Corporate
Social Responsibility (CSR) is a self-regulating process, through which
corporate link their activities with common public. The
Corporate generally using resources, whether it is natural or human to
amass big profits and through Corporate Social responsibility, they will take
social responsibility to develop local area and people living in that area. The
Corporate through Social Responsibility shall be accountable to the
itself, country and the public. The Corporate Social Responsibility also called
as Corporate Responsibility, Corporate Citizenship. Through CSR,
Corporate consider the interest of society by taking responsibility of
impact of their activities on the various stakeholders.
Historical Perspective of CSR Legislation
Historical Perspective of CSR Legislation
|
2007
|
Adoption of inclusive
Growth – 11th Five year Plan
|
|
2009
|
Voluntary Guidelines on
Corporate Social Responsibility, 2009
|
|
2010
|
Parliamentary Standing
Committee on Finance – 21st Report on Companies Bill, 2009
|
|
2011
|
National Voluntary
Guidelines (NVGs) on Social, Environmental and Economic Responsibility of
Business, 2011
|
|
2012
|
Business Responsibility
Reporting
|
|
2014
|
Mandatory provisions of
CSR under section 135 of the Companies Act, 2013 coming into effect from
01.04.2014.
|
The provisions of Section 135 of the Companies
Act, 2013 provides that every company 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 or more during any financial year shall ensure that the
Company spends, in every financial year, at lease two percent of the
average net profits of the company made during the three immediately preceding
financial years.
Text
of Section 135 of Companies
Act, 2013
135. CORPORATE SOCIAL RESPONSIBILITY
135. (1) Every company
having net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more during [1][the immediately preceding financial year] shall constitute a Corporate Social
Responsibility Committee of the Board consisting of three or more directors,
out of which at least one director shall be an independent director.
[2][Provided that where a
company is not required to appoint an independent director under sub-section
(4) of section 149, it shall have in its Corporate Social Responsibility
Committee two or more directors]
(2) The Board's report
under sub-section (3) of section 134 shall disclose the composition of the
Corporate Social Responsibility Committee.
(3) The Corporate Social
Responsibility Committee shall,—
(a) formulate
and recommend to the Board, a Corporate Social Responsibility Policy which
shall indicate the activities to be undertaken by the company [3][in areas or subject, specified in Schedule VII]
(b) recommend the amount of expenditure to be
incurred on the activities referred to in clause (a); and
(c) monitor
the Corporate Social Responsibility Policy of the company from time to time.
(4) The Board of every
company referred to in sub-section (1) shall,—
(a) after
taking into account the recommendations made by the Corporate Social
Responsibility Committee, approve the Corporate Social Responsibility Policy
for the company and disclose contents of such Policy in its report and also
place it on the company's website, if any, in such manner as may be prescribed;
and
(b) ensure
that the activities as are included in Corporate Social Responsibility Policy
of the company are undertaken by the company.
(5) The Board of every
company referred to in sub-section (1), shall ensure that the company spends,
in every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial years [5][or where the company has not completed the period of three
financial years since its incorporation, during such immediately preceding
financial years], in pursuance of its Corporate Social Responsibility Policy:
Provided that
the company shall give preference to the local area and areas around it where
it operates, for spending the amount earmarked for Corporate Social
Responsibility activities:
Provided further that if the company fails to spend such amount, the Board shall,
in its report made under clause (o) of sub-section (3) of section 134, specify
the reasons for not spending the amount [5] [and, unless the
unspent amount relates to any ongoing project referred to in sub-section (6),
transfer such unspent amount to a Fund specified in Schedule VII, within a
period of six months of the expiry of the financial year].
[4][Explanation.—For the
purposes of this section "net profit" shall not include such sums as
may be prescribed, and shall be calculated in accordance with the provisions of
section 198.']
[5][(6) Any amount
remaining unspent under sub-section (5), pursuant to any ongoing project,
fulfilling such conditions as may be prescribed, undertaken by a company in
persuance of its Corporate Social Responsibility Policy, shall be transferred
by the company within a period of thirty days from the end of the financial
year to a special account to be opened by the company in that behalf for that
financial year in any scheduled bank to be called the Unspent Corporate Social
Responsibility Account, and such amount shall be spent by the company in
pursuance of its obligation towards the Corporate Social Responsibility Policy
within a period of three financial years from the date of such transfer,
failing which, the company shall transfer the same to a Fund specified in
Schedule VII, within a period of thirty days from the date of completion of the
third financial year.
