Section 263 revision failed where section 80G deduction for CSR-linked donations was already examined and no general statutory bar applied.

Section 263 revisional jurisdiction could not be used to revise an assessment allowing deduction under section 80G for CSR-related donations where the Assessing Officer had already examined the claim and the assessee had disclosed the relevant facts. Explanation 2 to section 37(1) applies to computation of business income and does not itself bar a deduction otherwise allowable under Chapter VI-A. Section 80G contains only a specific restriction for certain CSR-linked donations, not a general prohibition for all donations made in the course of CSR compliance. On that basis, the assessment was not erroneous and prejudicial to the interests of the Revenue, and the revision was unsustainable.

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Issues: Whether the Principal Commissioner was justified in exercising revisional jurisdiction under section 263 of the Income-tax Act, 1961 to revise the assessment on the ground that deduction under section 80G on CSR-related donations was wrongly allowed.

Analysis: The assessment record showed that the Assessing Officer had already examined the claim relating to CSR expenditure and the assessee had made the relevant disclosures. The Tribunal held that Explanation 2 to section 37(1) operates only for computing business income and does not, by itself, bar a deduction otherwise allowable under Chapter VI-A. It also noted that section 80G contains an express restriction only in respect of specified donations linked to CSR, and no general prohibition exists for all other eligible donations merely because they form part of CSR spending. On that footing, the Tribunal found no legal basis to treat the assessment order as erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision under section 263 was not sustainable and the assessee's claim under section 80G could not be denied merely because the donations were made in discharge of CSR obligations.

Final Conclusion: The assessment revision was annulled and the assessee succeeded on the core issue of revisional jurisdiction and deduction eligibility for CSR-linked donations.

Ratio Decidendi: A revision under section 263 cannot be sustained where the assessment order has considered the issue and the statute does not contain a general bar against section 80G deduction for donations merely because they were made as part of CSR compliance.

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