Income Tax Appellate Tribunal - Mumbai
Assistant Commissioner Of Income Tax Cc ... vs Ndl Ventures Limited, Mumbai on 27 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "B" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
MS KAVITHA RAJAGOPAL (JUDICIAL MEMBER)
ITA No. 3899/MUM/2025
Assessment Year: 2018-19
Assistant Commissioner of Income NDL Ventures Limited
Tax CC 2 3 49/50, Incenter 12th road,
Room No. 803, Old CGO Annexe Vs. MIDC Andheri East, Mumbai-
Building, Churchgate, Mumbai- 400093
400020
PAN NO. AAACH 2058 N
Appellant Respondent
Assessee by : Mr. Mihir Naniwadekar &
Mr. Ruturaj Gurjar
Revenue by : Mr. Swapnil Choudhari, SR. AR
Date of He aring : 25/02/2026
Date of pronouncement : 27/03/2026
ORDER
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 29.03.2025 passed by the Ld. Commissioner of Income-tax (Appeals)- 48, Mumbai [in short 'the Ld.CIT(A)] for assessment year 2018-19, raising following grounds.
"1) Whether on the facts and circumstances of the case and in law, the Ld. CITYA) erred in deleting the addition of & 5,86,47,793/-made by the Assessing Officer u/s 144 of the Act?
NDL Ventures Limited 2 ITA No. 3899/MUM/2025
2) Whether on the facts and circumstances of case, the Ld. CITIA) was right in restricting to the suo moto moto disallowance made by the assessee of 5,01,67,393/-?
3) Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance made u/s 144 in view of Explanation to Section 141, inserted by Finance Act, 2022, 20 which clarifies that the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arises or has not been received evious year relevant to an assessment year and the during the previous expenditure has been incurred during the said previous year?
4) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing assessee's appeal by relying on theth judicial decision in the case of Hon'ble Supreme Court in the case of State Bank of Patiala (2018) and Hon'ble Delhi High Court in the case of CIT Vs. Joint Investment Put. Ltd. (2015) 372 ITR 69 (Delhi), which predate the insertion of Explanation to Section 14A by amendment made in way of insertion Finance Act, 2022?
5) Whether the statutory nature of CSR expenditure under Section 135 of the Companies Act, 2013 can be treated as a voluntary donation eligible for deduction under Section 80G of the Income Tax Act, 1961?
16) Whether allowing deductions under Section 80G for CSR expenses undermines the objective of mandating CSR as a separate statutory obligation under the Companies Act, 2013?"
2013?
2. Briefly stated facts of the case are that the assessee is engaged in the business of Media and Communication and also in trading securities, real estate etc 19, the assessee filed its etc. For A.Y. 2018-19, return of income on 25.10.2018 declaring total income at Rs. 141,89,78,930/-.. The return of income was processed u/s 143(1) of the Income Tax Act, 1961 [in short 'the Act'] computing total income at Rs. 141,89,79,046/ 141,89,79,046/-. Thereafter, the case selected for scrutiny and statutory notices under the Act were issued and complied with with.
In n the assessment completed, the the assessing officer made was NDL Ventures Limited 3 ITA No. 3899/MUM/2025 disallowance u/s 14A r.w.Rule 8D of Income-tax R tax Rules, 1962 58647993.. The assessing officer also made amounting to Rs. 58647993 disallowances A amounting to Rs. 50,00,000/- allowances u/s 80G of the Act 50,00,000/ for the reason that at same was part of the Corporate Social responsibility (CSR) activity , which is specially prohibited for deduction in view of Explanation below section 37(1) of the Act. On further appeal appeal, the additions Aggrieved, the Revenue is in Ld. CIT(A) deleted both the additions.
appeal before us by way raising grounds as reproduced above.