(7) If a company contravenes the
provisions of sub-section (5) or sub-section (6), the company shall be
punishable with fine which shall not be less than fifty thousand rupees but
which may extend to twenty-five lakh rupees and every officer of such company
who is in default shall be punishable with imprisonment for a term which may
extend to three years or with fine which shall not be less than fifty thousand
rupees but which may extend to five lakh rupees, or with both.
(8) The Central Government may give
such general or special directions to a company or class of companies as it
considers necessary to ensure compliance of provisions of this section and such
company or class of companies shall comply with such directions.]
KEY NOTE
1.
Substituted by the Companies Amendment Act 2017, effective from
19.09.2018 – for the words "any financial year" the words substituted
"the immediately preceding financial year"
2. Inserted by The Companies (Amendment) Act,
2017 effective from 19.09.2018.
3. Substituted by the Companies
Amendment Act 2017, effective from 19.09.2018 in sub-section (3), in clause
(a), for the words “as specified in 1,2 Schedule VII”
the words substituted "in areas or subject, specified in Schedule
VII"
4. Substituted by the Companies
Amendment Act 2017, amendment effective from 19.09.2018 In section 135, in
sub-section (5), the Explanation substituted.
5. Inserted by The Companies
(Amendment) Act, 2019 - Yet to be Notified [Companies (Amendment) Second Ordinance 2019
is repealed on 31st July 2019]
Compliance under section 135 of the Act i.e.
Corporate Social Responsibility is applicable from April, 2014
The compliance of the provisions of CSR under the Companies Act, 2013
i.e. constitution of CSR Committee, formulation of CSR Policy, the spending of
requisite amount on CSR activities came into force from April, 2014.
Applicability
The provisions of CSR applies to :
·
every company
·
its holding company
·
its subsidiary company
·
foreign company
Criteria
As per the issued amendments,
companies that have not completed 3 whole years but fall under the following
category will have to contribute 2% of their average net profit of the previous
3 years or years after the incorporation, if less than 3 years, on CSR:
(a)
Companies that have a net worth of Rs. 500 Crores or more
(b)
Companies having an annual turnover of Rs. 1,000 Crores or more
(c)
Companies having a net-profit of Rs. 5 Crores or more
How
much to spend
At least 2% of the
average net profit of the company in the immediately three preceding financial
years
Excess
spent above 2% can not be carried over to the next financial year
Since 2% is the minimum
amount to be spent in a financial year, the excess amount cannot be carried
forward for set off in the next financial year
‘Average net profit’ criteria for section 135(5) is Net
profit before tax
Computation
of net profit for section 135 is as per section 198 of the Companies Act, 2013
which primarily is Net Profit Before Tax.
No specific tax
exemptions have been extended to CSR expenditure per se. Finance (No. 2) Act,
2014 also clarifies that expenditure on CSR does not form part of business
expenditure. While no specific tax exemption has been extended to expenditure
incurred on CSR, spending on several activities like contributions to Prime
Minister’s Relief Fund, scientific research, rural development projects, skill
development projects, agricultural extension projects, etc., which find place
in Schedule VII, already enjoy exemptions under different sections of the
Income Tax Act, 1961.
CSR expenditure of a company can not be claimed
as a business expenditure
The amount spent by a company towards CSR cannot
be claimed as business expenditure. CSR expenditure, being an application of
income is not incurred wholly and exclusively for the purpose of carrying on
business - if such expenses are allowed as tax deduction, this would result in
subsidizing of around one third of such expenses by Government by way of tax
expenditure
Extract
from Budget, 2014 Memorandum
13.
Corporate Social Responsibility (CSR)
13.1
Under the Companies Act, 2013 certain companies (which have net worth of Rs.500
crore or more, or turnover of Rs.1000 crore or more, or a net profit of Rs.5
crore or more during any financial year) are required to spend certain
percentage of their profit on activities relating to Corporate Social
Responsibility (CSR). Under the existing provisions of the Income-tax Act,
expenditure incurred wholly and exclusively for the purposes of the business is
only allowed as a deduction for computing taxable business income.
