Allowability of deduction u/s 80G for CSR expenses
Allowability of deduction under section 80G of the Income tax Act 1961 for CSR contributions is a question often debated. Fortunately, in a fairly recent Order dated 28th November 2023, Income Tax Appellate Tribunal (ITAT) has upheld the allowance of Section 80G deduction on CSR expenses for Rustomjee Realty Private Limited., (Appeal Number: ITA No.1585/Mum/2023 related to Assessment Year 202021).
In the Order ITAT referred to several precedents and upheld the tax deduction u/s 80G, stating that the nature of CSR expenses under the Companies Act did not preclude eligibility for Section 80G. ITAT found that CSR expenses even though not allowed under section 37 of the Income tax Act pursuant to insertion of Explanation-2 to Section 37 (vide Finance Act, 2014 with effect from 01/04/2015); the said expenditure is allowable under section 80G of the Act. On perusal of the provision of Section 37(1) as well as Section 80G of the Income Tax Act, 1961, ITAT found that there is no specific restriction for companies spending on CSR claiming deduction u/s 80G of the Income Tax Act, 1961.