Addl. CIT, Special Range-7, New Delhi V. Rites Ltd., Gurgaon

ITA 6447/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8819 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Rule of consistency; Reasonable cause; Rule 8D; Set aside
• Section: 14A; 37(1); 80G; 201; 13; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.6447/DEL./2017 (ASSESSMENT YEAR : 2013-14) ITA NO.6448/DEL./2017 (ASSESSMENT YEAR : 2014-15) ADDL. CIT, SPL. RANGE 7, VS. M/S. RITES LIMITED, NEW DELHI. RITES BHAWAN, PLOT NO.1, SECTOR 29, GURGAON 122 001. (PAN : AAACR0830Q) CO NO.78/DEL.2019 (IN ITA NO.6447/DEL./2017) (ASSESSMENT YEAR : 2013-14) M/S. RITES LIMITED, VS. ADDL. CIT, SPL. RANGE 7, RITES BHAWAN, NEW DELHI. PLOT NO.1, SECTOR 29, GURGAON 122 001. (PAN : AAACR0830Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYAJEET GOEL, CA REVENUE BY : MS. SUSHMA SINGH, CIT DR SHRI M. BARNWAL, SENIOR DR DATE OF HEARING : 17.12.2020 DATE OF ORDER : 12.01.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 2 AFORESAID APPEALS FILED BY THE REVENUE AND CROSS O BJECTION FILED BY THE ASSESSEE ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, ADDL. CIT, SPL. RANGE 7, NEW DELHI (H EREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 31.07.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-38, DELHI QUA THE ASSESSMENT YEARS 2013-14 & 2014-15 ON THE IDENTICAL GROUNDS, EXCEPT THE DIFFERENCE IN AMOUNT, INTER ALIA THAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN DELETING DISALLOWANCE U/S 14A (AMOUNTING TO RS.1,15,21,250/- & RS.13,21,75,000/- FOR AYS 2013-14 & 2014-15 RESPECTIVELY) WITHOUT GOING INTO THE MERIT OF THE CASE THAT ASSESSEE HAS FURNISHED IN ACCURATE PA RTICULARS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION ON ACCOU NT OF CLAIM OF CSR (AMOUNTING TO RS.6,44,00,000/- & RS.5,32,92, 063 FOR AYS 2013-14 & 2014-15 RESPECTIVELY) WITHOUT GOING I NTO THE MERIT OF THE CASE THAT ASSESSEE HAS FURNISHED IN AC CURATE PARTICULARS. 3. THE OBJECTOR, M/S. RITES LTD., BY FILING THE PRE SENT CROSS OBJECTIONS CHALLENGED THE IMPUGNED ORDER DATED 31.0 7.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-38, DEL HI QUA THE ASSESSMENT YEAR 2013-14 ON THE GROUNDS INTER ALIA THAT :- ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 3 1(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING DISALLOWANCE OF RS.77,18,481/- BEING CLAIM OF SUSTAINABLE DEVELOPME NT EXPENSES EVEN THOUGH SAME IS INCURRED FOR THE PURPOSE OF BUS INESS AND ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961. (II) THAT THERE BEING NO DISPUTE WITH REGARDS TO G ENUINENESS OF THE EXPENSES AND SAME HAVING DIRECT NEXUS WITH B USINESS ACTIVITIES OF THE ASSESSEE, THE IMPUGNED DISALLOWAN CE IS MISCONCEIVED AND WITHOUT ANY BASIS. (III) THAT IN ANY CASE, THE EXPENSES TOWARDS SUSTA INABLE DEVELOPMENT HAVING BEEN INCURRED IN ACCORDANCE WITH MANDATORY GUIDELINES ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISE, MINISTRY OF HEAVY INDUSTRIES, THE SAME ARE ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961. (IV) THAT EVEN OTHERWISE, THE LD. CIT(A) HAVING DE LETED DISALLOWANCE OF CSR EXPENSES, THERE WAS NOT GROUND OR JUSTIFICATION FOR UPHOLDING IMPUGNED DISALLOWANCE O F SUSTAINABLE DEVELOPMENT EXPENSES PARTICULARLY WHEN THE NATURE OF THESE EXPENSES IS SAME. 2. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JU STIFIED ON FACTS AND SAME ARE BAD IN LAW. 4. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE SUBM ITTED THAT THERE IS A DELAY OF 49 DAYS IN FILING THE CROSS OBJ ECTION BEFORE THE TRIBUNAL AND SOUGHT TO CONDONE THE DELAY. KEEPING IN VIEW THE REASONABLE CAUSE GIVEN IN THE CONDONATION APPLICATI ON, THE DELAY OF 49 DAYS IN FILING THE PRESENT CROSS OBJECTION IS HE REBY CONDONED. 5. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER (AO) DI SALLOWED AN ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 4 AMOUNT OF RS.1,15,21,250/- & RS.13,21,75,000/- BY INVOKING THE PROVISIONS CONTAINED U/S 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) FOR ASSESSMENT YEARS 2013-14 & 201 4-15 RESPECTIVELY. AO ALSO MADE ADDITION OF RS.7,21,34, 499/- & RS.5,32,92,063/- BY WAY OF DISALLOWANCE OF CLAIM MA DE BY THE ASSESSEE ON ACCOUNT OF EXPENDITURE OF CORPORATE SOC IAL RESPONSIBILITY (CSR) FOR AYS 2013-14 & 2014-15 RESP ECTIVELY. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEALS WHO HAS PARTLY ALLOWED THE APPEA L FOR ASSESSMENT YEAR 2013-14 AND DELETED THE ADDITIONS B Y DISMISSING THE APPEAL FOR AY 2014-15. FEELING AGGRIEVED BY TH E ORDER PASSED BY THE LD. CIT (A), THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS FOR AYS 2013-1 4 & 2014-15. THE ASSESSEE HAS ALSO COME UP BEFORE THE TRIBUNAL B Y WAY OF FILING CROSS OBJECTION FOR AY 2013-14 CHALLENGING THE CONF IRMATION BY THE LD. CIT (A) OF DISALLOWANCE OF RS.77,18,481/- M ADE BY THE AO BEING THE CLAIM OF SUSTAINABLE DEVELOPMENT EXPENSES . 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 5 GROUND NO.1 OF REVENUES APPEALS IN ITA NO.6447/DEL/2017 (AY 2013-14) ITA NO. 6448/DEL/2017 (AY 2013-14) 8. UNDISPUTEDLY, THE ASSESSEE IS A GOVERNMENT UNDER TAKING AND ITS SUBSTANTIAL INVESTMENTS IN SPECIFIED GOVERNMENT SECURITIES ARE COMING FROM EARLIER YEARS. IT IS ALSO NOT IN DISPU TE THAT DURING THE YEARS UNDER ASSESSMENT, ASSESSEE EARNED DIVIDEND IN COME TO THE TUNE OF RS.12,08,26,704/- & RS.14,83,49,435/- IN AY S 2013-14 & 2014-15 RESPECTIVELY. 9. ASSESSEE HAS COME UP WITH SPECIFIC PLEA THAT FOR EARNING EXEMPT DIVIDEND INCOME, IT HAS NOT INCURRED ANY EXP ENDITURE, HENCE NO SUO MOTU DISALLOWANCE HAS BEEN MADE. WHEN WE EXAMINE THE ORDER PASSED BY THE AO WE FIND THAT HE HAS PROCEEDED ON THE PREMISE THAT SINCE THE ASSESSEE HAS EARNED H UGE DIVIDEND INCOME, SOME EXPENDITURE WOULD HAVE BEEN INCURRED F OR EARNING THE SAME. 10. AO HAS ACCEPTED THE AUDITED BOOKS OF ACCOUNT MA INTAINED BY THE ASSESSEE COMPANY WHICH IS A GOVERNMENT UNDERTAK ING. WHEN IT IS UNDISPUTED FACT ON RECORD THAT ASSESSEE COMPA NY BEING A GOVERNMENT UNDERTAKING HAS MADE INVESTMENT IN SPECI FIC GOVERNMENT SECURITIES AND MOREOVER SUBSTANTIAL PORT ION OF INVESTMENTS IS COMING FROM EARLIER YEARS, NO QUESTI ON ARISES TO ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 6 INCUR SEPARATE EXPENSES. IN ORDER TO INVOKE THE PR OVISIONS CONTAINED U/S 14A READ WITH RULE 8D(2)(III), THE AO IS MANDATORILY REQUIRED TO RECORD HIS DISSATISFACTION THAT CLAIM O F THE ASSESSEE AS TO NOT INCURRING ANY EXPENSES IS NOT CORRECT. SO, WIT HOUT RECORDING PROPER SATISFACTION, DISALLOWANCE UNDER RULE 8D IS NOT SUSTAINABLE. 11. AO WITHOUT BRINGING ON RECORD AN IOTA OF EVIDEN CE IF ASSESSEE HAS INCURRED EXPENSES TO EARN THE DIVIDEND INCOME PROCEEDED TO INVOKE THE PROVISIONS CONTAINED UNDER SECTION14A R/W RULE 8D(2)(III) MECHANICALLY WHICH IS NOT PERMISSIB LE. LD. CIT (A) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISIONS RENDERED BY HONBLE DELHI HIGH COURT IN C ASES OF PRADEEP KHANNA VS. ACIT IN ITA 953/2015 ORDER DATED 11.08.2016, CIT VS. TAIKISHA ENGINEERING PRIVATE LI MITED 370 ITR 338 (DEL.) AND MAXOPP INVESTMENT (P) LTD. S. CI T 347 ITR 272 (DEL.) . 12. IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2826/DEL/2014 & ITA NO.3026/DEL/2014 ORDER D ATED 24.04.2017. IN THE APPEAL AT HAND, IT IS ADMITTED FACT THAT SUBSTANTIAL PORTION OF THE INVESTMENTS ARE MADE IN THE EARLIER YEARS. ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 7 13. IN THESE CIRCUMSTANCES, FINDING NO ILLEGALITY O R PERVERSITY IN THE DELETION MADE BY THE LD. CIT (A) UNDER SECTION 14A FOR AYS 2013-14 & 2014-15, GROUND NO.1 IN BOTH THE APPEALS FILED BY THE REVENUE IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 OF REVENUES APPEALS IN ITA NO.6447/DEL/2017 (AY 2013-14) ITA NO. 6448/DEL/2017 (AY 2013-14) 14. UNDISPUTEDLY, ASSESSEE COMPANY IN ORDER TO PROV IDE THE BEST POSSIBLE SOLUTIONS FOR SUSTAINABLE DEVELOPMENT OF S OCIETY EXECUTED PROJECTS DURING THE YEARS UNDER ASSESSMENT AS UNDER :- (I) CONSTRUCTION OF A YOUTH FACILITY HOUSE (RESIDEN TIAL) FOR SOS CHILDRENS VILLAGES OF INDIA NEAR ANANGPUR VILL AGE, FARIDABAD, HARYANA. (II) CONSTRUCTION OF AGE DAY CARE AND WELLNESS CENT RE RESIDENTIAL FACILITY, VILLAGE RONGLA, PATIALA, PUNJ AB (PHASE B). (III) CONSTRUCTION OF KALYAN MANDAP FOR CENTRAL UNI VERSITY OF KARNATAKA. (IV) CONSTRUCTION OF SCHOOL COMPLEX AT VILLAGE WAZI RPUR, MANESAR. (V) GIRLS RESIDENTIAL SCHOOL COMPLEX, KHANPUR GHATI . (VI) CONSTRUCTION OF BUILDING OF ASIA INSTITUTE OF TRANSPORT DEVELOPMENT (AITD) AT DWARKA, NEW DELHI. (VII) MAINTENANCE OF MEDIA VERGE, C.R. AVENUE, KOLK ATA. 15. PERUSAL OF THE ASSESSMENT ORDERS GOES TO PROVE THAT AO HAS MECHANICALLY DISALLOWED THE CLAIM OF EXPENDITURE MA DE BY THE ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 8 ASSESSEE COMPANY TOWARDS CORPORATE SOCIAL RESPONSIB ILITY (CSR) AND SUSTAINABLE DEVELOPMENT WITHOUT ANALYZING THE F ACT THAT ASSESSEE COMPANY BEING A GOVERNMENT UNDERTAKING IS REQUIRED TO INCUR SUCH EXPENSES AS PER GUIDELINES ISSUED BY THE DEPARTMENT OF PUBLIC ENTERPRISES BY UNDERTAKING SOCIAL WELFARE AC TIVITIES UNDER THE SOCIAL SECURITY SCHEME. ASSESSEE COMPANY HAS H OWEVER CLAIMED THESE EXPENSES AS BUSINESS EXPENDITURE PERM ISSIBLE UNDER THE ACT. 16. IT IS CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT IDENTICAL CLAIM OF CSR EXPENSES HAS BEEN DULY ACCEPTED BY THE REVENUE IN THE EARLIER YEARS AND THERE IS NO CHANGE IN THE FAC TS AND CIRCUMSTANCES OF CASE. NEITHER AO NOR LD. DR FOR T HE REVENUE HAS CONTROVERTED THIS FACT. 17. AO HAS DISALLOWED CLAIM OF THE ASSESSEE COMPANY QUA CSR EXPENDITURE BY MISINTERPRETING THE PROVISIONS CONT AINED UNDER SECTION 37(1) OF THE ACT BY OBSERVING THAT SINCE CS R EXPENDITURE IS NOT INCURRED FOR THE PURPOSE OF CARRYING ON THE BUS INESS, SUCH EXPENDITURE CANNOT BE ALLOWED UNDER THE EXISTING P ROVISIONS OF SECTION 37 OF THE ACT. EVEN EXPLANATION 2 TO SECTI ON 37(1) OF THE ACT IS PROSPECTIVE IN NATURE TO BE EFFECTIVE FROM 0 1.04.2015 AND IS APPLICABLE TO THE EXPENSES INCURRED WITH REFERENCE TO SECTION 135 OF ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 9 THE COMPANIES ACT, 2013 THAT TOO AFTER 01.04.2015, SO EXPLANATION (2) TO SECTION 37(1) OF THE ACT IS NOT APPLICABLE T O THE PRESENT CASE ALSO. MOREOVER, EXPENSES CLAIMED BY THE ASSESSEE C OMPANY HAVE BEEN INCURRED AS PER GUIDELINES OF THE MINISTRY CON CERNED WITH APPROVAL OF THE BOARD TO THE BEST BUSINESS INTEREST OF THE ASSESSEE COMPANY. SO AO, WITHOUT EXAMINING THE NATURE OF TH E EXPENSES, DISALLOWED THE CLAIM MECHANICALLY EVEN BY IGNORING THE RULE OF CONSISTENCY. 18. MOREOVER, CSR EXPENSES HAVE BEEN INCURRED BY TH E ASSESSEE ON THE DIRECTION OF THE GOVERNMENT OF INDIA AND IDE NTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNA L IN CASE OF M/S. HLL LIFECARE LTD. VS. ACIT IN ITA NO.123/COCH/ 2017 FOR AY 2012-13 ORDER DATED 11.06.2018 BY RETURNING FOLL OWING FINDINGS :- 9.5 THE CSR EXPENSES HAS BEEN INCURRED AS PER THE DIRECTIONS OF GOVERNMENT OF INDIA. THE HON'BLE KERALA HIGH COU RT IN THE CASE OF TRAVANCORE TITANIUM PRODUCTS LTD. (SUPRA) H AD HELD THAT A GOVERNMENT UNDERTAKING IS DUTY BOUND TO COMPLY WI TH GOVERNMENTAL ORDERS. THE RELEVANT FINDINGS OF THE H ON'BLE JURISDICTIONAL HIGH COURT READS AS FOLLOWS :- 'BEING A COMPANY UNDER THE CONTROL OF THE GOVERNMEN T, IT