The Income Tax Appellate Tribunal (ITAT) has affirmed that corporate social responsibility (CSR) contributions made to eligible charities can qualify for deduction under Section 80G of the Income Tax Act, 1961, despite the Companies Act, 2013 provisions. The decision also restores a claim for double taxation relief, providing clear guidance for taxpayers on CSR tax planning.
Background & Facts
The Dispute
The appellant, HELLA INDIA AUTOMOTIVE PRIVATE LIMITED, challenged an order dated 19.12.2025 passed by the National Commissioner of Income Tax (NFAC) under Section 250 of the Income Tax Act, 1961. The order disallowed a deduction of Rs.50,75,000 claimed by the appellant under Section 80G for CSR-related donations made in Assessment Year 2020-21.
Key Facts
- The appellant claimed CSR expenses amounting to Rs.109,04,471 for AY 2020-21.
- Of this, a donation of Rs.50,75,000 was made to the Odisha State Disaster Management Authority and was treated as part of CSR obligations under Section 135 of the Companies Act, 2013.
- The Assessing Officer (AO) added Rs.50,75,000 to the net profit, disallowing the 80G deduction.
- The appellant also claimed double taxation relief under Section 90 of the Act to the tune of Rs.1,11,34,019, which the AO failed to credit.
- The AO’s detailed reasoning appeared on pages 10 to 16 of the assessment order.
- The appellant relied on a series of coordinate-bench ITAT decisions that permitted 80G deductions on CSR spend, including Cheil India (P) Ltd. v. DCIT (2024) and Kellog Brown & Root Engineering & Construction India (P) Ltd. v. DCIT (2026).
Procedural History
- 20.09.2022: The Assessing Officer added Rs.50,75,000, holding the 80G claim not allowable.
- 19.12.2025: NFAC affirmed the disallowance under Section 250.
- 06.07.2026: Appeal filed before the ITAT, Delhi Bench "A" (ITA No.1721/DEL/2026).
- 24.08.2026: ITAT pronounced its order, allowing the appeal.
The Parties' Positions
- Appellant (HELLA INDIA AUTOMOTIVE PRIVATE LIMITED): Asserted that CSR donations to eligible entities qualify for deduction under Section 80G(5) and that the Companies Act provision cannot override the Income Tax Act.
- Respondent (Dy. Commissioner of Income): Contended that Section 135 of the Companies Act and the Ministry of Corporate Affairs notification preclude 80G benefits for CSR-mandated spend, and that such expenditures are barred under Section 37(1) of the Income Tax Act.
Relief Sought
The appellant sought:
- Allowance of the Rs.50,75,000 deduction under Section 80G for the CSR donation.
- Restoration of double taxation relief of Rs.1,11,34,019 under Section 90 after verification.
- Costs of the appeal.
The Legal Issue
Whether donations made by a company as part of its CSR obligations under Section 135 of the Companies Act, 2013 can be allowed as a deduction under Section 80G of the Income Tax Act, 1961, and whether the disallowance of such deduction is legally sustainable.
Arguments Presented
For the Appellant
- Relied on coordinate-bench ITAT decisions (Cheil India (P) Ltd. v. DCIT, Kellog Brown & Root Engineering & Construction India (P) Ltd. v. DCIT, Agilent Technologies (International) Pvt. Ltd. v. ACIT) that permitted 80G deductions on CSR spend.
- Argued that the Income Tax Act is a distinct code; provisions of the Companies Act can be invoked only when expressly incorporated, which is not the case for Section 80G.
- Submitted that the donation satisfied the conditions of Section 80G(5)(vi) - being made to a government-approved disaster management authority.
For the Respondent
- Cited Section 135 of the Companies Act, 2013 and the Ministry of Corporate Affairs notification dated 27.02.2014, asserting that CSR spend is a statutory obligation and therefore ineligible for 80G benefits.
- Relied on the principle that expenditures incurred under a statutory CSR obligation are barred under Section 37(1) of the Income Tax Act.
- Emphasised that the AO’s detailed analysis (pages 10-16) demonstrated that the donation was part of a mandatory CSR outlay, not a voluntary charitable contribution.
The Court's Analysis
The Tribunal examined the statutory scheme of the Income Tax Act vis-à-vis the Companies Act. It observed that:
- The Income Tax Act, being a separate legislative enactment, does not automatically import definitions or exclusions from the Companies Act unless expressly stated.
- Section 80G(5) provides a specific exemption for donations to certain government-approved funds, and the donation to the Odisha State Disaster Management Authority qualified under clause (vi).
- The coordinate-bench precedents consistently held that CSR-related donations, when made to eligible entities, are permissible under Section 80G, provided they meet the conditions of Section 80G(5).
- The Tribunal distinguished the respondent’s reliance on Section 135, noting that the Companies Act merely mandates a percentage of profit to be spent on CSR; it does not prescribe the tax treatment of such spend.
- The Tribunal also addressed the double taxation relief claim, finding that the AO’s omission was a procedural lapse and that the relief should be granted after verification.
"We direct that the benefit of Section 80G(5) deserves to be allowed, as claimed by the assessee."
The Tribunal concluded that the AO’s disallowance was not justified and that the donation fell squarely within the ambit of Section 80G(5)(vi).
The Verdict
The appeal is allowed. The Tribunal orders the Assessing Officer to allow a deduction of Rs.50,75,000 under Section 80G for the donation made to the Odisha State Disaster Management Authority. It also restores the claim for double taxation relief of Rs.1,11,34,019 under Section 90, directing the AO to verify and credit the amount. Costs of the appeal are awarded to the appellant.
What This Means For Similar Cases
CSR Donations Can Qualify for 80G
- Tax practitioners must examine whether a CSR donation satisfies the specific eligibility criteria of Section 80G(5), especially clause (vi) for disaster management funds.
- The Companies Act provision on CSR does not automatically bar 80G benefits; each donation must be assessed on its own merits.
Coordinate-Bench Precedents Carry Persuasive Weight
- Recent ITAT decisions (e.g., Kellog Brown & Root Engineering 2026) provide strong support for allowing 80G deductions on CSR spend.
- Counsel should cite these precedents when arguing for deduction eligibility.
Double Taxation Relief Claims Must Be Verified
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Even if the AO omits credit for Section 90 relief, the claim can be revived on appeal and must be processed after verification.
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Practitioners should ensure that proper documentation (e.g., foreign tax credit certificates) accompanies the claim.
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Verify that the recipient entity is listed under Section 80G(5)(vi).
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Maintain clear segregation between mandatory CSR spend and voluntary charitable contributions.
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Prepare detailed affidavits and receipts to satisfy the AO’s verification requirements.