13.2
CSR expenditure, being an application of income, is not incurred wholly and
exclusively for the purposes of carrying on business. As the application of
income is not allowed as deduction for the purposes of computing taxable income
of a company, amount spent on CSR cannot be allowed as deduction for computing
the taxable income of the company. Moreover, the objective of CSR is to share
burden of the Government in providing social services by companies having net
worth/turnover/profit above a threshold. If such expenses are allowed as tax
deduction, this would result in subsidizing of around one-third of such
expenses by the Government by way of tax expenditure.
13.3
The provisions of section 37(1) of the Income-tax Act provide that deduction
for any expenditure, which is not mentioned specifically in section 30 to
section 36 of the Income-tax 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 Act. Therefore, in order to provide
certainty on this issue, said section 37 has been amended to clarify that for
the purposes of 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 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 Act shall be
allowed as deduction under those sections subject to fulfillment of conditions,
if any, specified therein.
13.4
Applicability:- This amendment takes effect from 1st April, 2015 and will,
accordingly, apply in relation to the assessment year 2015-16 and subsequent
years.
The Finance (No. 2) Act, 2014 has inserted Explanation 2 to section 37(1)
with effect from 01.04.2015 which provides that 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 be an
expenditure incurred by the assessee for the purposes of the business or
profession. The expenditure on CSR is considered as appropriation of profit. The
Finance (No. 2) Act, 2014 has inserted an Explanation 2 in Section 37(1) of the
Income Tax Act, 1961 as follows:
"Explanation 2- it is declared that for the
purpose of subsection (1) any expenditure incurred any an assessee on the
activities relating to corporate social responsibility referred to section 135
of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by
the assessee for the purpose of business or profession"
Expenditure
on CSR activities is non-deductible for tax purposes unless falling within
provisions of Sections 30 to 36 of the Income Tax Act, 1961
With
effect from 01.04.2015, it is clarified that for the purpose of section 37(1)
any expenditure under the provisions of section 135 of the Companies Act, 2013 which
is of the nature described in Sections 30 to 36 of the Income Tax Act, 1961
shall be allowed as deduction under the section.
Income Tax considerations
CSR expenditure to be
incurred mandatorily under the Companies Act is not deductible under section 37(1)
of the Income-tax Act, 1961. However, if the expenses are aligned with the
other provisions of the Act i.e. Section 35(1)(ii), 35AC etc., tax efficiency
can be brought in. Illustrative list is given below:
|
Mechanism
|
Nature of CSR
Expenditure
|
Contribution to /
Expenditure on
|
Probable benefits under
Income Tax Act
|
|
Contribution Based
|
Deduction in respect of
donation to certain funds, charitable institutions etc.
|
Prime Ministers Relief
Fund Prime Ministers Drought Relief Fund Jawaharlal Nehru memorial Fund
NGOs
Others as specified
under section 80G
|
100% or 50% with or
without restriction
|
|
Scientific Research
Expenditure
|
Research association or
to a university, college, or other institution to be used for scientific
research [Section 35(1)(ii)]
|
100% of the sum paid
|
|
|
Research association,
university college or other institution to be used for social or statistical
research [Section 35(1)(iii)]
|
100% of the sum paid
|
||
|
Project Based
|
Promoting social and
economic welfare or uplift of the public
|
PSU or a local
authority or to an association / institution approved by the National
Committee or expenditure incurred directly by such company on an eligible
project
|
100% of the sum paid or
expenditure incurred
|
|
Employment enhancing
vocation skills [Section 35CCD of Income Tax Act, 1961]
|
On any skill
development project notified by CBDT
|
100% of expenditure (not being expenditure in the nature of
cost of land or building)
|
Permitted Activities to be included in accordance with
Schedule VII of the Companies Act, 2013
The Board shall ensure that the
activities included by a company in its CSR Policy fall within the purview of
the activities included is schedule VII. Some activities are specified in
Schedule VII as the activities which may be included by companies in their
Corporate Social Responsibility Policies. The Schedule VII was brought into force with effect from the
1st April, 2014. The
entries in Schedule VII are as follows:
(i) Eradicating
hunger, poverty and malnutrition, promoting healthcare including preventive
healthcare and sanitation including contribution to the Swach Bharat Kosh
set-up by the Central Government for the promotion of sanitation and making
available safe drinking water.
