The Income Tax Appellate Tribunal (ITAT), Delhi Bench deleted the disallowance made on account of Corporate Social Responsibility (CSR) and and SD expenses.
The assessee has raised the issue whether the CIT(A) was justified in confirming disallowance of CSR & SD expenses to the extent of Rs. 4,52,21,943/- under section 37 on the misconceived ground that same have not been incurred for the purpose of business of the appellant.
The coram of Bhavnesh Saini and N.K.Billaiya said that once it is found that the expenditure was dictated by commercial expenses, the deduction under section 37(1) cannot be declined.
The expenditure incurred for the implementation of 20-Point Programme was solely for the welfare of the oppressed classes of society, for which even the Constitution of India sanctions positive discrimination and for contribution to all around development of villages, which has always been the central theme of Government’s development initiatives. An expenditure of such a nature cannot but be, ‘a concrete expression of care and concern for the society at large and an expenditure to discharge the responsibilities of a ‘good corporate citizen which brings goodwill of with the regulatory agencies and society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill.
The Tribunal said that the authorities below indeed erred in law in declining deduction of the expenditure incurred on 20-Point Programme which was, beyond dispute or controversy, at the instance of the Government, and was to discharge the assessee’s obligations towards society as a responsible corporate citizen.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
