSR expenditure in its books of accounts however, for the purpose of claiming deduction u/s 80G of the Income-tax, Act, 1961, the assessee is treating the same expenses as Donation. The amount has not been paid by the a ssessee voluntarily to become eligible for entity specified under Section 80G of the Act. But the same has been paid by the assessee as a mandatory requirement as per Section 135 of the Companies Act, 2013 to spend certain amount for specified activities as per. The expression \"shall ensure\" used in Section 135(5) of the Companies Act 2013 clearly implies that there is a mandate to spend 2% of average net profits of the preceding three years on CSR activity. Therefore, the different treatment given to the same expenses as per the assessee's own convenience cannot be accepted and is found to be bad in law. CSR expense being a contribution mandated by the Companies Act, 2013 is a necessary obligation of the company which was introduced by the legislature with the objective that companies having net worth/turnover/profit above a threshold should share the burden of the government in providing social services. Thus, a CSR expense cannot at the same time be a donation. For this purpose, the government also categorically mentioned that the amount relating to the CSR should be 2% of the average net profit. If tax deduction is allowed on such CSR expenses, this would result in subsidizing these expenses by one-third amount. The same has also been specifically mentioned in the explanatory notes to the provisions of the Finance Act, 2015 vide circular 01/2015 dated 21st January 2015. The corporate social responsibility (CSR) cannot be considered to be business expenditure. Though it is claimed that they have been incurred out of commercial expediency in the larger interest of workers, yet it was not shown as to how they related to the business carried on by the assesse. Further, the Finance Act, 2014 has inserted Explanation 2 to sec. 37(1) specially prohibiting allowance of CSR expenses. The relevant part of the provisions are as under: [Explanation 2- For the removal of doubts, it is hereby by declared that for the purposes of sub-section (1), any expenditure incurred by an assesse on Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 8 the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assesse for the purposes of the business or professional] As can be seen from the above highlighted portion of the Explanatory Notes to the provisions of the Finance Act, 2015 that only that CSR expenditure is allowed as a deduction (disallowed u/s 37 of the Income-tax Act, 1961) which is of the nature described in Section 30 to Section 36 of the Income- tax Act, 1961. Thus, when the law explicitly states the nature of the expenses allowed for deduction to be that of Section 30 to Section 36, the assessee cannot suo-moto expand the scope of such a law to imply Section 80G. Thus it is clear that the expenditure on CSR activities is non-deductible for tax purposes unless falling within provisions of Sections 30 to 36 of the Income Tax Act, 1961. In view of the above, the claim of the assessee u/s. 80G in respect of CSR expenditure is not found to be acceptable. Therefore, we reject the ground of objection no. 5 raised by the assessee.” 7. In conformity, the AO passed the impugned final assessment making the disallowance of INR 1,31,34,075 under section 80G of the Act. Being aggrieved, the assessee is in appeal before us. 8. During the hearing, the learned Sr. Counsel by placing reliance upon various decisions of the coordinate bench of the Tribunal submitted that CSR expenditure has been held to be allowable under section 80G of the Act. The learned Sr. Counsel submitted that the assessee made donations to various institutions, foundations, organisations, i.e. Cancer Foundations, Society to Hear, Aid, Restore, Educate (SHARE), etc. for empowering poor children, or for setting up safe drinking water, community centres across slums, etc. It was further submitted that the primary objectives of the assessee’s CSR policy are education, healthcare, social and environmental sustainability, and disaster relief. The learned Sr. Counsel also referred to the details of donation and payment receipts, forming part of the paper book, to support Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 9 the submission that the CSR expenditure incurred is covered under the ambit of section 80G of the Act. 9. On the contrary, the learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. 