Dismissing the appeal of the Revenue the Court held that the assessee had provided funds in discharge of its obligation as mandated by law on the advice of the Department of Public Enterprises and therefore, it could not be said that the obligation placed on the assessee by law was not connected wholly and exclusively to its business. There is nothing on record which would show that the assessee had directed investment of funds which were offered in fulfilment of discharge of its legal obligation in a capital asset. The Tribunal had concluded that the corporate social responsibility expenses incurred by the assessee were allowable under section 37. Explanation 2 appended to section 37(1) was not retrospective in nature. Followed, PCIT v. PEC LTD. (2023) 451 ITR 436 (Delhi)(HC)
PCIT v. Steel Authority of India Ltd. (2023)455 ITR 139 / 148 taxmann.com 132 (Delhi)(HC)/Editorial : SLP of Revenue is dismissed , PCIT v. Steel Authority of India Ltd. (2024) 300 Taxman 593 (SC)
S. 37(1) : Business expenditure-Capital or revenue-Corporate Social Responsibility (CSR)-Amendment is not retrospective-Explanation 2 was inserted by the Finance Act, 2014 with effect from April 1, 2015 to section 37(1) of the Income-tax Act, 1961 and is prospective.