3. Nos. 1 to 4 of the appeal of the Revenue As far as ground Nos. R are concerned same pertain to the disallowance under section 14A of the Act. The Assessing Officer computed disallowance under Rule 8D at ₹10,88,15,186/ 10,88,15,186/- and, after considering the suo-motu disallowance made by the assessee, made an addition of ₹5,86,47,793/-.. The learned learned CIT(A), however, restricted the disallowance to the amount already disallowed by the assessee, holding that disallowance under section 14A cannot exceed the exempt income. The relevant finding of the Ld. CIT(A) is reproduced as under:
"6.1.1 considered the relevant and material facts on record as 6.1.1 I have considered brought out in the assessment order and submission made during the appellate proceedings. During the course of assessment proceedings, the AO observed that the appellant had made investments in 'Equity Sh Shares' from which it had earned exempt income of Rs. 10,88,15,186/-
10,88,15,186/ during the year under consideration. Accordingly details of the investments were called for. The appellant submitted in its submission that it had incurred 5,01,67,393/ on exempt income and the same was an amount of Rs. 5,01,67,393/-
disallowed u/s 14A The AO in the assessment order has mentioned that the appellant has excluded from the working of disallowance u/s14A NDL Ventures Limited 4 ITA No. 3899/MUM/2025 r.w.r.8D, the shares had not yielded any dividend in the category of investment and inventories.
inventories. Consequently, the AO invoked the section 14 of the Act and computed the amount of disallowance at Rs 10,88,15,186/-
10,88,15,186/ as per Rule 8D. Since the appellant suomoto disallowed Rs.5,01,67,393/-
Rs.5,01,67,393/
the AO disallowed an amount of Rs 5,86,47,793/ u/s.14A and added
5,86,47,793/-u/s.14A a
back to the income of the appellant.
6.1.2 The written submissions filed by appellant, the observations and the findings of the Assessing Officer on this issue are carefully considered. I have considered the various decisions of Hon'ble High Courts and a Income Tax appellate tribunals referred by the Id. Counsel that disallowance u/s 14A cannot exceed the amount of exempt income earned during the year. Hon'ble Supreme Court in the case of State Bank of Patiala (2018) 99 taxman.com 286 (SC) and Hon'ble Delhi Delhi High Court in the case of CIT Vs. Joint Investment Pvt. Ltd. (2015) 372 ITR 69 (Delhi) held that disallowance is to be restricted to the extent of exempt income earned by the assessee. Therefore, following the decision of Hon'ble Apex Court and High Court,C disallowance is to be restricted to the extent of exempt income shown by the appellant. In decision of Caraf Builders and Constructions P. Ltd.] 101 taxmann.com 167 (Delhi) Hon'ble Delhi High Court has held that:
"25. Total exempt income earned ea assessee in this year by the respondent-assessee was Rs. 19 lakhs In these circumstances, we are not required to consider the case of the Revenue that the disallowance should be enhanced from Rs. 75.89 crores to Rs. 144.52 crores. Upper disallowance as held in Pr. CIT v. McDonalds India (P) Ltd. ITA 725/2018 decided on 22nd October, 2018 cannot exceed the exempt income of that year. This decision follows the ratio and judgment of the Supreme Court in the case of Maxopp Investments Ltd. v. CI 7120181 402 ITR 640/254 Taxm Taxman 325/91 taxmann.com 154 and the earlier judgments of the Delhi High Court in Cheminvest v. CIT- [2015] 378 ITR 33/234 Taxman 761/61 taxmann.com 118 and CIT v. Holcim (P.) Ltd. [2015] 57 taxmann.com 28 (Delhi). Relevant McDonalds India (P.) Ltd. (supra) reads:- portion of the judgment in McDonalds reads:
"8. The decision in the case of Maxopp Investment Ltd. (supra) is significant and does answer the question in issue: This decision does not support the Revenue as the Assessing Officer in the case of Maxopp Investment Ltd. Ltd. (supra) had himself restricted the disallowance to the extent of exempt income. After referring to Walford Share and Stock Brokers P. Ltd. (supra) it was held-
held "Axiomatically, it is that expenditure alone which has been incurred income which is includable in total income that has in relation to the income NDL Ventures Limited 5 ITA No. 3899/MUM/2025 to be disallowed. If an expenditure incurred has no causal connection with the exempted Income, then such an expenditure would obviously be treated as not related to the Income that is exempted from tax and such such expenditure would be allowed as s ch expenditure would business expenditure. To put it differently, such then be considered as incurred in respect of other income which is to be treated as part of the total income."
