Income Tax Appellate Tribunal - Ahmedabad
Lonsen Kiri Chemical Industries ... vs The Dy.Cit, Circle-2(1)(1), Ahmedabad on 23 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" BENCH, AHMEDABAD
BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER &
SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER
I.T.A. No.506/Ahd/2026
(Assessment Year: 2020-21)
Lonsen Kiri Chemical Vs. Deputy Commissioner of
Industries Ltd., Income Tax,
th
7 Floor, Hasubhai Chambers, Circle-2(1)(1),
Opp. Town Hall, Ellisbridge, Ahmedabad
Ahmedabad-380006
[PAN No.AABCL4527B]
(Appellant) .. (Respondent)
Appellant by : Shri Tushar Hemani, Sr. Adv.
Respondent by: Shri Rameshwar P Meena, Sr. DR
Date of Hearing 02.04.2026
Date of Pronouncement 23.04.2026
ORDER
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short "Ld. CIT(A)"), National Faceless Appeal Centre (in short "NFAC"), Delhi vide order dated 10.12.2025 passed for A.Y. 2020-21.
2. The assessee has raised the following grounds of appeal:
"1. The Ld. CIT(A) erred in law and on facts in upholding the order of Ld. AO u/s 143(3) of the Act.
2. The Ld. AO has erred in law and on facts in denying deduction claimed u/s. 80G of the Act amounting to Rs. 70,00,000/- by the Appellant, on ground that such amount paid is CSR (as mandated u/s. 135, Companies Act, 2013) in nature and does not qualify as donation.
3. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and principles of Natural Justice and therefore deserves to be quashed.ITA No. 506/Ahd/2026
Lonsen Kiri Chemical Industries Ltd. vs. DCIT Asst.Year -2020-21
- 2-
4. The learned AO has erred in law and on facts in initiating penalty proceedings u/s. 270A of the Act.
5. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal."
3. The brief facts of the case are that the assessee company filed its return of income for A.Y. 2020-21 declaring total income of Rs. 220,10,14,750/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noted that the assessee had incurred CSR expenditure of Rs. 2,20,22,029/-, which was suo motu disallowed by the assessee under section 37(1) of the Act. However, out of the said amount, the assessee claimed deduction under section 80G of the Act in respect of donations aggregating to Rs. 1,40,00,000/- made to eligible charitable institutions, out of which deduction of Rs. 70,00,000/- was claimed. The Assessing Officer, while framing assessment order, disallowed the deduction claimed under section 80G of the Act amounting to Rs. 70,00,000/- on the ground that the said expenditure was incurred towards CSR obligations and therefore could not be treated as voluntary donation eligible for deduction under section 80G of the Act. The Assessing Officer further held that allowing deduction under section 80G of the Act would defeat the intent of Explanation 2 to section 37(1) of the Act and accordingly made the addition. Penalty proceedings under section 270A of the Act were also initiated.
4. In appeal, the learned CIT(Appeals) considered Ground Nos. 1 to 3 relating to disallowance of deduction under section 80G of the Act and upheld the action of the Assessing Officer by holding that CSR expenditure is an application of income incurred under statutory obligation and cannot be regarded as voluntary donation. The CIT(A) observed that the intent of the legislature, as clarified by CBDT Circular ITA No. 506/Ahd/2026 Lonsen Kiri Chemical Industries Ltd. vs. DCIT Asst.Year -2020-21
- 3- No. 01/2015 and the Memorandum to Finance (No.2) Act, 2014, was to deny double benefit in respect of CSR expenditure and that such expenditure, even if routed through eligible institutions, loses the character of "donation" for the purpose of section 80G of the Act. It was further held that CSR payments are not voluntary but are made to comply with statutory mandate under section 135 of the Companies Act, 2013 and therefore cannot qualify for deduction under section 80G. Accordingly, Ground Nos. 1 to 3 were dismissed. With regard to Ground No. 4 relating to initiation of penalty under section 270A, the CIT(A) held that the same was premature and did not call for adjudication at this stage and hence dismissed the same. Thus, the CIT(Appeals) dismissed the appeal of the assessee.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
6. We have heard the rival contentions and perused the material available on record. The short issue involved in the present appeal is whether deduction under section 80G of the Act can be denied in respect of donations made to eligible institutions merely on the ground that such payments were made as part of CSR obligation and were disallowed under section 37(1) of the Act.