10. We have considered the submissions of both sides and perused the material available on record. The only grievance of the assessee is against the denial of deduction under section 80G of the Act in respect of CSR expenditure. In the present case, it is undisputed that the assessee has not claimed the CSR expenditure under section 37(1) of the Act, and its claim is only restricted to section 80G of the Act. We find that a similar issue came up for consideration before various coordinate benches of the Tribunal. We find that in Allegis Services (India) Private Ltd. V/s ACIT, in ITA No. 1693/Bang./2019, the deduction in respect of CSR expenditure under section 80G of the Act was denied by the Revenue on a similar basis as in the present case. While deciding the issue in favour of the taxpayer, the coordinate bench of the Tribunal, vide order dated 29/04/2020, observed as follows:- “We have perused submissions advanced by both sides in light ofrecords placed before us. 10. Section 135 of Companies Act, 2013 requires companies with CSR obligations, with effect from 01/04/2014. Finance (No.2) Act, 2014 inserted new Explanation 2 to sub- section (1) of section 37, so as to clarify that for purposes of sub- section (1) of section 37, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 10 11. This amendment will take effect from 1/04/2015 and will,accordingly, apply to assessment year 2015-16 and subsequentyears. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head Income form Business and Profession'. Further, clarification regarding impact of Explanation 2 to section 37(1) of the Income Tax Act in Explanatory Memorandum to The Finance (No.2) Bill, 2014 is as under: “The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditure cannot be allowed under the existing provisions of section 37 of the Income-tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clare that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and, hence, shall not be allowed as deduction under section 37. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfilment of conditions, if any, specified therein.\" 13. From the above it is clear that under Income tax Act, certain provisions explicitly state that deductions for expenditure would be allowed while computing income under the head, 'Income from Business and Profession\" to those, who pursue corporate social responsibility projects under following sections.  Section 30 provides deduction on repairs, municipal tax andinsurance premiums.  Section 31, provides deduction on repairs and insurance ofplant, machinery and furniture.  Section 32 provides for depreciation on tangible assets like building, machinery, plant, furniture and also on intangible assets like know-how, patents, trademarks, licenses.  Section 33 allows development rebate on machinery, plantsand ships.  Section 34 statesconditions for depreciation and development rebate.  Section 35 grants deduction on expenditure for scientific research and knowledge extension in natural and applied sciences under agriculture, animal husbandry and fisheries. Payment to approved universities/research institutions orcompany also qualifies for deduction. In-house R&D is eligible for deduction, under this section.  Section 35CCD provides deduction for skill development projects, which constitute the flagship mission of the present Government. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 11  Section 36 provides deduction regarding insurance premium on stock, health of employees, loans or commission for employees, interest on borrowed capital, employer contribution to provident fund, gratuity and payment of security transaction tax. Income Tax Act, under section 80G, forming part of Chapter VIA, provides for deductions for computing taxable income as under:  Section 80G(2) provides for sums expended by an assessee asdonations against which deduction is available. a) Certain donations, give 100% deduction, without any qualifying limit like Prime Minister's National Relief Fund, National Defence Fund, National Illness Assistance Fund etc., specified under section 80G(1)(i). b) Donations with 50% deduction are also availableunder Section 80G for all those sums that do not fallunder section 80G(1)(i). Under Section 80G(2) (iiihk) and (iiihl) there are specific exclusion of certain payments, that are part of CSR responsibility, not eligible for deduction u/s80G. 14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, 'Income form Business and Profession\", where as monies spent under section 80G are claimed while computing \"Total Taxable income\" in thehands of assessee. The point of claim under these provisions aredifferent. 15. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, \"Income from Business and Profession\". 16. For claiming benefit under section 80G, deductions are considered at the stage of computing \"Total taxable income\". Even if any payments under section 80G forms part of CSR payments( keeping in mind ineligible deduction expressly provided u/s.80G), the same would already stand excluded while computing, Income under the head, \"Income form Business and Profession\". The effect of such disallowance would lead to increase in Business income. Thereafter benefit accruing to assessee under Chapter VIA for computing \"Total Taxable Income\" cannot be denied to assessee, subject to fulfillment of necessary conditions therein. 