10. The decision of the Delhi High Court in Holcim India Pvt. Ltd. (supra) had referred to the issue whether disallowance of expenditure under Section 14A of the Act would be made even when no exempt income in the form of dividend was earned in the year, and it was observed:
"14. On the issue whether wh assessee could have the respondent-assessee earned dividend income and even if no dividend income was earned, ea yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue is Revenue. No contrary and against the appellant-Revenue.
decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad v. Mis. Lakhani Marketing Incl, ITA No. 970/2008, decided on 02.04.2014, made reference reference to two earlier decisions of the same Court in CIT v. Hero Cycles Limited, 120101 323 ITR 518 and CIT v. Winsome Textile Industries Limited, (20091 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision deci is of the Gujarat High Court in Commissioner of Income Tax--II v. Cortech Energy (P) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax (li) Kanpur, s. Shivam Motors (P.) Ltd. decided on 05.05.2014. In the said v. Mis.
decision It has been held:
"As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not formfo part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned earn any tax free income. Hence, in the absence of any tax free income, the NDL Ventures Limited 6 ITA No. 3899/MUM/2025 corresponding expenditure could not be worked out for disallowance. The view of the CIT (A), which has been affirmed af by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of Rs. 2,03,752/-made 2,03,752/ by the Assessing Officer was in order
15. Income exempt under Section 10in a particular assessment year, may not have been exempt earlier and can become taxable in future years.
ars. Further, whether income earned earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent assessment year. For example, long term capital gain on sale of shares is presently not faxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains lax. It is an undisputed position that respondent assessee is an a investment company and had Invested by purchasing a substantial number of shares and thereby securing right to management. Possibility of sale of shares by private placement etcet cannot be ruled out and is not an improbability. Dividend may or may not be declared. Dividend is ared by the company and strictly in legal sense, a shareholder declared has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax."
11. Decision in Holcim India (P.) Ltd. (supra) was followed and elaborated in Cheminvest Ltd. (supra).
6.1.3 Hon'ble Madras High Court in Case of Marg Ltd Vs CIT has cleared the doubts in following manner:
14. It is well settled that the Rule cannot go beyond the main parent provision. Therefore, whatwhat has been provided as computation method in Rule 8D cannot go beyond the roof limit of section 14A itself under any circumstances. The Courts have time and again reiterated this correct, reasonable and clear position of law. But, merely to somehow make mo re disallowance and impose tax on the more hypothetical income of the Assessee, in contrast to the concept of "real income" to be taxed as per section 5 of the Income-tax Income Act, the Income tax Act keep on adopting such absurd authorities under the Income-tax procedures. The disallowance to this extent, if it was to have its way, will constitute a hypothetical income taxable in the hands of the Assessee, which could never be the intention of section 14A of the Act, providing for a proportionate disallowance of expenditure incurred urred to earn the exempted income.
NDL Ventures Limited 7 ITA No. 3899/MUM/2025
15. The expenditure incurred to earn any income has to be always below the extent of income itself and bear a reasonable proportion thereto, as the commercial prudence does not permit any one to spend more and earn less. The investment in shares of which dividend is earned and dividend being exempted income, the expenditure incurred for earning such dividend in the form of interest on the borrowed funds, which are employed to buy such shares can obviously be not more than the dividend itself and even if the interest paid on such borrowed funds is more than the actual dividend earned during the year in question, the disallowance of interest cannot go beyond the amount of dividend itself. As such, interest paid on borrowed fu nds by the Assessee does not constitute funds 'income of Assessee for that year. Section 14A has been introduced not to allow expenditure incurred to earn ea such exempted income in the form of dividend as an allowable expenditure against the exempted Income of the Assessee and therefore, obviously the disallowance too cannot exceed the extent of dividend itself. The Tribunal itself in many such cases has upheld the disallowance under section 14A only to the extent of 2% of the Dividend income or income even if Assessee claimed that no expenditure other exempted income was incurred to earn such Dividend income and even appeals filed by the Assessee against such 2% disallowance have been dismissed by this Court. Therefore, such an inconsistent approach on the part of the Tribunal bunal cannot be sustained 6.1.4 Hon'ble Courts have decided another outcome of application of Rule 8DD rws 14A wherein disallowances have been made in case of nil exempt income. Hon'ble Supreme Court in its decision in the case of Delhi ort Pvt Ltd [2022] 143 taxmann.com209 (SC) held that International Airport where assessee did not have exempt income, no disallowance could be made under section 14A read with rule 8D. In Pr. CIT v. Oil Industry Development Board103 taxmann.com 326/262, Taxman 102 (SC), the 'ble SC confirmed the decision of the Delhi High Court in Oil Industry Hon'ble Development Board's case wherein it was held that no disallowance u/s. 14A could be made in the absence of any exempt income.
