Section 263 revision fails where CSR expenditure claimed as section 80G donation reflects a plausible, debatable view.

Revision under section 263 was held unsustainable because the assessment order allowing CSR expenditure as a donation under section 80G was based on a plausible view supported by coordinate bench decisions. The issue was treated as highly debatable, so the Assessing Officer's approach could not be characterised as erroneous and prejudicial to the interests of the Revenue merely because the Principal Commissioner preferred a different interpretation. Reliance on Explanation 2 to section 37(1) and Circular No. 1/2015 did not justify revision in these circumstances. The revision order was set aside and the assessment order restored.

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Issues: Whether the Principal Commissioner could invoke revisionary jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessment order allowing a claim relating to CSR expenditure as donation under section 80G was erroneous and prejudicial to the interests of the Revenue.

Analysis: The issue was held to be highly debatable because coordinate bench decisions had taken a consistent view that CSR expenditure could be claimed as donation under section 80G. In such circumstances, the view taken by the Assessing Officer in the original assessment was treated as a plausible view. The revisionary authority's contrary view, even if plausible, amounted only to a change of opinion and did not justify invocation of section 263. The order also noted the reliance placed by the revisionary authority on Explanation 2 to section 37(1) and Circular No. 1/2015 dated 21/01/2015.

Conclusion: The invocation of section 263 was unsustainable and the revision order was set aside, with the assessment order restored.

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