17. We therefore do not agree with arguments advanced byLd.Sr.DR. 18. In present facts of case, Ld. AR submitted that all paymentsforming part of CSR does not form part of profit and loss account for computing Income under the head, \"Income from Business and Profession\". It has been submitted that some payments forming part of CSR were claimed as deduction under section80G of the Act, for computing \"Total taxable Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 12 income\", which has been disallowed by authorities below. In our view, assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing Total Taxable Income\". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. 19. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. 20. Under such circumstances, we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its calim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility.” 11. We further find that the coordinate bench of the Tribunal in Societe Generale Securities India (P.) Ltd. vs. Principal Commissioner of Income-tax, reported in [2023] 157 taxmann.com 533 (Mumbai – Trib), while affirming the claim of deduction under section 80G of the Act in respect of CSR expenditure, observed as follows: – “6. After computing the business income, while computing the total income of the assessee, the assessee is invoking the benefit under Chapter VIA by claiming deduction of the sums under section 80G of the Act. According to the revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction under section 80G of the Act. There is no express provision to support the contention of Revenue. On the other hand, section 80G (2) (iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swatch Bharath Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards Swatch Bharath Kosh and Clean Ganga Fund spent as a part of CSR are not qualified for deduction under section 80G of the Act. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G (2) (iiihk) and (iiihl) of the Act. Explanation 2 to section 37(1) of the Act which denies deduction for CSR Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 13 expenses by way of business expenditure is applicable only to extent of computing 'business income' under Chapter IV-D of the Act and; it could not be extended or imported to CSR contributions which was otherwise eligible for deduction under Chapter VI-A of the Act. 7. Where the deduction under section 80G of the Act is also disallowed, since CSR qualifying donations are not 'voluntary contributions', it will be a double jeopardy in the case of assessee. Assessee cannot be denied the benefit of claim under Chapter VIA of the Act, which is considered for computing 'Total Taxable Income\". If assessee is denied this benefit, merely because such payment forms part of CSR, it would lead to double disallowance, which is not the intention of Legislature at all. Legislature on this matter simply dealing with the computation of total income under chapter IVD pertaining to \"Income under the head Business and Profession\" and not at all dealt with the eligibility of assessee to claim deduction u/s. 80G of the Act, falling in chapter VIA of the Act. It is further observed that genuineness of the transactions and identity of the donees are also not under challenge. All the payments were made through proper banking channel and appropriate donation receipts were also produced before the lower authorities and before us also.” 12. Further, the coordinate bench of the Tribunal in Alubound Dacs India (P.) Ltd. vs. Deputy Commissioner of Income-tax, reported in [2024] 163 taxmann.com 536 (Mumbai – Trib), held that the expenditure towards CSR activities is an allowable deduction under section 80G of the Act. The relevant findings of the coordinate bench, in the decision, are reproduced as follows:– “11. We have heard the rival submissions and perused the materials available on record. The only moot question to be decided here is whether the expenditure towards CSR activities are an allowable deduction u/s. 80G of the Act. The CSR expenses are governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR) Policy Rules, 2014 where companies having net worth of Rs.500 crores or more or turnover of Rs.1000 crores or more or net profit of Rs.5 crores or more have to mandatorily comply with the CSR provisions specified u/s. 135(1) of the Companies Act, 2013. The above mentioned companies are liable to spend atleast 2% of its average net profit for the immediately preceding three financial years on CSR activities. In the present case, the assessee has contributed Rs.30 lacs to various educational and charitable trust for which the assessee has claimed 50% of the total donation paid as deduction u/s. 80G of the Act. Prior to the Finance (No.2) Act, 2014, the said expenditure was claimed as 'business expenditure' u/s. 37(1) of the Act where after the insertion of Explanation 2 to section 37(1) of the Act, the CSR expenses referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of business or Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 14 profession. It is observed that the said expenses pertaining to CSR has been claimed as deduction u/s. 80G of the Act which claim was perennially rejected by the Revenue for the reason that only donations which are voluntary in nature will come under the purview of section 80G of the Act and donation towards CSR was merely a statutory obligation on companies as per section 135 of the Companies Act, 2013. It is pertinent to point out that the intention of the legislature was clear when the same was clarified by the Finance (No.2) Act, 2014 that CSR expenses will not fall under the business expenditure and also there has been an express bar specified in sub clause (iiihk) and (iiihl) of section 80G(2)(a) of the Act that any sum paid by the assessee as donation to Swatch Bharat Kosh and Clean Ganga Fund will not come under the purview of deduction u/s. 80G of the Act subject to certain conditions. This justifies the fact that the other donations specified u/s. 80G of the Act would be entitled to deduction provided the conditions stipulated u/s. 80G of the Act are satisfied. In the present case in hand, the contributions made by the assessee would not fall under the two exceptions specified above which clearly mandates that the assessee is entitled to claim deduction for the donations contributed during the year under consideration u/s.80G of the Act. The decision relied upon by the ld. A.O. in the case of PVG Raju, Raja of Vizianaram (supra) is distinguishable on the facts of the present case where there is no requirement of proving the voluntariness of the donation contributed by the assessee for claiming deduction u/s. 80G of the Act. The amendment brought about by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses (iiihk) and (iiihl) to be the exception for qualifying a donation for claiming u/s. 80G of the Act could also be an evidencing factor to substantiate that CSR expenditures which falls under the nature specified in section 30 to 36 of the Act are an allowable deduction u/s. 80G of the Act. 12. On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s. 80G of the Act towards the CSR expenditure incurred by it. We, therefore, direct the ld. A.O. to allow the claim of the assessee subject to the condition that the assessee has satisfied the other requirements warranted u/s.80G of the Act. Hence, ground no. 2 raised by the assessee is allowed.” 13. Thus, respectfully following the aforementioned decisions, we are of the considered view that the claim for deduction under section 80G of the Act in respect of CSR expenses cannot be denied. In the present case, the lower authorities denied the deduction claimed by the assessee under section 80G of the Act without verifying the conditions as laid down in the said section. Therefore, respectfully following the aforesaid decisions rendered by the coordinate bench of the Tribunal, we remit this issue to the file of the jurisdictional AO to verify the conditions necessary for claiming Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 15 deduction under the said section. The assessee is also directed to file all the details for the purpose of claiming deduction under section 80G of the Act. We further direct that if the conditions as laid down in section 80G are found to be satisfied then deduction be granted to the assessee. With the above directions, the impugned order is set aside. Accordingly, Corporate Tax grounds no.(a) and (b) raised in assessee’s appeal are allowed for statistical purposes. 14. The issue arising in ground no.3, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned Sr. Counsel submitted that the TDS credit of INR 6,32,01,974 has been granted to the assessee as against the TDS credit of INR 6,40,75,417 claimed in the modified return of income. In this regard, reference was also made to the application dated 30/08/2022 filed by the assessee seeking rectification before the AO, which is still pending disposal. Since this issue requires verification of necessary information and the assessee’s rectification application is also pending consideration, we deem it appropriate to restore this issue to the file of jurisdictional AO for adjudication, as per law, after necessary verification of the relevant information. With the above directions, ground no.3 raised in assessee’s appeal is allowed for statistical purposes. 15. The issue arising in grounds no.4 and 5, raised in assessee’s appeal, pertains to the levy of interest under section 234B and section 234C of the Act, which is consequential in nature. Therefore, the same requires no separate adjudication. Deutsche India Pvt Ltd ITA No.2522/Mum/2022 Page | 16 16. In the result, the appeal by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 28/10/2024 A Sd/-sd/- AMAJIT SINGH ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 28/10/2024 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Assistant Registrar ITAT, Mumbai "