Similar view is taken in the following case.
ad Development Co. Ltd. v. Dy. CIT 124 taxmann.com Tamilnadu Road 599/436 ITR 298 (Mad.).
Pr. CIT v. Dipesh Lalchand Shah 143 taxmann.com 419 (Guj.) NDL Ventures Limited 8 ITA No. 3899/MUM/2025 Pr. CIT v. Adani Wilmar Ltd. 133 taxmann.com 443 (Guj.) CIT v. Chettinad Logistics (P.) Ltd.95 taxmann.com 250/257 Taxm Taxman 2 (SC).
Pr. CIT v. GVK Project & Technical Services Ltd. 106 taxmann.com 181/264 Taxman 76 (SC) 6.1.5 It is further decided by Hon'ble Delhi High Court in ACB India Ltd 62 taxmann.com 71 and by Ho'ble ITAT in case of Vireet Investment Pvt Ltd. 82 taxmann.com 415 that in computation of disallowance u/s 14A only investment yielding exempt income should be considered and such disallowance can not be made in book profit.
6.1.6 Considering the facts and circumstances of the case and relying on sion of various courts as discussed above, it is held that the AO is the decision not justified in disallowing the sum of Rs. 10,88,15,186/-
10,88,15,186/ under section 14A.r.w.r.8D of the Act. I am inclined to agree that the disallowance under section 14A cannot exceed exempt incom e. The AO is directed to restrict income.
the disallowance to the tune of Rs. 5,01,67,393 /- /- i.e to the extent disallowance made by the appellant during the year. These grounds of appeal are allowed.
4. Before us ld. counsel for the assessee also relied on the Hon'ble Jurisdiction High Court in the case of Tata Industries Ltd.(supra) wherein herein the Hon'ble High Court following the various decision cited in paragraph para 4 restricted the disallowances to the extent of exempted ed income.
income 4.1 We have considered the rival submissions submissions and perused the material on record. The position of law is now well settled that disallowance under section 14A cannot exceed the exempt income earned during the relevant previous year. This principle has Hon'ble Supreme Court and consistently been affirmed by the Hon'ble various High Courts. The learned CIT(A), after detailed examination NDL Ventures Limited 9 ITA No. 3899/MUM/2025 of the facts and binding judicial precedents, has correctly applied this settled principle and restricted the disallowance to the extent of exempt income /suo llowance made by the assessee. We suo-motu disallowance find no infirmity in the said approach. The contention of the Revenue seeking enhancement of disallowance beyond exempt income is contrary to the settled legal position and cannot be sustained. Accordingly, the findings of the learned CIT(A) on this issue are upheld. The T ground nos. 1 to 4 of the appeal of the Revenue are dismissed.
5. Now, we take up the ground nos.
nos. 5 and 6 of the appeal of the Revenue relating to the allowability of deduction under section 80G in respect of donations forming part of Corporate Social Responsibility (CSR) expenditure. The Assessing Officer disallowed the claim on the premise that CSR expenditure, being mandatory in nature under section 135 of the Companies Act, 2013, lacks the element of voluntariness and, therefore, cannot qualify as a "donation" eligible for deduction under section 80G. The relevant finding of the ld AO is reproduced as under:
"13. Income under Chapter VI -A:
13. Deduction from total Income 1,00,00,000/ under section 80G of Assessee has claimed deduction of Rs. 1,00,00,000/-
the IT act in the ITR for the year 2018 19. Assessee was asked to furnish 2018-19.
the details of the same. On perusal of details furnished by the assessee, it is seen that the assessee has made a donation of Rs.20000000/-
Rs.20000000/ to Hinduja Foundation and claimed deduction as follows:
Sr. Name of Address PAN Date of Purpose Cheque No Deductio No. Donee Address payment (as per and Amount n receipt of Donation Claimed NDL Ventures Limited 10 ITA No. 3899/MUM/2025 80G 1 HINDUJA HINDUJA AAATH0 30.03.201 Donation No. 449310 5000000 FOUNDA FOUNDA 124L 8 towards TION TION impleme dated 171, DR ntation of 28.03.2018 A. R. Corporat ROAD, e Social Rs.1,00,00, WORLI, responsi 000 MUMBAI MUMBAI- bility on 18 behalf of the company 2 HINDUJA HINDUJA AAATH0 30.03.201 Donation No 492266 5000000 FOUNDA HOUSE 124L 8 towards TION 171 DR.
