Whether expenses related to transfer of capital asset as provided under rule 7(4) of Companies (CSR Policy) Rules, 2014, will qualify as admissible CSR expenditure?

Yes, expenses related to transfer of capital asset as provided under rule 7(4) of Companies (CSR Policy) Rules, 2014, will qualify as admissible CSR expenditure.

Rule 7(4) of the Companies (CSR Policy) Rules, 2014, states that the CSR amount may be spent by a company for creation or acquisition of a capital asset, which shall be held by:

• a company established under section 8 of the Act, or a Registered Public Trust or Registered Society, having charitable objects and CSR Registration Number under sub-rule (2) of rule 4; or
• beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or
• a public authority:

This means that a company can spend its CSR funds on creating or acquiring a capital asset, such as a building, a piece of equipment, or a vehicle. The asset must then be held by one of the entities listed in rule 7(4).

The expenses related to the transfer of the capital asset, such as stamp duty and registration fees, will qualify as admissible CSR expenditure. This is because these expenses are incurred in order to create or acquire the asset, which will then be used for CSR purposes.

For example, if a company spends its CSR funds to build a school, the expenses related to the construction of the school, such as the cost of materials and labor, will qualify as admissible CSR expenditure. This is because the school will be used to provide education to children, which is a CSR activity.

It is important to note that the expenses related to the transfer of the capital asset must be directly related to the creation or acquisition of the asset. For example, if a company spends its CSR funds to purchase a vehicle, the expenses related to the registration of the vehicle will qualify as admissible CSR expenditure. However, if the company spends its CSR funds to purchase a vehicle and then uses the vehicle for non-CSR purposes, such as commuting to work, the expenses related to the registration of the vehicle will not qualify as admissible CSR expenditure.

Overall, expenses related to transfer of capital asset as provided under rule 7(4) of Companies (CSR Policy) Rules, 2014, will qualify as admissible CSR expenditure. This is because these expenses are incurred in order to create or acquire an asset that will then be used for CSR purposes.