ITAT Mumbai Allows Deduction For Donation To PM Relief Fund Despite Being Part Of CSR

The Income Tax Appellate Tribunal (ITAT), Mumbai, has allowed Landmark Worldwide Breakthrough Technologies Pvt. Ltd. to claim a deduction on its donation to the Prime Minister's National Relief Fund, even though the payment formed part of its CSR expenditure.

The bench comprising Judicial Member Pawan Singh and Accountant Member Girish Agrawal held that such a claim cannot be denied merely because the donation was made to meet CSR obligations.

The taxpayer had filed its return declaring a total income of Rs. 6.83 crore. It had incurred CSR expenditure, which it disallowed under Section 37(1), but separately claimed a deduction of Rs. 22.94 lakh under Section 80G for a donation to PMNRF.

The Assessing Officer rejected the claim on the ground that the donation was part of CSR spending. This was upheld by the CIT(A).

Before the tribunal, the taxpayer argued that there is no bar in law preventing deduction under Section 80G merely because the donation is made out of CSR funds, and that the two provisions operate independently.

Accepting the submissions, the Tribunal held:

“Considering the facts on record where there is no dispute on making of donations by the assessee except that it has been made out of CSR fund, we find that there is no statutory bar in claiming the deduction u/s. 80G. Donations made by the assessee do not fall under specified exception and therefore, assessee is entitled to deduction claimed u/s. 80G..”

The tribunal further clarified:

“...As long as the donations are made to institutions approved under section 80G and all the requisite documentary compliances are in place, the deduction cannot be denied merely because the payment also satisfies the CSR requirement under the Companies Act...”

It also rejected the Revenue's argument, observing that the choice of recipient of CSR donations lies with the taxpayer and that no specific restriction under the Act applies to such donations.

Accordingly, the tribunal deleted the disallowance and allowed the taxpayer's appeal.

For Appellant: Akshay J. Shah, CA

For Respondent: Surendra Mohan, Sr. DR