ITAT Delhi Upholds ₹18 Lakh Tax Deduction Claim On Ernst & Young's CSR Donations

Ernst & Young Services Private Limited has succeeded before the Delhi bench of the Income Tax Appellate Tribunal in a dispute over a tax deduction claimed on donations made as part of its Corporate Social Responsibility (CSR) spending. The tribunal dismissed the Income Tax Department's appeal and upheld the deduction.

A bench of Judicial Member Yogesh Kumar U.S. and Accountant Member Manish Agarwal was considering the Department's challenge to relief granted to the company.

The dispute centred on a deduction of about ₹18 lakh claimed under Section 80G on donations of about ₹36 lakh made to approved charitable trusts. The assessing officer had disallowed the claim on the ground that the donations formed part of the company's CSR expenditure. The Commissioner (Appeals) later deleted the disallowance.

The tribunal noted that CSR expenditure is disallowable while computing business income, whereas deductions for eligible donations are considered separately while computing total taxable income.

Holding against the Revenue, the bench observed,

"The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter"

The tribunal concluded that the restriction applicable to CSR expenditure as a business deduction could not be used to deny deductions otherwise available for eligible donations. The Revenue's appeal was accordingly dismissed.

For Assessee: Advocate Kamal Sawhney for Shri Puro, Advocate

For Revenue: Dayainder Singh Sindhu, CIT-DR