171, futheranc Dated
A. B. e of the 28.03.2018
ROAD, objective Rs.1,00,00,
WORLI
WORLI, s 000
MUMBAI
MUMBAI- Hinduja
18 Foundati
on
Rs Rs.1,00,
200,00,000 00,000/-
/-
13.1 As can be seen from the above table, out of the total donation of made to Hinduja Foundation, an amount of Rs.
Rs.2,00,00,000/-made 1,00,00,000/- has been disallowed as being expenses towards Corporate from Business Income Social Responsibility in the computation of income from which is in order. However, the assessee has claimed 50% deduction of Rs.1,00,00,000/- under section 80G of an amount of Rs.50,00,000/ Rs.50,00,000/-which is incorrect and has to be disallowed.
The assessee has claimed 50% deduction of Rs.1,00,00,000/ Rs.1,00,00,000/- under Rs.50,00,000/ being donation made to section 80G of an the amount of Rs.50,00,000/- Hinduja Foundation for the objects of the Trust which is correct.
Therefore, the excess amount claimed as deduction under chapter VIA is Rs.50,00,000/-which claimed of deduction under which is disallowed. The claimed chapter VI-A Rs.50,00,000/- after disallowance of the claim A is restricted to Rs.50,00,000/ of deduction u/s 80G in respect of expenditure incurred towards Corporate Social Responsibility in the guise of donation to Hinduja Foundation.
Deduction under VI-A VI Disallowed: Rs.50,00,000/-
NDL Ventures Limited 11 ITA No. 3899/MUM/2025 Penalty proceedings initiated separately u/s 270A of the Income tax act as the assessee has claimed a higher deduction resulting in under reporting reporting as per the provisions of the section 270A."
due to mis-reporting 25.1 We find that assessee claimed donation in respect of the .00 crores made to two parties and claimed payment of Rs. 2.00 cla deduction u/s 80G at the rate of 50% of the said donation.
ssessing officer noticed that those payments were However, the ld Assessing incurred urred towards CSR and therefore same were not eligible for deduction 80G of the A Act.
5.2 The learned CIT(A), relying on judicial precedents, allowed the claim subject to verification of statutory conditions. The relevant finding of the Ld. CIT(A) on issue and dispute is reproduced as under:
"6.2.1 I have gone through the facts of the case and submission made by the d appellant. Incurring at least two per cent of the average net profit towards CSR is an act of compulsion under section 135 of Companies Act, 2013 for companies having net worth of rupees five hundred crores or more or turnover of rupees one thousand crores or more or a net profit of five crore rupees or more during any financial year. The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession.
6.2.2 As the CSR expenditure, being an application of income, is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under the existing provisions of section 37 of the tax Act. Therefore, in order to provide certainty on this issue, it is Income-tax proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under section 37. However, the NDL Ventures Limited 12 ITA No. 3899/MUM/2025 CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed as deduction deduction under those sections subject to fulfillment of conditions, if any, specified therein. However, not allowing CSR would lead to additional tax liability for the companies pursuing CSR.
res integra. The allowability 6.2.3 The issue in dispute is no longer res-integra. allowab of CSR under the provision of section 80G is decided in the case of Motilal Oswal Securities Ltd in ITA No.1795/Mum/2023 dated 18.08.2023 by Hon'ble ITAT, 'D' Bench Mumbai as under:
"9. The issue arising in ground no. (iv), raised in Revenue's appea appeal, is pertaining to the deletion of disallowance of deduction claimed under section 80G of the Act on Corporate Social Responsibility ("CSR") expenses.
10. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, the assessee incurred CSR expenses of Rs. 2,25,71,775, and claimed donation under section 80G of the Act amounting to Rs. 2,21,41,893. The assessee was asked to show cause as to why the claim of deduction under section 80G of the Act of Rs. 1,10,70,947, against the CSR expenses should not be disallowed. The AO vide order passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that the expenditure incurred provisions of the Companies Act, 2013, by the assessee under the provisions cannot be claimed as a donation under section 80G of the Act. The AO further held that the expenditure under the aforesaid provisions of the Companies Act, 2013 is a mandatory contribution and not a and this expenditure has categorically been voluntary contribution and disallowed under section 37 of the Act. The AO further held that if the tax deduction is allowed on CSR expenses then this would result one third amount. Accordingly, the in subsidizing the expenses by one-third disallowed the deduction of Rs. 1,10,70,947, claim under section AO disallowed 80G of the Act and added the same to the total income of the assessee.
11. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue following the judicial edents rendered by the coordinate benches of the Tribunal. precedents Being aggrieved, the Revenue is in appeal before us.
12. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate NDL Ventures Limited 13 ITA No. 3899/MUM/2025 Tribunal have consistently taken the view in favour of benches of the Tribunal the assessee and held that the CSR expenses even though not allowed under section 37 of the Act pursuant to insertion of Explanation--2 2 to section 37 vide Finance Act, 2014 with effect from However, the said expenditure is allowable under 01/04/2015. However, section 80G of the Act."
6.2.4 Further in the case of Allegis Services (India) Pvt. Ltd. in ITA No. 1693/Bang/2019 dated 29.04.2020 by Hon'ble ITAT, Bangalore, wherein it was held that "18. In present facts of case, Ld AR submitted that all payments forming part of CSR does not form part of profit and loss account for computing Income under the head, "Income from Business and Profession". It has been submitted that some payments forming part claimed as deduction under section80G of the Act, for of CSR were claimed computing "Total taxable income", which has been disallowed by authorities below. In our view, assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing 'Total Tax able Income. If assessee is denied this benefit, Taxable merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature.
19. On the basis of above discussion, in our view, authorities below in denying claim of assessee under section 80G of the have erred in Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act.
such circumstances, we are remitting the issue back to
20. Under such Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then irected to grant deduction to the extent of eligibility." directed 6.2.5 Further, Hon'ble ITAT, Kolkata in the case of JMS Mining Pvt. Ltd. in [2021] 130 taxmann.com 118 (Kolkata - Trib.)held as under.
"Since Parliament intended certain restrictions to CSR expend expenditure in respect of two donations included by an assessee as CSR expenditure Le. [Swachh Bharat Kosh and Clean Ganga Fund) has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible und under section NDL Ventures Limited 14 ITA No. 3899/MUM/2025 80G. In this context, it is found that the assessee has made donation by RTGS through bank which is received by Shree Charity Trust which was approved under section 80G(5) (vi). The assessee has also made payment to Pt. Jashraj Music Academy Trust Tru which is also approved under section 80G(5)(vi) and certificate given by Director (Exemption) is found placed. Therefore, since the assessee satisfies the condition under section 80G of the donees, the assessee's claim for deduction of CSR expenses/contribution expenses/cont under section 80G was allowed after enquiry by the Assessing Officer. Thus, the action of the Assessing Officer allowing the claim under section 80G is a plausible view."
6.2.6 As the facts of the case identical to the cases decided by Hon'ble ITAT (supra), therefore, the AO is directed to allow the claim of CSR in ITR subject to verification of donation forming part of CSR are eligible for deduction under the provision of section 80G of the Act. Accordingly, this ground of appeal is allowed."
6.3 Before us ld. counsel for the assessee referred to the decision Tribunal in the case of ACG Pam of the coordinate bench of the Tribunal Pharma Technologies (P.) Ltd vs. PCIT reported in [2025] 176 taxmann.com 98 (Mumbai - Trib.) wherein the claim of deduction u/s 80G for donation classified as CSR has been held to be allowable. The relevant findings of the Tribunal(supra) Tribunal is reproduced as under:
7. First for all, we take up the first issue/question and after hearing the "7.
parties at length on this issue, we noticed that Ld. PCIT has held that since CSR expenditure is mandatory therefore the same cannot constitute a donation, which is voluntary and hence not eligible for deduction under ACG Pam Pharma Technologies Private Limited section 80G of the Act. Whereas it is an undisputed fact that donation made by the assessee are to entities registered under section 80G and that the assessee is otherwise eligible to claim deduction under section 80G of the Act.