IS BOUND TO COMPLY WITH ALL THE GOVERNMENT ORDER S AND THE BOARD OF DIRECTORS ITSELF IS CONSTITUTED WITH T HE GOVERNMENT SECRETARIES AND OTHER NOMINEES AS MEMBER S. THEREFORE, THE CLAIM OF DEDUCTION HAS TO BE CONSIDE RED WITH REFERENCE TO THE PECULIAR CIRCUMSTANCES OF THE COMPANY WHICH HAS NO DISCRETION IN REGARD TO THE PAYMENT OF THE SERVICE CHARGES TO THE GOVERNMENT AS IT IS ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 10 BOUND TO COMPLY WITH THE GOVERNMENT ORDERS. SO MUCH SO, WE ARE OF THE VIEW THAT THE PARAMETERS APPLICABLE I N THE CASE OF A PRIVATE COMPANY THAT TOO WITH RESPECT TO THE CLAIM FOR BUSINESS EXPENDITURE, ARE EXACTLY NOT APP LICABLE IN THE CASE OF PUBLIC SECTOR COMPANY WHETHER IT IS UNDER THE CONTROL OF THE STATE GOVERNMENT OR CENTRAL GOVERNMENT. IN FACT, MANY PUBLIC SECTOR COMPANIES ARE NOT FORME D JUST TO MAKE PROFIT ALONE BUT ARE SUPPOSED TO ACHIEVE LA RGER OBJECTIVES FOR THE SOCIETY AND THE STATE. BY MAKING PAYMENT OF SERVICE CHARGE, THE RESPONDENT COMPANY HAS DISCHARGED ONLY THE OBLIGATION UNDER GOVERNMENT ORDERS. IT CANNOT CARRYON BUSINESS BY VIOLATING GOVERNMENT ORDERS AND REMAIN AS A DEFAULT ER TO THE GOVERNMENT. 9.6 THE ITAT MUMBAI BENCH IN THE CASE OF HINDUSTAN PETROLEUM CORPORATION LTD. (96 ITD 186) HAD HELD CS R EXPENDITURE INCURRED BY GOVERNMENT UNDERTAKING IS A N ALLOWABLE DEDUCTION. THE RELEVANT FINDING OF THE IT AT MUMBAI BENCHES READS AS FOLLOWS:- 'EXPENDITURE INCURRED BY ASSESSEE, A COMPANY OWNED BY THE GOVERNMENT OF INDIA AND WORKING UNDER ITS CONTR OL AND DIRECTIONS, TOWARDS IMPLEMENTATION OF 20 POINT PROGRAMME AS PER SPECIFIC DIRECTIONS OF THE GOVERNM ENT THOUGH VOLUNTARY IN NATURE AND NOT FORCED BY ANY STATUTORY OBLIGATION, IS ALLOWABLE AS BUSINESS EXPE NDITURE. MERELY BECAUSE AN EXPENDITURE IS IN THE NATURE OF DONATION, IT DOES NOT CEASE TO BE AN EXPENDITURE DE DUCTIBLE UNDER S. 37(1).' 9.7 THE COMMISSIONER OF INCOME TAX HAD MENTIONED I N HIS ORDER THAT 'THE APEX COURT (313 ITR 334 SC) CIT VS MADRAS REFINERIES LTD., WHILE HEARING THE ALLOWABILITY OF CSR EXPENSES OBSERVED THAT NEITHER THE HIGH COURT NOR THE TRIBUN AL CONCERNED HAD GIVEN SPECIFIC FINDING TO THE EFFECT THAT THE S AID CSR EXPENDITURE IS ALLOWABLE AS BUSINESS EXPENDITURE '. IN THE ABOVE MENTIONED CASE, THE APEX COURT HAS NOT GIVEN ANY DE CISION ON MERITS OF THE CASE. IT HAD ONLY GIVEN AN OBSERVATIO N AND REMITTED THE ISSUE BACK TO THE TRIBUNAL TO GIVE SPECIFIC FIN DING TO THE EFFECT THAT THE SAID CSR EXPENDITURE IS ALLOWABLE AS BUSIN ESS EXPENDITURE. ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 11 9.8 SINCE, THE ASSESSEE HAD INCURRED CSR EXPENSES TO COMPLY WITH THE DIRECTIONS OF GOVT. OF INDIA, FOLLOWING TH E ABOVE OBSERVATIONS MADE BY HIGH COURT OF KERALA AND ITAT, MUMBAI BENCH, THE EXPENDITURE INCURRED IS INCIDENTAL TO TH E ASSESSEE'S BUSINESS AND OUGHT TO BE ALLOWED AS DEDUCTION U/S 3 7 OF THE I.T.ACT. 19. IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY THE CO ORDINATE BENCH OF THE TRIBUNAL IN HINDUSTAN PETROLEUM CORPOR ATION LTD. VS. DCIT (2005) 96 ITD 186 (MUM.) BY RETURNING FOLLOWIN G FINDINGS:- IT HAD BEEN HELD BY THE KARNATAKA HIGH COURT IN TH E CASE OF MYSORE KIRLOSKAR LTD. V. CIT [1987J 166 ITR 836/ 30 TAXMAN 467. THAT WHILE 'THE BASIC REQUIREMENTS FOR INVOKING SECTIONS 37(/) AND 80G ARE QUITE DIFFERENT ', BUT NONETHELESS THE TWO SECTIONS ARE NOT MUTUALLY EXCLU SIVE. THUS, THERE ARE OVERLAPPING AREAS BETWEEN THE DONAT IONS GIVEN BY THE ASSESSEE AND THE BUSINESS EXPENDITURE INCURRED BY THE ASSESSEE. IN OTHER WORDS, THERE CAN BE CERTA IN AMOUNTS. THOUGH IN THE NATURE OF DONATIONS, AND NONETHELESS, THESE AMOUNTS MAY BE DEDUCTIBLE UNDER SECTION 37(1) AS WELL. THEREFORE, MERELY BECAUSE THE EXPEND ITURE IN QUESTION WAS IN THE NATURE OF DONATION, OR, AS PER THE WORDS OF THE COMMISSIONER (APPEALS), 'PROMPTED BY ALTRUIS TIC MOTIVES', IT DID NOT CEASE TO BE AN EXPENDITURE DED UCTIBLE UNDER SECTION 37(1). IN THE CASE OF MYSORE KIRLOSKA R LTD. (SUPRA), THE HIGH COURT HAD OBSERVED THAT EVEN IF T HE CONTRIBUTION BY THE ASSESSEE IS IN THE FORM OF DONA TIONS, BUT IF IT COULD BE TERMED AS EXPENDITURE OF THE CATEGOR Y FALLING IN SECTION 37(/), THEN THE RIGHT OF THE ASSESSEE TO CL AIM THE WHOLE OF IT AS A DEDUCTION UNDER SECTION 37(1) CANN OT BE DECLINED. WHAT IS MATERIAL IN THIS CONTEXT IS WHETH ER THE EXPENDITURE IN QUESTION WAS NECESSITATED BY BUSINES S CONSIDERATIONS OR NOT. ONCE IT IS FOUND THAT THE EX PENDITURE WAS DICTATED BY COMMERCIAL EXPEDIENCIES, THE DEDUCT ION UNDER SECTION 37(1) CANNOT BE DECLINED. [PARA 7] IN THE INSTANT CASE, THE EXPENDITURE ON 20-POINT PROGRAMME WAS INCURRED IN VIEW OF SPECIFIC DIRECTIO NS OF THE GOVERNMENT OF INDIA. IT COULD NOT BUT BE IN THE BUSINESS INTEREST OF THE ASSESSEE TO ABIDE BY THE DIRECTIONS OF THE GOVERNMENT OF INDIA WHICH ALSO OWNED THE ASSESSEE. ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 12 FURTHER, THE EXPENDITURE INCURRED FOR THE IMPLEMENT ATION OF 20-POINT PROGRAMME WAS SOLELY FOR THE WELFARE OF TH E OPPRESSED CLASSES OF SOCIETY, FOR WHICH EVEN THE CO NSTITUTION OF INDIA SANCTIONS POSITIVE DISCRIMINATION AND FOR CONTRIBUTION TO ALL AROUND DEVELOPMENT OF VILLAGES, WHICH HAS ALWAYS BEEN THE CENTRAL THEME OF GOVERNMENT'S DEVELOPMENT INITIATIVES. AN EXPENDITURE OF SUCH A N ATURE CANNOT BUT BE, 'A CONCRETE EXPRESSION OF CARE AND C ONCERN FOR THE SOCIETY AT LARGE AND AN EXPENDITURE TO DISC HARGE THE RESPONSIBILITIES OF A 'GOOD CORPORATE CITIZEN WHICH BRINGS GOODWILL OF WITH THE REGULATORY AGENCIES AND SOCIET Y AT LARGE, THEREBY CREATING AN ATMOSPHERE IN WHICH THE BUSINESS CAN SUCCEED IN A GREATER MEASURE WITH THE AID OF SU