DOSTI REALTY LIMITED,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX , MUMBAI

ITA 5897/MUM/2024

AI Insights

Dosti Realty Limited appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the disallowance of a deduction claimed under section 80G of the Income Tax Act, 1961. The deduction pertained to donations made under the company's Corporate Social Responsibility (CSR) initiatives. The Assessing Officer had initially disallowed the deduction, citing that CSR expenditures are not eligible for deduction under section 80G as per section 37(1) of the Act. The Tribunal noted discrepancies in the reported amounts and the treatment of CSR expenses and donations in the company's accounts. It was highlighted that similar cases had allowed deductions under section 80G even when the donations were categorized under CSR expenses. Consequently, the Tribunal remanded the matter back to the Assessing Officer for a detailed examination and decision in line with precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32184 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Other Referred Cases: M/s.Alubound Dacs India Private Limited vs. DCIT, M/s. Naik Seafoods Pvt. Ltd. vs. Pr.CIT, Societe Generale Securities India Pvt. Ltd. vs. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: RUCHI TAHMANKAR
• Keywords: Set aside; Business income
• Section: 37(1); 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “D” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 5897/Mum/2024 Assessment Year : 2018-19 Dosti Realty Limited, 276, 1st Floor, Lawrence & Mayo House, Dr.D.N. Road, Fort, Mumbai PAN : AACCD7714K vs. DCIT, Circle-1(1)(1), Aayakar Bhavan, Maharshi Karve Road, Mumbai. (Appellant) (Respondent) Assessee by : Ms. Ruchi Tahmankar Revenue by : R.R. Makwana, Addl.CIT Date of Hearing : 02-01-2025 Date of Pronouncement : 03-01-2025 ORDER PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.30-09-2024 passed by the Ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY.2018-19. The only issue urged in this appeal is non-granting of deduction u/s. 80G of the Income Tax Act, 1961 („the Act‟) in respect ofexpenditure incurred under Corporate Social Responsibility (CSR). 2 ITA No. 5897/Mum/2024 2. The assessee is a limited company, engaged in real estate business. In the return of income, it claimed deduction u/s.80G of the Act amounting to Rs. 90.75 lakhs. The AO noticed that the assessee has incurred certain expenditure under CSR and one of them was related to the donation of Rs.1,81,50,000/- donated to certain trusts, which were eligible for deduction u/s.80G of the Act. The assessee had accordingly claimed deduction of Rs.90.75%, being 50% of the donation amount of Rs.1,81,50,000/- paid by the assessee and accounted as CSR expenses. The AOtook the view thatthe expenditure incurred by way of donations which fall under“CSR expenses” will not be eligible for deduction u/s.80G of the Act, since CSR expenditure is required to be disallowed u/s 37(1) of the Act. He accordingly disallowed the deduction claimed by the assessee u/s.80G of the Act and the Ld.CIT(A) also confirmed the same. 3. The Ld.AR submitted that there is no bar or restriction under the Act that the donations given by the assessee falling within the scope of CSR expenses are not eligible for deduction u/s.80G of the Act. The Ld.AR submitted that the Co-ordinate Benches of the Tribunal have held that the deduction u/s.80G of the Act shall be allowed, even if the donation payment was booked under the CSR expenses. In this regard, she placed reliance on a host of decisions rendered by the Tribunal, some of which are as under:- a. M/s.Alubound Dacs India PrivateLimited vs. DCIT (ITA No. 3663/Mum/2023, dated 27-05-2024 (Mumbai); b. M/s. Naik Seafoods Pvt. Ltd., Mumbai vs. Pr.CIT (ITA No. 490/Mum/2021, dated 26-11-2021) (Mumbai); c. Societe Generale Securities India Pvt. Ltd., vs. PCIT (ITA No. 1921/Mum/2023, dated 20-11-2023 (Mumbai) 3 ITA No. 5897/Mum/2024 4. The Ld.DR, on the contrary, submitted that the CSR expenses is not allowable as deduction u/s 37(1) of the Act while computing the business income of the assessee. However, it is not clear from the assessment order or from the documents furnished by the assessee as to whether the assessee has disallowed the entire amount of CSR expenses before claiming deduction u/s.80G of the Act. 5. We heard the parties and perused the record.We notice that there is no clarity with regard to the CSR expenses. In the computation of total expenditure, the assessee has disallowed CSR expenditure of Rs.1,67,50,000/- and donation of Rs.34,76,200/-. The Ld.CIT(A) in paragraph No. 6.2.11 of his order mentioned the amount of donation as Rs. 1,90,90,200/-. However, the donation amount stated by the assesseewas Rs.1,81,50,000/-, on which the deduction u/s. 80G of the Act has been claimed. Hence, there is some obscurity with regard to the facts relating to CSR expenditure and the donation amounts. 5.1. Be that as it may, as per the various decisions of Tribunal relied upon by Ld.AR, if the donation paid by the assessee is eligible for deduction u/s 80G, then the said deduction should be allowed, even if the said donation payment is included under the head“CSR expenditure” and disallowed u/s 37(1) of the Act. This is because the methodology prescribed for computation of “Income from business or profession” cannot influence the provisions of sec.80G of the Act.Accordingly, the deduction claimed by the assessee u/s. 80G of the Act would be allowable if those payments are eligible for deduction u/s. 80G of the Act. 5.2. However, since the facts relating to the CSR expenses, donation amounts etc., are not clear, we feel it proper to restore this issue to the file 4 ITA No. 5897/Mum/2024 of the AO. Accordingly, we set aside the order passed by the Ld.CIT(A) and restore the issue to the file of the AO with a direction to examine this issue afresh and decide the same in accordance with the decisions rendered by the Co-ordinate Benches of the Tribunal on an identical issue, which are referred above. The assessee may clarify the discrepancies noticed above to the satisfaction of the AO. After hearing the assessee, the AO may take appropriate decision in accordance with law. 6. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 03-01-2025 Sd/- Sd/- [SUNIL KUMAR SINGH] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated:- 03-01-2025 TNMM 5 ITA No. 5897/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “D” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "