TaxTMI 
TaxTMI 
2024 (6) TMI 329
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....tions towards Corporate Social Responsibility ('CSR') of Rs. 48,59,170: 2. erred in directing the Assessing Officer to conduct requisite enquiries in relation to allowability of deduction under section 80G in respect of donations made to eligible institutions and forming part of CSR contributions, and to frame a fresh assessment order accodingly. 3. erred in not appreciating the fact that the provisions relating to disallowance of CSR expenditure have been introduced only in connection with allowability of deduction under section 37(1), and do not apply to allowability of deduction under section 80G of the Act 4. erred in not appreciating the fact that the provisions of section 80G [in clauses (iiihk) and (iiihl)] specifically provide for disallowance of deduction only in respect of certain specific CSR contributions, viz. Swachh Bharat Kosh and Clean Ganga Fund, and thereby deduction is allowable under section 80G of the Act in respect of other eligible CSR contributions.. 2. The Brief facts of the case are that, the assessee company is engaged in the business of rendering a full spectrum of engineering consultancy services including feasibility studies, process eng....
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.... in the matter is fixed on 11/12/2023 at 11:00 AM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in 1. In your case, the relevant case records were called for the AY 2018-19 and examined. It is seen from the examination of the said records that the Return of Income was filed for the year on on 30.11.2018 declaring total income of Rs. 129,92,74,400/-. The assessment was completed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act on 08.04.2021 assessing the total income at Rs. 147,17,46,060/-. 2. On perusal of the case records, it is noticed that an amount of Rs. 48,59,170/- was claimed as donation u/s 80G on the amount spent on CSR activities. The same is prima facie not an allowable deduction.....
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....l income of the donor." 2.31 Hence, it would not be out of case to mention that if the intent of legislature was that any expenditure towards CSR is not eligible for deduction u/s. 80G of the Act, then restriction would not have been made specifically for donation to SwachhKosh and Clean Ganga Fund only. Consequently, where the donation (other than contribution made to Swachh Bharat Kosh and Clean Ganga Fund) is made to the trust/institution covered u/s. 80G(5) of the Act, deduction for such donation is allowable to the assessee even if such donation also qualifies as CSR payments u/s. 135(5) of the Companies Act, 2013. 2.50 It is submitted that expenditure incurred towards CSR is not allowable as deduction u/s. 37 of the Act while computing the income chargeable under the head income from business and profession. However, where such CSR expenses is covered by any other specific section of the Act (i.e. other than section 37 of the Act), the same is allowable as deductible item to the assessee against the income of the assessee in accordance with provisions of such specific section. Consequently, where the donation made by the assessee is squarely covered by section 80G of the ....
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....idising the said expenditure incurred by the tax payers. The relevant extract of the Memorandum is as follows:- "13.2 CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for computing the taxable income of the company. Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidising of around one-third of such expenses by the Government by way of tax expenditure". This is, both, a case of no enquiry on the issue and also non application of mind on the issue with respect to the clarifications given in the Memorandum to the Finance Act explaining the very basis of bringing the amendment. 6. In view of the facts discussed above, on the above above i issue it is seen that the requisite enquiry was not made by the AO and the assessment was completed without proper ap....
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....er to make up the deficiency is altogether an incorrect impression of the law. Further, incorrect impression of law of the Ld. Tribunal is to be found from the following sentence." "If there is an enquiry, even inadequate, that would not by itself give occasion to the Ld. CIT to pass order u/s. 263 of the Act." From the above, it can be inferred that inadequate enquiry by the Assessing Officer would make the order erroneous and prejudicial to the interest of Revenue. Incorrect assumption of facts and improper application of mind would also make the order erroneous and prejudicial to the interest of revenue. 10. Thus, it is observed that in the above highlighted issue has not been examined by the assessing officer at all and the assessment order has been passed without making requisite inquiries or verification which should have been made under the facts and circumstances of the case, thus rendering the assessment order erroneous and prejudicial to the interest of revenue. In view of the facts discussed above, and the legal position discussed above, the Assessing Officer's failure in, not conducting the requisite enquiries which were required to be made in this case the as....