CH GOODWILL'. [PARA 9] JUST BECAUSE THE EXPENDITURE WAS VOLUNTARY IN NATUR E AND WAS NOT FORCED ON THE ASSESSEE BY A STATUTORY O BLIGATION, IT COULD NOT CEASE TO BE A BUSINESS EXPENDITURE. TH EREFORE, THE AUTHORITIES BELOW INDEED ERRED IN LAW IN DECLIN ING DEDUCTION OF THE EXPENDITURE INCURRED ON 20-POINT PROGRAMME WHICH WAS, BEYOND DISPUTE OR CONTROVERSY, AT THE INSTANCE OF THE GOVERNMENT, AND WAS TO DISCHARG E THE ASSESSEE S OBLIGATIONS TOWARDS SOCIETY AS A RESPONS IBLE CORPORATE CITIZEN. [PARA 10] 20. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT (A) IN DELETING THE ADDITIO N MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF CSR EXPENDITURE FO R AYS 2013- 14 & 2014-15. GROUND NO.2 OF BOTH THE APPEALS FILE D BY THE REVENUE ARE DETERMINED AGAINST THE REVENUE. GROUND NO.1(I), (II), (III) & (IV) OF CO NO.78/DEL./2019 (AY 2013-14) FILED BY THE ASSESSEE 21. LD. CIT (A) HAS UPHELD THE DISALLOWANCE OF RS.7 7,18,481/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF CLAIM OF SUSTAINABLE ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 13 DEVELOPMENT EXPENSES. LD. AR FOR THE ASSESSEE CONT ENDED THAT THESE EXPENSES WERE INCURRED EXCLUSIVELY FOR THE PU RPOSE OF BUSINESS AND IS ALLOWABLE U/S 37 OF THE ACT. IT IS FURTHER CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT DURING THE EARL IER YEAR, THIS CLAIM OF THE ASSESSEE COMPANY HAS BEEN DULY ACCEPTE D. 22. LD. CIT (A) HAS UPHELD THE DISALLOWANCE OF RS.7 7,18,481/- BEING CLAIM OF SUSTAINABLE DEVELOPMENT EXPENSES BY SIMPLY RECORDING THE FACT THAT ASSESSEE HAS NOT ADDUCED ANY COGENT ARGUMENT FOR DELETING THE SUSTAINABLE DEVELOPMENT E XPENSES, WITHOUT GOING INTO THE FACT THAT IN THE EARLIER YEA RS, SUSTAINABLE DEVELOPMENT EXPENSES ARE BEING ALLOWED BY THE REVEN UE ITSELF. REVENUE IS REQUIRED TO FOLLOW THE RULE OF CONSISTEN CY. SO, THIS ISSUE IS SET ASIDE TO THE AO TO DELETE THE EXPENSES CLAIMED ON ACCOUNT OF SUSTAINABLE DEVELOPMENT EXPENSES BY THE ASSESSEE COMPANY BY FOLLOWING EARLIER YEARS ORDERS IF FACTS ARE NOT DISTINGUISHABLE. CONSEQUENTLY, GROUND NO.1(I), (II ), (III) & (IV) IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.2 OF CO NO.78/DEL./2019 (AY 2013-14) FILED BY THE ASSESSEE 23. GROUND NO.2 OF THE CROSS OBJECTION FILED BY THE ASSESSEE IS GENERAL IN NATURE, HENCE DOES NOT REQUIRE ANY SPECI FIC ADJUDICATION. ITA NO.6447/DEL./2017 ITA NO.6448/DEL./2017 CO NO.78/DEL.2019 14 24. RESULTANTLY, BOTH THE APPEALS FILED BY THE REVE NUE BEING ITA NOS.6447/DEL/2017 & 6448/DEL/2017 ARE DISMISSED AND THE CROSS OBJECTION NO.78/DEL/2019 FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 12 TH DAY OF JANUARY , 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF JANUARY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-38, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.