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January 2023

Business expenditure – Corporate Social Responsibility (CSR) – Explanation 2 was inserted in Section 37 by Finance (No.2) Act, 2004 w.e.f. 1st April, 2015.

By Ajay R. Singh, Advocate
Reading Time 6 mins
Pr. CIT - 7 vs. PEC Ltd.
ITA No. 268, 269 & 270 of 2022 (Delhi HC)
Date of order: 29th October, 2022
A.Ys.: 2013-14 to 2014-15
Section: 37 of ITA, 1961

Business expenditure - Corporate Social Responsibility (CSR) - Explanation 2 was inserted in Section 37 by Finance (No.2) Act, 2004 w.e.f. 1st April, 2015.

A common question of law arose for consideration in the appeals:“Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal [hereafter referred to as “Tribunal”] erred in allowing deduction of expenses undertaken under the Corporate Social Responsibility (CSR) endeavour under Section 37 of the Income Tax Act, 1961 [in short “Act”]?”

The expenses incurred by the two assessees in the A.Ys. 2013-14 to 2014-15 were disallowed by the AO in each of the assessment years detailed out hereunder:

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