Dy. Commissioner of Income Tax, Circle-1(1), Pune, PUNE V. CREDIT SUISSE SERVICES (INDIA) PRIVATE LIMITED , PUNE

ITA 44/PUN/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7195 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-04-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 07-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARIOUS DECISIONS OF HONBLE
• Keywords: Ineligible deduction
• Section: 37; 2; 37(1); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “A” BENCH : PUNE [THROUGH HYBRID HEARING] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A.No.44/PUN./2024 [E-APPEAL] Assessment Year 2020-2021 The DCIT, Circle-(1), PMT Bldg., Swargate, Shankarshet Road, PUNE-411 037. Maharashtra. vs. Credit Suisse Services (India) private Limited, Ground Floor, Wing-1, Cluster-A EON Free Zone, Plot No.1, S.No.77, MIDC Knowledge Park Kharadi, PUNE – 411 014. Maharashtra. PAN AACCC9532G (Appellant) (Respondent) For Revenue : Shri Ramnath P. Murkunde For Assessee : Shri Rajendra Agiwal Date of Hearing : 26.04.2024 Date of Pronouncement : 15.05.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This Revenue’s appeal for assessment year 2020-21, arises against the CIT(A), Pune-12, Pune's Din and Order No. ITBA/APL/S/250/2023-24/1057876023(1), dated 10.11.2023, in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case file perused. 2. The Revenue pleads the following substantive grounds in the instant appeal : 2 ITA.No.44/PUN./2024 1) “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing assessee's ground challenging the disallowance of deduction of Rs.4,55,13,521/- u/s 80G of the Income-tax Act, 1961 made by the Assessing Officer. 2) On the facts end the circumstances of the case and in law, the Ld. CIT(A) erred by setting aside the matter back to the AO for verification.” 3. Both the learned representatives next invited our attention to the CIT(A)'s impugned detailed discussion allowing the assessee’s sec.80G deduction claim as under : “5. Decision I have carefully perused grounds of appeal, facts of the case, submissions made by the Appellant, assessment order and other evidences on records. 5.1. Ground 1 Vide this Ground, the Appellant has challenged action of the AO in making the disallowance of Rs.4,55,13,521/- u/s 80G with respect to the donations forming part of Corporate Social Responsibility (‘CSR’). In this regard, the Appellant has submitted that : • The amount paid to various funds is without any consideration in return and is in the nature 3 ITA.No.44/PUN./2024 of irrevocable contribution. Thus, such contributions partake the character of donation • Since, all other requisite conditions under section 80G have been satisfied and not in dispute, the Appellant is eligible for deduction under section 80G of the Act. The institution to whom the Donations are made are duly registered under section 80G(5) of the Act • The CSR expenditure is not allowed only for the purpose of section 37 for computing business income. If such expenditure is otherwise allowable as deduction under other provisions of the Act, the same cannot be disturbed. • The donations/expenditure made by the Appellant is towards women empowerment, education, environmental research etc. and forms part of CSR expenditure as per Schedule VII of the Companies Act, 2013. • The legislature has restricted the benefit only in two specific cases being ‘Swachh Bharat Kosh’ (‘SBK’) and ‘Clean Ganga Fund’ (‘CGF’) as per sub-clause (iiihk) and (iiihl) of section 80G(2)(a) of the Act, thereby implying that CSR contribution to other eligible institution qualifies for deduction under section 80G of the Act. The 4 ITA.No.44/PUN./2024 Appellant has made CSR contribution to funds other than SBK and CGF, thus, claim under section 80G of the Act shall be allowed. • The said claim, as discussed above, is supported by the Explanatory Memorandum to Finance Bill 2014 with restriction placed only in relation to specified funds under section 80G, clarification issued by MCA and multiple favourable decisions. I have considered the submissions made by the Appellant. I find that the issue is covered in favour of the Appellant by various decisions of Hon’ble Tribunals. I find that Hon’ble ITAT Bangalore in the case of Allegi Services (India) Pvt Ltd vs ACIT, (ITA No.1693/Bangalore/2019) has decided this issue in favour of the assessee. Relevant part of the said decision is reproduced as under : “Brief facts of the case are as under: 2. Assessee is a company and filed its return of income on 30/11/2016 declaring income of Rs.73,44,38,310/-. The case was selected for scrutiny and notice under section 143 (2) and 142 (1) along with questionnaire was issued to assessee. In response to statutory notices, 5 ITA.No.44/PUN./2024 representative of assessee appeared before Ld.AO and filed requisite details as called for. 3. Ld.AO from the details furnished by assessee observed that assessee claimed deduction amounting to Rs.8,40,000/- under section 80 G of the Act, towards donation paid. Ld.AO was of the opinion that claim made under section 80 G of the Act, was not allowable as the amount was forming part of CSR expenses debited to profit and loss account. Ld.AO was of the opinion that donation made outside CSR expenses was only eligible to be claimed under section 80 G of the Act. .............................. 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 the hands of assessee. The point of claim under these provisions are different. 15. Further, intention of legislature is very clear and unambiguous, since expenditure 6 ITA.No.44/PUN./2024 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. 7 ITA.No.44/PUN./2024 17. We therefore do not agree with arguments advanced by Ld.Sr.DR. 18. In present facts of case, Ld.AR submitted that all payments forming 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 section 80G of the Act, for computing “Total taxable 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 8 ITA.No.44/PUN./2024 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 claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. Accordingly grounds raised by assessee stands allowed for statistical purposes. In the result appeal filed by assessee stands allowed." In view of the above facts and respectfully following the decision of Hon’ble ITAT Bangalore in the case of Allegi Services (India) Pvt Ltd (supra), I am of the considered view that the appellant is entitled to claim deduction u/s 80G with respect to the donations forming part of CSR expenses. However, in this regard, I direct the AO to verify whether the Appellant satisfies the requisite conditions prescribed for deduction u/s 80G. In case it satisfies the conditions for deduction u/s 80G, the claim of Rs. 4,55,13,521/- has to be allowed. If found contrary, 9 ITA.No.44/PUN./2024 the stand of the AO stands confirmed. The AO is directed to give effect by passing a speaking order. The Appellant is directed to furnish all relevant details online before the AO for verification. Ground is, thus, allowed for statistical purpose.” 4. Mr. Murkunde vehemently argued in favour of the Revenue’s pleadings that the Ld. CIT(A)'s herein has erred in law and on facts in accepting the assessee’s sec.80G deduction claim of Rs.4,55,13,521/- qua “CSR expenditure” not exigible for relief u/sec.37 of the Act. 5. The assessee has drawn strong support from Ld. CIT(A)'s above extracted detailed discussion. 6. We have given our thoughtful consideration to the foregoing rival stands and find no merit in the Revenue’s instant sole substantive grievance. Suffice to say, the Revenue’s only argument is that once the impugned expenditure is not allowable u/sec.37 of the Act; the same is also not exigible to sec.80G deduction as well. We find no substance in Revenue’s instant sole substantive grievance as the Ld. CIT(A)'s detailed discussion has considered a catena of case law of various judicial forums (supra) already accepting the very issue in assessee’s favour and against the department. We thus adopt judicial consistency herein as well 10 ITA.No.44/PUN./2024 to uphold the Ld. CIT(A)'s detailed discussion accepting the assessee’s sec.80G deduction claim. Rejected accordingly. No other ground or argument has been pressed before us. 7. This Revenue’s appeal is dismissed in above terms. Order pronounced in the open Court on 15.05.2024. Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] VICE PRESIDENT JUDICIAL MEMBER Pune, Dated 15 th May, 2024 VBP/- Copy to 1. The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “A” Bench, Pune. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.