Deduction under Section 80G Allowed on Donations Made from CSR Funds: ITAT

Case: Hemani Industries Ltd. v. Pr. Commissioner of Income-tax-6

Court: ITAT Mumbai

Assessment Year- 2019–20

ITA No.: 2329/Mum/2025

Date of Order: August 21, 2025

Brief Facts:

• The assessee company claimed deduction under section 80G of the Income-tax Act on donations made from funds allocated for Corporate Social Responsibility (CSR) under the Companies Act, 2013.

• The Assessing Officer allowed the deduction.

• However, the Principal Commissioner of Income-tax (Pr. CIT) invoked section 263, contending that CSR expenses were statutory in nature, lacked voluntariness, and thus did not qualify for deduction under section 80G.

Observations of the Tribunal:

• The Tribunal held that section 80G does not restrict deductions only to voluntary donations; rather, if a donation satisfies prescribed conditions and is made to an eligible institution, it qualifies.

• Further, CSR expenses, although mandatory under company law, do not lose their character as donations when made to approved institutions.

• The Tribunal noted that CSR expenses are disallowed under section 37 (business expenditure), but not under section 80G.

• Relying on judicial precedents, it held that the Pr. CIT’s reasoning of “double deduction” was misplaced.

• Accordingly, the revision order under section 263 was not sustainable.

Hence, the ITAT ruled that CSR donations are eligible for deduction under section 80G, provided the statutory conditions are met. The order passed by the Pr. CIT under section 263 was quashed, and the assessee’s appeal was allowed.