CSR expenditure disallowed under section 37(1) qualifies for section 80G deduction if conditions met; TDS disallowance under sections 40(a)(i)/(ia) requires verification of compliance on actual payments, not mere provisions for unidentified payees.

ORDER

PER SANDEEP SINGH KARHAIL, J.M.

The Revenue has filed the present appeal against the impugned order dated 17.07.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeal) – 52, Mumbai [“learned CIT(A)”], for the assessment year 2020-21.

2. In this appeal, the Revenue has raised the following grounds: -

1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in granting relief to the assessee by allowing provisions for expenses under Section 40(a)(i) of the Income Tax Act, 1961, despite clear non-compliance with the provisions of Chapter XVII-B of the Act, especially failure to deduct tax at source on payments made to non- residents?

2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A has erred in granting partial relief of 30% on disallowance made under Section 40(a)(ia), without substantiating the basis for such proportionate allowance, especially when the assessee had failed to produce invoices, confirmations, or proof of TDS compliance in respect of the remaining 70% of the provisions made, even when specifically asked by AO?"

3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the amount of Rs. 2.29,06,061/- even when the assessee failed to establish (on specific enquiry by AO) that the assessee has deducted TDS on the payment for which expenses have been claimed in AY 2020-21.7"

4 "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)has erred in concluding that partial relief is justified under Section 40(a)(ia), despite the assessee's non-compliance with Section 206AA, resulting in short deduction and non-deduction of TDS?"

5. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition without justifying that the AO had rightly disallowed 100% of provisions made under Section 40(a)(i) (payments to non-residents without TDS); and 30% of the provisions under Section 40(a)(ia) (residents, where TDS was not deducted or deposited), as per the mandate of the Act and judicial precedents?"

6. "Whether on the facts and in the circumstances of the case and in law, the impugned order passed by the CIT(Appeal) is perverse. It is pertinent to note that Para 6.1 to 6.2 of the said order is in favour and support of revenue, whereas the concluding paragraph appears abrupt and in favour of the assessee without any reasonable basis. Notably the Ld.CIT(A) has failed to render any clear or categorical findings on the specific ground raised by the assessee."

7. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to given any opportunity to the assessing officer during the appellate proceedings for verification, of details filed by the assessee?"

8. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in justifying the fact that as per assessment order the assesseee company, falls under the applicability of Section 135 of the Companies Act, 2013, and has duly incurred CSR expenditure in compliance with the said provisions."

9. “Whether on the facts and in the circumstance of the case in law, the Ld.CIT(A) has erred in justifying the fact that the Assessing Officer has disallowed the deduction under Section 80G on the ground that CSR expenditure is n