SULOCHANA COTTON SPINNING MILLS (P) LTD.,TIRUPPUR V. DCIT, CIRCLE-1, , TIRUPPUR

ITA 809/CHNY/2025

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The case involves Sulochana Cotton Spinning Mills Private Limited appealing against an order from the Commissioner of Income Tax (Appeals), which confirmed a disallowance of Rs.48,35,182 as CSR expenditure under section 37 of the Income Tax Act, 1961. The assessee argued that they had already disallowed the amount in their return, leading to a case of double taxation. The Tribunal agreed that the lower authorities had inadvertently omitted this aspect and directed the AO to verify the details provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633471 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Laws Referred To: Income Tax Act, 1961, Companies Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Assessee Lawyers: SURAJ NAHAR; C.A
• Keywords: Set aside
• Section: 37

Judgement Text

"आयकर अपीलीय अधिकरण, ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI श्री यस यस विश्वनेत्र रवि, न्यावयक सदस्य एवं श्री अविताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.809/Chny/2025 Assessment Years: 2019-20 Sulochana Cotton Spinning Mills Private Limited, No.424, 426(Old No.483, 484), Kamaraj Road, Tiruppur, Tamil Nadu-641 604. [PAN: AADCS8189G) Deputy Commissioner of Income Tax, Circle-1, Tiruppur (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri Suraj Nahar, C.A, प्रत्यर्थी की ओर से /Revenue by : Ms.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 03.06.2025 घोषणा की तारीख /Date of Pronouncement : 11.06.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / APL / S / 250 / 2024-25 / 1072454940(1) dated 23.01.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), Addl/JCIT(A)-1, Noida for the assessment year 2019-20. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time. 2.0 The only issue contested in the present appeal is regarding a disallowance of Rs.48,35,182/- u/s 37 vide order u/s 143(1) dated ITA No.809/Chny/2025 Page - 2 - of 4 06.07.2020. It is the case of the Revenue that the impugned expenditure is liable for disallowance as the same is hit by the mischief of being a CSR expenditure. We have noted from para 4.9 of the order of Ld.First Appellate Authority that explanation-2 to section 37 mandates that any expenditure in the nature of CSR, falling under the ambit of section 135 of the Company’s Act, is not an allowable expenditure. Accordingly, the addition was confirmed. 3.0 The Ld. Counsel for the appellant has submitted that its financials including computation of income have not been properly understood and appreciated by the department. It was argued that the appellant is fully conscious of the fact that explanation-2 to section 37 mandates that any expenditure in the nature of CSR, falling under the ambit of section 135 of the Company’s Act, is not an allowable expenditure under the Act. It was submitted that consequently the appellant had itself disallowed the impugned amount qua CSR activities while filing its return of income. It was argued that the impugned disallowance has resulted in a case of double addition / double taxation. In support of its submissions, the appellant had provided a copy of computation of its income. 4.0 The Ld.DR fairly conceded in the light of submissions made and details filed by the appellant assessee but submitted that the veracity of evidences filed requires to be verified at the end of the Ld.AO. ITA No.809/Chny/2025 Page - 3 - of 4 5.0 We have heard rival submissions in the light of material available on records. We have noted that the assessee concurs with the conclusions drawn by the Revenue that explanation-2 to section 37 mandates that any expenditure in the nature of CSR, falling under the ambit of section 135 of the Company’s Act, is not an allowable expenditure and had therefore had disallowed itself the impugned CSR expenses while filing its return of income. It appears that this aspect was inadvertently omitted to be considered by the lower authorities. Be that as it may be, we are of the considered view that the Ld.AO may be given an opportunity to verify the details filed by assessee. Accordingly, we set aside the order of lower authorities and remit the issue to the Ld.AO with the directions of holding a limited verification of details filed by the assessee. The impugned disallowances of Rs.48,35,182/- u/s 143(1) would stand deleted if the Ld.AO satisfies himself, from perusal of original records, that the disallowance was suo moto made by the assessee. Accordingly all the grounds of appeal raised by the assessee on the issue of disallowance / double addition are allowed for statistical purposes. 6.0 Through ground of appeal no.2 the assessee has raised a legal ground contesting that the addition per se was non-maintainable because of the prohibition of making similar additions u/s. 143(1). Apropos to the decision in para 5 above, as the assessee has succeeded on merits and ITA No.809/Chny/2025 Page - 4 - of 4 we have remitted the issue to the Ld.AO for limited verification and corresponding relief, this legal ground of appeal has been left open. 7.0 In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 11th , June-2025 at Chennai. Sd/- (यस यस धवश्वनेत्र रधव) (SS VISWANETHRA RAVI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 11th , June-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Coimbatore 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "