Ericsson India Global Services (P) Ltd. v. DCIT

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The Tax Publishers2024 TaxPub(DT) 1176 (Del-Trib) IN THE ITAT, DELHI BENCH SAKTIJIT DEY, V.P. & PRADIP KUMAR KEDIA, A.M. Ericsson India Global Services (P) Ltd. v. Dy. CIT ITA No. 1150/DEL/2022 5 March, 2024 Assessee by: Vishal Kalra, Adv., Ankit Sahni, Adv. & Yishu Goel, Adv. Revenue by: Vizay B. Vasanta, CIT-D.R. ORDER *Saktijit Dey, V.P.* The captioned appeal has been filed by the assessee against the order of learned Commissioner (Appeals)-44, Delhi, pertaining to assessment year 2015-16. 2. At the outset, learned counsel appearing for the assessee submitted that Ground no. 1, being a general ground, does not require adjudication. He further submitted that Ground no. 6 has become redundant as the assessing officer, in the meanwhile, has granted the desired relief. In view of the aforesaid submissions, ground nos. 1 and 6 are dismissed as not pressed. 3. In Ground no. 2, the assessee has challenged disallowance of deduction claimed under section 80G of the Act, 1961 in respect of Corporate Social Responsibility (CSR) donations. 4. Briefly the facts relating to the issue in dispute are, the assessee is a residential corporate entity stated to be engaged in the business of providing services in terms of operating and supporting the network, development and delivery of software based solutions for telecommunication industry. For the assessment year under dispute, the assessee filed its return of income on 30-11-2015 declaring total income of Rs. 690,78,94,230. In course of assessment proceedings, assessee made a fresh claim of deduction under section 80G of the Act. It was the case of the assessee that it has incurred expenditure of Rs. 3.4 crores towards CSR activities. The assessee claimed that though the expenditure was disallowed in the computation of income following section 37(1) of the Act, however, since the institutions to whom the assessee had donated the funds are eligible under section 80G of the Act, the assessee is entitled for deduction of 50% of the amount expended in terms of section 80G of the Act. While completing the assessment, the assessing officer did not allow assessees claim. Contesting the disallowance, the assessee preferred appeal before learned First Appellate Authority. While deciding the issue, learned First Appellate Authority held that intention of Government is very clear that expenditure on CSR does not form part of business expenditure and no specific tax exemption including deduction under section 80G of the Act has been extended to CSR expenditure. He further held that deduction under section 80G of the Act is applicable only to donation which is a voluntary act on the part of the donor. He observed that since CSR expenditure has been incurred mandatorily in compliance of provisions of the Companies Act, it cannot be said to be voluntary and would not qualify for tax deduction under section 80G of the Act. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2024 TaxPub(DT) 1176 (Del-Trib)

IN THE ITAT, DELHI BENCH

SAKTIJIT DEY, V.P. & PRADIP KUMAR KEDIA, A.M.

Ericsson India Global Services (P) Ltd. v. Dy. CIT

ITA No. 1150/DEL/2022

5 March, 2024

Assessee by: Vishal Kalra, Adv., Ankit Sahni, Adv. & Yishu Goel, Adv.

Revenue by: Vizay B. Vasanta, CIT-D.R.

ORDER

Saktijit Dey, V.P.

The captioned appeal has been filed by the assessee against the order of learned Commissioner (Appeals)-44, Delhi, pertaining to assessment year 2015-16.

2. At the outset, learned counsel appearing for the assessee submitted that Ground no. 1, being a general ground, does not require adjudication. He further submitted that Ground no. 6 has become redundant as the assessing officer, in the meanwhile, has granted the desired relief. In view of the aforesaid submissions, ground nos. 1 and 6 are dismissed as not pressed.

3. In Ground no. 2, the assessee has challenged disallowance of deduction claimed under section 80G of the Act, 1961 in respect of Corporate Social Responsibility (CSR) donations.

4. Briefly the facts relating to the issue in dispute are, the assessee is a residential corporate entity stated to be engaged in the business of providing services in terms of operating and supporting the network, development and delivery of software based solutions for telecommunication industry. For the assessment year under dispute, the assessee filed its return of income on 30-11-2015 declaring total income of Rs. 690,78,94,230. In course of assessment proceedings, assessee made a fresh claim of deduction under section 80G of the Act. It was the case of the assessee that it has incurred expenditure of Rs. 3.4 crores towards CSR activities. The assessee claimed that though the expenditure was disallowed in the computation of income following section 37(1) of the Act, however, since the institutions to whom the assessee had donated the funds are eligible under section 80G of the Act, the assessee is entitled for deduction of 50% of the amount expended in terms of section 80G of the Act. While completing the assessment, the assessing officer did not allow assessees claim. Contesting the disallowance, the assessee preferred appeal before learned First Appellate Authority. While deciding the issue, learned First Appellate Authority held that intention of Government is very clear that expenditure on CSR does not form part of business expenditure and no specific tax exemption including deduction under section 80G of the Act has been extended to CSR expenditure. He further held that deduction under section 80G of the Act is applicable only to donation which is a voluntary act on the part of the donor. He observed that since CSR expenditure has been incurred mandatorily in compliance of provisions of the Companies Act, it cannot be said to be voluntary and would not qualify for tax deduction under section 80G of the Act.