(ii) Promotion of education, including special
education and employment enhancing vocation skills especially among children,
woman, elderly and the differently abled and livelihood enhancement projects
(iii) Promoting gender equality, empowering
women, setting up homes and hostels for women and orphans, setting up old age
homes, day care centers, and such other facilities for senior citizens and
measures for reducing inequalities faced by socially and economically backward
groups
(iv) Ensuring environmental sustainability,
ecological balance, protection of flora and fauna, animal welfare,
agroforestry, conservation of natural resources and maintaining quality of
soil, air and water including contribution to the Clean Ganga Fund set-up by
the Central Government for rejuvenation of river Ganga
(v) Protection of national heritage, art and
culture including restoration of buildings and sites of historical importance
and works of art; setting up of public libraries, promotion and development of
traditional arts and handicrafts
(vi) Measures for the benefit of armed forces
veterans, war widows and their dependents vii. Training to promote rural
sports, nationally recognized sports, Paralympic sports and Olympic sports
(viii) Contribution to the Prime Minister's National
Relief Fund or any other fund set up by the Central Government for
socio-economic development and relief and welfare of the Scheduled Castes, the
Scheduled Tribes, other backward classes, minorities and women.
(ix) Contributions or funds provided to
technology incubators located within academic institutions which are approved
by the Central Government
(x) Rural development projects
(xi) Slum area development
Explanation – For the purpose of this
item, the term ‘slum area’ shall mean any area declared as such by the Central
Government or any State Government or any other competent authority under any
law for the time being in force.
(xii) Disaster management, including relief, rehabilitation
and reconstruction activities."
Disaster relief can
cover wide range of activities that can be appropriately shown under various
items listed in Schedule VII. For example,
(i) medical aid can be covered under ‘promoting
health care including preventive health
care.’
(ii) food supply can be covered under eradicating
hunger, poverty and malnutrition.
(iii) supply of
clean water can be covered under ‘sanitation and making available safe drinking
water’. (Refer to annexure to General Circular dated 18.06.2014)
General Circular No. 21/2014 dated 18.06.2014
of MCA has clarified that the statutory provision and provisions of CSR Rules,
2014, is to ensure that while activities undertaken in pursuance of the CSR
policy must be relatable to Schedule VII of the Companies Act 2013.
However, the entries in the said
Schedule VII must be interpreted liberally so as to capture the essence of the
subjects enumerated in the said Schedule. The items enlisted in the Schedule
VII of the Act, are broad-based and are intended to cover a wide range of
activities.
Activities not
qualify under CSR provisions
(i)
The CSR projects or programs or Activities exclusively for benefit of
employees and their families shall not be considered as
CSR activities in accordance with section 135 of the Act.
(ii) Activities undertaken in pursuance of normal
course of business of the company shall not be considered
(iii) Only CSR activities within India will be
taken into consideration
(iv) Contribution of any amount directly or
indirectly to any political parties shall not be considered as CSR activity spend
(v) Expenses incurred by the company for
fulfillment of any Act/statute of regulations (such as Labor Laws, Land
Acquisition Act, etc.) would not count as CSR expenditure
under the Companies Act.
(vi) One-off events such as marathons/ awards/
charitable contribution/ advertisement/sponsorships of TV programmes etc. would not be qualified as
part of CSR expenditure.
Transfer
of unspent CSR amount [Section 135(6)]
The Amendment Act
introduces a new concept wherein if any unspent amount from the total allocated
amount for CSR remains, pursuant to any ongoing CSR project in accordance with
its CSR policy, the company is then required to transfer such unspent amount to
a special account within a period of thirty days from the end of the financial
year.
Such
special account is required to be opened in the name of Unspent Corporate
Social Responsibility Account (“CSR Account“) in any of the scheduled banks.
The amount that has been carry forwarded to the CSR Account must be spent in
consonance with the CSR policy within the stipulated time period of three financial
years from the date of such transfer. On failure to do the same, the company should transfer this unspent
amount to a fund specified under Schedule VII of the Act.
However,
if the unspent amount does not relate to an ongoing CSR project, such unspent
amount should be directly transferred to the fund mentioned in Schedule VII of
the Act, within six months from the end of the relevant financial year.
Penalty
for Non-compliance of the Provisions [Section 135(7)]
The Government has amended provision of Section 135 of the
Companies Act, 2013 through Companies (Amendment) Act, 2019 by inserting
penalty provisions for companies as well as officers in default as follows;
(a) FOR COMPANIES:
On failure to comply with the
provisions, the company shall be punishable with fine which shall not be less
than Rs. 50,000/- and may further extend to Rs. 25,00,000/-; and
(b) FOR OFFICER IN DEFAULT:
Every officer of such company who is
in default, shall be punishable with imprisonment for a term which may extend
to three years or with fine which shall not be less than Rs. 50,000/-and may
extend to Rs. 5,00,000/-, or with both.
Power
with the Central Government [Section 135(8)]
The Central Government
has the authority to give such general or special directions to a company or a
class of companies as it considers necessary to ensure
compliance of provisions of section 135 and such company or class of companies
shall comply with such directions.
Supply of own goods as
CSR
The
goods manufactured by the company should be valued in accordance with the
principles prescribed in AS 2 and services rendered, valued at cost including
indirect taxes so contributed
CSR activities through charitable
company trust society
Notification,
dated 23.05.2016 – [F. No. 05/12/2016-CSR-Cell]
G.S.R.
540(E).—In exercise of the powers conferred under section 135 and sub-sections
(1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central
Government hereby makes the following rules further to amend the Companies
(Corporate Social Responsibility Policy) Rules, 2014, namely:—
1. Short title and commencement – (1) These rules
may be called the Companies (Corporate Social Responsibility Policy) Amendment
Rules, 2016. (2) They shall come into force on the date of their publication in
the Official Gazette.
2. In the
Companies (Corporate Social Responsibility Policy) Rules, 2014, in rule 4, for
sub-rule (2), the following sub-rule shall be substituted, namely:—
“(2) The Board of a company may decide to
undertake its CSR activities approved by the CSR Committee, through
(a) a company established under section 8
of the Act or a registered trust or a registered society, established by the
company, either singly or alongwith any other company, or
(b) a company established under section 8
of the Act or a registered trust or a registered society, established by the
Central Government or State Government or any entity established under an Act
of Parliament or a State legislature :
Provided
that- if, the Board of a company decides to undertake its CSR activities
through a company established under section 8 of the Act or a registered trust
or a registered society, other than those specified in this sub-rule, such
company or trust or society shall have an established track record of three
years in undertaking similar programs or projects; and the company has
specified the projects or programs to be undertaken, the modalities of
utilisation of funds of such projects and programs and the monitoring and
reporting mechanism”.
Provisions of CSR are applicable on Section 8
Company, if it fulfills the criteria of section 135(1) of Companies Act, 2013
Section 135 of the Act reads “ Every company…….”, i.e no specific
exemption given to section 8 companies with regard to applicability of section
135, hence section 8 companies are required to follow CSR provisions.
General Circular No. 21/2014 of MCA
dated 18.06.2014 clarifies that Contribution to Corpus of a Trust/ Society/
Section 8 companies etc. will qualify as CSR expenditure as long as :
(a) the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR
(a) the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR
activities or
(b) where the corpus is created exclusively for a purpose directly relatable to a subject
(b) where the corpus is created exclusively for a purpose directly relatable to a subject
covered in Schedule VII of the Act
General Circular No.
21/2014 - No. 05/01/2014- CSR , Dated: 18.06.2014
To,
All Regional Director, All Registrar of Companies, All Stakeholders
Subject: -
Clarifications with regard to provisions of Corporate Social Responsibility
under section 135 of the Companies Act, 2013.
Sir,
This
Ministry has received several references and representation from stakeholders
seeking clarifications on the provisions under Section 135 of the Companies
Act, 2013 (herein after referred as ‘the Act’) and the Companies (Corporate
Social Responsibility Policy) Rules, 2014, as well as activities to be
undertaken as per Schedule VII of the Companies Act, 2013. Clarifications with
respect to representations received in the Ministry on Corporate Social
Responsibility (herein after referred as (‘CSR’) are as under:-
(i)
The statutory provision and provisions of CSR Rules, 2014, is to ensure that
while activities undertaken in pursuance of the CSR policy must be relatable to
Schedule VII of the Companies Act 2013, the entries in the said Schedule VII
must be interpreted liberally so as to capture the essence of the subjects
enumerated in the said Schedule. The items enlisted in the amended Schedule VII
of the Act, are broad-based and are intended to cover a wide range of
activities as illustratively mentioned in the Annexure.