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....he Act in the detailed submissions filed vide letter dated 22.12.2023 in the revision proceedings U/sec. 263 of the Act. The Pr.CIT has overlooked these factual aspects and evidences and dealt on the provisions of section 37(1) of the Act and without considering the merits of claim has issued directions to the Assessing officer to conduct enquiries. Further Ld. AR has substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the assessee appeal. 8. Per Contra, the Ld. DR submitted that the AO has not dealt on the facts that the assessee has made donations and no enquiry was conducted and the Ld.DR relied on the order of the Pr.CIT. 9. We heard the rival submissions and perused the material on record. The Ld.AR envisaged that the order passed by the Pr.CIT is bad in law as the order revised under revision proceedings passed by the Pr. CIT is not erroneous and not prejudicial to the interest of the revenue. The contentions of the Ld. AR that, the AO has considered the submissions, facts in respect of claims and method of accounting. In compliance to the notice u/sec. 142(1) of the Act and subsequent hearings, the assessee has filed the....
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....icial decisions on the validity of revision proceedings U/sec. 263 of the Act and the donations though forming part of CSR Expenditure are eligible for claim of deduction u/sec. 80G of the Act as under: 1. Malbar Industrial Co. Ltd Vs. CIT, (SC), 109 taxman 66 2. CIT Vs. Jain Construction Co., 34 taxmann.com 84 (Raj HC) 3. Bajaj Electricals Ltd Vs. Pr. CIT, ITA No. 1302/Mum/2021 4. FDC Ltd Vs. PCIT, 157 taxmann.com 387 (Mum Trib) 5. JMS Mining (P.) Ltd Vs. Pr. CIT, 130 taxmann.com 118 (Kol Trib) 6. Naik Seafoods Pvt Ltd Vs. PCIT, ITA No. 490/Mum/2021 7. Synergia Lifesciences Pvt Ltd Vs. DCIT, ITA No. 938/Mum/2023 8. ACIT Vs. M/s Rustomjee Realty Pvt Ltd., ITA No. 1585/Mum/2023 9. Societe Generale Securities Ind Pvt Ltd Vs. Pr. CIT, ITA No. 1921/Mum/2023. 10. National Seeds Corp Ltd., Vs ACIT, ITA No. 6794/Del/2014 11. Goldman Sachs Services Pvt Ltd Vs. JCIT, TS-331-ITAT2020(Bang) 12. Allegis Services (Ind) Pvt Ltd Vs. ACIT, ITA No. 1693/Bang/2019 13. First American (Ind) Pvt Ltd Vs. ACIT, ITA No. 1762/Bang/2019 14. P. C. Chandra Holding Pvt Ltd Vs. Pr. CIT, ITA No. 256/Kol/2022. 10. The AO dealt on the facts in the proceedings but there are no observati....
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....conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282." 11. Further In the case of Nagesh Knitwears P Ltd (2012)(345 ITR 135), the Hon'ble Delhi High Court has elucidated and explained the scope of the provisions of sec. 263 of the Act and the same has been extracted by the Delhi High court in the case of CIT Vs. Goetze (India) Ltd (361 ITR 505) as under:- "Thus, in cases of wrong opinion or finding on merits,....
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....ed by the assessee, mere fact that it is not dealt with by the A.O. in the order cannot implied that there is no application of mind. We find that the A.O has considered one of the possible views based on the information and it is not necessary that the A.O should put all the discussions/observations in the assessment order, as per explanation (2) to sec 263 of the Act the authority has to invoke provisions only when there is no verification and enquiry conducted by the A.O. Whereas the A.O has applied his mind and verified the facts and has not doubted the genuineness of expenditure. The Ld. AR referred to the submissions, financial statements, judicial decisions and explanations filed before the A.O. We find the Hon'ble High Court of Bombay in CIT Vs. Gabriel India Ltd.(203 ITR 108) has observed as under: Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1973-74 - Assessee claimed a sum of Rs. 99,326 described 'as plant relay out expenses' as revenue expenditure and ITO, after making enquiries in regard to nature of said expenditure and considering explanation furnished by assessee in that regard, allowe....