7. We find that the issue is no longer res integra and is squarely covered in favour of the assessee by the decision of the coordinate bench of Ahmedabad Tribunal in the case of Patel Infrastructure Ltd. vs. PCIT (Central), Surat at Vadodara in ITA No. 787/Ahd/2025 dated 28.07.2025, wherein the Tribunal, while dealing with identical issue, held that deduction under section 80G of the Act cannot be denied merely ITA No. 506/Ahd/2026 Lonsen Kiri Chemical Industries Ltd. vs. DCIT Asst.Year -2020-21
- 4- because the donation forms part of CSR expenditure, provided the donee institution satisfies the conditions prescribed under section 80G(5) of the Act. The Tribunal further held that Explanation 2 to section 37(1) only restricts allowance of CSR expenditure as business deduction and does not override the provisions of Chapter VI-A, including section 80G of the Act. The Tribunal also observed that once the Assessing Officer has examined the claim and adopted a plausible view, the same cannot be disturbed merely on a different interpretation.
8. We further find that the Ahmedabad Tribunal in the case of Deputy Commissioner of Income-tax vs. Amneal Pharmaceuticals (P.) Ltd. [2026] 184 taxmann.com 414 (Ahmedabad - Trib.) in ITA No. 2139/Ahd/2025 dated 12.03.2026 has held that CSR expenditure disallowed under section 37(1) does not ipso facto disentitle the assessee from claiming deduction under section 80G, as both provisions operate in distinct fields. It was held that once the donation is made to institutions approved under section 80G(5) of the Act and all statutory conditions are fulfilled, deduction cannot be denied merely because such payment also satisfies CSR obligation. The Tribunal, after considering a series of earlier decisions including Vimal Coal (P.) Ltd. v. Dy. CIT [2025] 175 taxmann.com 694 (Ahd.-Trib.) and Gujarat State Financial Services Ltd. v. Dy. CIT [2025] 174 taxmann.com 461 (Ahd.-Trib.), reiterated that there is no restriction under section 80G of the Act against CSR donations except in specific cases expressly provided in the Statute.
9. Respectfully following the aforesaid binding precedents of the coordinate bench of Ahmedabad Tribunal, we hold that the action of the Assessing Officer in disallowing deduction under section 80G of the Act and the confirmation thereof by the CIT(Appeals) is not sustainable in law.
ITA No. 506/Ahd/2026Lonsen Kiri Chemical Industries Ltd. vs. DCIT Asst.Year -2020-21
- 5- In the present case, it is not in dispute that the donee institutions are duly approved under section 80G(5) of the Act and the donations have been made through proper banking channels. The assessee has already disallowed the CSR expenditure under section 37(1) of the Act and has only claimed deduction under section 80G of the Act in accordance with law. Therefore, there is no question of double deduction.
10. In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 23/04/2026
Sd/- Sd/-
(ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 23/04/2026
TANMAY, Sr. PS TRUE COPY
आदे श की ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील) / The CIT(A)-
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे श ानु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation 06.04.2026 (Dictated over dragon software)
2. Date on which the typed draft is placed before the Dictating Member 07.04.2026
3. Other Member.....................
4. Date on which the approved draft comes to the Sr.P.S./P.S 16.04.2026
5. Date on which the fair order is placed before the Dictating Member for pronouncement 23.04.2026
6. Date on which the fair order comes back to the Sr.P.S./P.S 23.04.2026
7. Date on which the file goes to the Bench Clerk 23.04.2026
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Dispatch of the Order..........................................