Revisionary jurisdiction under Section 263 cannot be invoked when legal entitlement is determinable from record and no prejudice exists.

Whether revisionary jurisdiction under Section 263 was properly invoked to set aside an assessment allowing a donation deduction claimed as 50% of CSR expenditure turns on two issues: legal entitlement to the deduction under donation provisions, and whether the A.O.'s lack of detailed enquiry rendered the order erroneous and prejudicial to Revenue. Co ordinate decisions and the materials on record permitted determination of the legal question that CSR linked donations were not expressly excluded and thus legally tenable; absence of a fuller enquiry did not make the order erroneous or prejudicial. Result: revision under Section 263 was unjustified and the assessment stands for the deduction claimed.

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Issues: Whether the Principal Commissioner of Income Tax was justified in invoking revisionary jurisdiction under Section 263 of the Income-tax Act, 1961 to set aside the assessment order on the ground that the Assessing Officer erred in allowing deduction of Rs.17,50,000 claimed as donation (50% of CSR contribution) as deductible under Section 80G of the Income-tax Act, 1961.

Analysis: The question turns on (i) whether the deduction claimed as donation is legally tenable under the provisions applicable to donations and (ii) whether the Assessing Officer's alleged failure to conduct a detailed enquiry renders the assessment order "erroneous and prejudicial to the interest of the Revenue" so as to justify exercise of revisionary powers under Section 263. Prior coordinate decisions establish that where the legal entitlement to a claim can be determined from materials on record, mere lack of a detailed enquiry by the Assessing Officer does not transform a legally tenable allowance into an erroneous order warranting revision. On the merits, consistent decisions of co-ordinate benches treat CSR contributions required under the Companies Act as not being explicitly excluded from donation deductions under the statute governing donations, and therefore the legal position favours allowance of the claim where materials support it. Applying these principles to the facts, the material necessary to determine the legal question was available in the assessment proceedings and the claim was legally tenable; consequently the twin conditions for invocation of Section 263-error in the assessment order and prejudice to Revenue-are not satisfied.

Conclusion: The revisionary action under Section 263 of the Income-tax Act, 1961 is not justified; the assessment order is neither erroneous nor prejudicial to the interest of Revenue in respect of the Rs.17,50,000 deduction claimed as donation out of CSR expenditure. The appeal is allowed in favour of the assessee.

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