8. We noticed that though section 135 of the Companies Act, 2013 mandates the quantum of CS R expenses, it does not mandate to whom CSR and how the amount to be spent and the Appellant at its discretion can choose the mode of spending towards CSR. The donations made by the NDL Ventures Limited 15 ITA No. 3899/MUM/2025 Appellant to ACS Cares Foundation are made voluntarily as there is no reciprocal al commitment from the donees. In any case, section 80G of the Act does not put any condition for the donation to be voluntary in nature for the purpose of claiming deduction. CBDT, vide Circular No. 1/2015 1/ dated 21st January 2015 which contains the Explanatory Notes provisions of the Finance (No. 2) Act, 2014, has stated that expenditure incurred which is eligible for CSR and allowable under other sections, shall be computing income. The relevant extract of allowed as a deduction while computing CBDT Circular is reproduced as under:
"13.3 The provisions of section 37(1) of the Income-tax Income Act provide that deduction for any expenditure, which is not mentioned cifically in section 30 to section 36 of the Income-tax specifically Income Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under the provisions of section 37 of the Income-tax Income Act.
Therefore, in order to provide certainty on this issue, said section 37 has been amended to clarify that for the purposes of sub sub-section (1) of section 37 any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall n not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under said section 37.. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Income-tax tax Act shall be allowed as deduction under those sections subject to fulfillment of conditions, if any, specified therein therein."
9. The CBDT Circular clearly states that the restriction on claiming deduction of CSR expense is only with respect to Section 37(1) of the Act ACG Pam Pharma Technologies Private Limited wherein it w will not be deemed to be a business expenditure for the purpose computing income under the head 'Profits and Gains from Business or Profession'. The Circular itself clarifies that CSR expenditure will be allowable under other sections under the same head of income. In view of CBDT Circular, it is clear that there is no express bar in claiming deduction in respect of CSR expenditure, other than under Section 37(1) of the Act. The Ministry of Corporate Affairsrs ("MCA") has issued Frequently Asked Questions ("FAQ") NDL Ventures Limited 16 ITA No. 3899/MUM/2025 through General Circular No. 01/2016 dated January 12, 2016 (FAQ No.
6) has clarified on the issue as follows:
"Question No. 6: What tax benefits can be availed under CSR? Answer: No specific tax exemptions have been extended to CSR expenditure per se. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. What no specific tax exemptions have been extended to expenditure incurred on CSR, spending on several activities like Prime Minister's Relief Fund, scientific research, rural development projects, skill development projects, agriculture extension projects etc, which find place in Schedule VII, already enjoys exemptions under different sections of the Income-tax Act, 1961."
10. This clarification being issued by the Ministry of Corporate Affairs, Government of India also confirms that donation covered under CSR Expenses are eligible for the deduction under section 80G of the Income- tax Act, 1961. Moreover, reliance is placed on the decision of the Coordinate Bench of the ITAT, Mumbai Bench in the case of ACIT v. Sharda Cropchem Limited (ITA No. 6163/Mum/2024) wherein it was held that donations which are classified as CSR expenditure are eligible for Sectio 80G of the Act. The relevant extract of the order deduction under Section is reproduced as under:
"9. We have carefully perused relevant provisions of the Act and legal position emerging from the cited decision (supra).The CSR expenses which are required to be mandatorily incurred incur by the company as per section 135 of the Companies Act are not assessee-company entitled to deduction under section 37(1) for assessment year 2015-16 virtue of the fetter placed by Explanation 2 to section 16 by virtue 37(1),, which was inserted by the Finance (No. 2) Act, 2014. A plain reading of Explanation 2 to section 37(1) shows that any expenditure incurred towards CSR activities as referred to in section 135 of the Companies Act, 2013 shall not be allowed as ' business expenditure' and shall be deemed to have have not been incurred for purpose of business. The embargo created by Explanation 2 inserted in section 37 by Finance (No. 2) Act, 2014 was to deny deduction for (3SR expenses ACG Pam Pharma Technologies Private Limited incurred by companies, as and by way of regular business expenditure while computing 'income under the head business'. So, NDL Ventures Limited 17 ITA No. 3899/MUM/2025 it can be clearly seen that this Explanation 2 to section 37(1) which denies deduction for CSR expenses by way of business expenditure is applicable only to the extent of computing 'business income' under Chapter IV-D. D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligibl eligible for deduction under any other provision or Chapter, so as to say donations made by charitable trust registered under section 80G.Parliament 80G has expressed its intention clearly by bringing in restriction in respect of expenditure classified by an assessee company while claiming deduction under section 80G i.e. CSR expenditure related to Swachh Bharat Kosh and Clean Ganga Fund. And if the Parliament desired,ed, it could have been made such kind of restriction or any restriction like in the case of donation to Swachh Bharat Kosh& Clean Ganga Fund. So the assertion of the Assessing Officer is erroneous and therefore cannot be accepted. It can be safely inferred that when the Legislature in particular has provided for only the above referred tivo specific exceptions in section 80G, 80G then it is the implied intent of the Legislature to permit deduction under section 80G in respect of CSR contributions made to funds/organizations referred to in all other subsub-clauses of section 80G [other than (iiihk) and (iiihl)] off the Act.