(ii)
It is further clarified that CSR activities should be undertaken by the companies
in project/ programme mode [as referred in Rule 4 (1) of Companies CSR Rules,
2014]. One-off events such as marathons/ awards/ charitable contribution/
advertisement/ sponsorships of TV programmes etc. would not be qualified as
part of CSR expenditure.
(iii)
Expenses incurred by companies for the fulfillment of any Act/ Statute of
regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as
CSR expenditure under the Companies Act.
(iv)
[Clarification (iv) omitted vide General
Circular No. 36/2014 dated 17.09.2014. Prior to the omission, it read as under:
“Salaries
paid by the companies to regular CSR staff as well as to volunteers of the
companies (in proportion to company’s time/hours spent specifically on CSR) can
be factored into CSR project cost as part of the CSR expenditure.”
(v)
“Any financial year” referred under Sub-Section (1) of Section 135 of the Act
read with Rule 3(2) of Companies CSR Rule, 2014, implies ‘any of the three
preceding financial years’.
(vi)
Expenditure incurred by Foreign Holding Company for CSR activities in India
will qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are
routed through Indian subsidiaries and if the Indian subsidiary is required to
do so as per section 135 of the Act.
(vii)
‘Registered Trust’ (as referred in Rule 4(2) of the Companies CSR Rules, 2014)
would include Trusts registered under Income Tax Act 1956, for those States
where registration of Trust is not mandatory.
(viii)
Contribution to Corpus of a Trust/ society/ section 8 companies etc. will
qualify as CSR expenditure as long as (a) the Trust/ society/ section 8 companies
etc. is created exclusively for undertaking CSR activities or (b) where the
corpus is created exclusively for a purpose directly relatable to a subject
covered in Schedule VII of the Act.
2.
This issues with the approval of Competent Authority.
Merely because assessee - trust was formed by a company for
complying corporate social responsibility requirement, it could not be denied
registration under section 12AA, unless genuineness of activities of assessee -
trust or its charitable object was doubted
The ITAT after perusing
section 135 of the Companies Act, 2013 and notification dated 27.02.2014 issued
by Ministry of Corporate affairs observed that “CSR compliance is allowed to be
carried out through a dedicated trust or society under the Companies Act, 2013.
Merely because the trust was formed for complying CSR requirements it cannot
per se be the reasons for denying registration under section 12AA. The ITAT
observed that the activities of the trust are in nature of charitable
activities and held that for the purpose of granting registration under section
12AA, only two factors mainly objects of the trust and genuineness of
activities are to be seen by the CIT (Exemption). All the other
considerations/matters are required to be considered by a learned Assessing Officer
at the time of assessment for an exemption under section 11 of the Act. Further
it mentioned that whether a donation is received out of profits and whether a
company is eligible to claim a deduction under section 37 of the Act have no bearing
in the hands of trust. In view of the aforesaid observations, the ITAT directed
the CIT (Exemptions) to grant the registration to the assessee. – [Nanak Chand Jain Charitable Trust v. CIT
(Exemption)
(2018) 169 ITD 534 : 91 taxmann.com 197 (ITAT Delhi)
Business
expenditure – Corporate social responsibilities- Held to be allowable –
Explanation 2 inserted in section 37(1) with effect from 01.04.2015 is
prospective in nature
Expenditure
incurred on Corporate social responsibilities is held to be allowable. Explanation
2 inserted in section 37(1) with effect from 01.04.2015 is prospective in
nature. (Related Assessment Year2012-2013) [National Small
Industries Corporation Ltd. v. DCIT (2019) 175 ITD 601 (ITAT Delhi)]
Business
expenditure – Expenditure incurred for providing training through Apparel
Training and Development center, being in the nature of Corporate Social
Responsibility (‘CSR’) expenses is not allowable as a deduction
Expenditure
incurred for providing training through Apparel Training and Development
center, being in the nature of Corporate Social Responsibility (‘CSR’) expenses
is not allowable as a deduction, as there is no nexus between the expenditure
and the objects of the business activity of the Assessee and accordingly, the
same cannot be allowed as a deduction. (Related Assessment Years 2009-10 to
2012-13) - [Rajasthan State Industrial
Development & Investment Corporation Ltd. v. DCIT (2018) 195 TTJ 35 (ITAT
Jaipur)]
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