Supreme Court dismissed Revenue’s appeal against Bombay HC’s ruling that CSR donations qualify for deduction under Section 80G, quashing reassessment based on change of opinion.
CSR Donations Eligible for 80G Deduction: SC Affirms
The Supreme Court dismissed the Revenue’s special leave petition challenging Bombay High Court’s decision in Castrol India Ltd. v. ACIT, which held that donations made under Corporate Social Responsibility (CSR) can qualify for deduction under Section 80G if made to approved institutions and not mandated by law.
The Bombay HC had quashed reopening under Section 148, observing that the reassessment was based on a change of opinion since the same issue was considered during original scrutiny. The SC refused to interfere after a delay of 268 days, reinforcing the finality of High Court rulings on tax benefits.
“CSR expenditure, if voluntary and to eligible entities, merits charitable deduction”, the HC had held.
This affirmation provides much-needed clarity to corporations: bona fide CSR donations to registered trusts are eligible under Section 80G. Practitioners must distinguish mandatory CSR under Companies Act from voluntary donations to ensure eligibility.
Citations
- Section 80G, Section 148, Income Tax Act, 1961
