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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the revisionary order under section 263 of the Income-tax Act, 1961 could be sustained on the ground that the Assessing Officer had not made proper enquiry into the assessee's claim of deduction under section 80G in respect of CSR-related donations; (ii) Whether deduction under section 80G of the Income-tax Act, 1961 is allowable on donations made out of CSR expenditure, notwithstanding disallowance of CSR expenditure under section 37(1).
Issue (i): Whether the revisionary order under section 263 of the Income-tax Act, 1961 could be sustained on the ground that the Assessing Officer had not made proper enquiry into the assessee's claim of deduction under section 80G in respect of CSR-related donations.
Analysis: The record showed that the Assessing Officer had issued specific queries regarding the section 80G claim linked to CSR expenses and the assessee had furnished a detailed reply with supporting material. In such circumstances, the matter was not one of absence of enquiry. The revisional authority did not demonstrate any defect in the enquiry or bring on record any independent factual basis to show that the assessment order was unsustainable. A revision under section 263 cannot be founded merely on a different view where enquiry was in fact made and the Assessing Officer had taken a possible view.
Conclusion: The revision under section 263 could not be sustained on the ground of lack of enquiry.
Issue (ii): Whether deduction under section 80G of the Income-tax Act, 1961 is allowable on donations made out of CSR expenditure, notwithstanding disallowance of CSR expenditure under section 37(1).
Analysis: CSR expenditure disallowed under section 37(1) is a computation restriction for business income, whereas deduction under section 80G operates independently at the stage of gross total income under Chapter VI-A. The fact that the payment arose from CSR obligation does not by itself negate its character as a donation for section 80G purposes, provided the donation is made to an eligible institution and the statutory conditions are fulfilled. No statutory embargo was shown that barred such deduction merely because the amount was spent as part of CSR compliance.
Conclusion: Deduction under section 80G was allowable on the CSR-linked donations in the present case.
Final Conclusion: The revisional order was unsustainable and the assessee's claim for deduction under section 80G on CSR-related donations was upheld.
Ratio Decidendi: Where the Assessing Officer has conducted enquiry and taken a possible view, section 263 cannot be invoked merely to substitute a different opinion, and CSR-linked donations remain eligible for deduction under section 80G if the statutory conditions for that deduction are otherwise satisfied.
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