9.1 It may be stated here that the co-ordinateco ordinate Bench of ITAT, Mumbai in the case Alubound Dacs India Private Limited vs. Dy. CIT in IT A No. 3663/M u m/2023 ( A. Y. 2020 - 21)has duly considered ed similar contentious issue and decided the same in favour of the assessee. The relevant extracts are reproduced below for the sake of ready reference:
.............
9.3 Respectfully following the decisions cited above, we hold that the assessee is entitled to deduction claimed u/s. 80G of the Act towards the CSR expenditure incurred by it. We, therefore, direct the Id. A.O. to allow the claim of the assessee subject to the condition assessee has satisfied the other requirements warranted that the assessee u/s.SOG of the Act. We do not find any infirmity in the appellate order. Hence, ground no. 3 raised by the Revenue is dismissed.
11. Thus, after evaluating the facts of the present case and also decision o of the Coordinate Bench and the settled proposition of law, we are also of the NDL Ventures Limited 18 ITA No. 3899/MUM/2025 view that the assessee is entitled for deduction claimed under section 80G of the Act towards CSR expenditure incurred by it."
it."
6.4 We have examined the rival submissions and the material placed on record. The issue is no longer res integra. The statutory embargo introduced by Explanation 2 to section 37(1) denies deduction of CSR expenditure only as a business expenditure. However, there is no corresponding prohibition under Chapter VI-A, VI including section 80G, save and except specific exclusions expressly provided by the Legislature. It is trite law that where the Legislature intends to deny a benefit, it does so expressly. In the absence of any explicit bar under section 80G, a donation otherwise satisfying the prescribed conditions cannot be denied deduction merely because it also qualifies as CSR expenditure. The distinction between disallowability under section 37(1) and eligibility under section 80G must be maintained, as both provisions operate in distinct fields. The consistent view of various coordinate benches of the Tribunal, including decisions relied upon by the learned CIT(A), supports the expenditure, though not allowable as business proposition that CSR expenditure, expenditure, may still qualify for deduction under section 80G, subject to fulfillment of statutory conditions. Denial of such deduction would result in unintended double disallowance, which is not the object of the law. In the present case, it is not disputed that the donee institutions are duly approved under section 80G and the payments have been made through proper banking channels. Once these foundational conditions are satisfied, the claim cannot be NDL Ventures Limited 19 ITA No. 3899/MUM/2025 rejected solely on the ground that the expenditure also falls within the ambit of CSR.
6.5 In view of the above, we find no reason to interfere with the reasoned order of the learned CIT(A). Grounds Nos. 5 and 6 of well-reasoned the Revenue's appeal are accordingly dismiss dismissed.
7. In the result, appeal of the Revenue Revenue is dismissed.
/03/2026.
Order pronounced in the open Court on 27/0 Sd/-
Sd/ Sd/-
Sd/
(KAVITHA
KAVITHA RAJAGOPAL)
RAJAGOPAL (OM
OM PRAKASH KANT)
KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 27/03/2026
Disha Raut, Stenographer
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai