TaxTMI 
TaxTMI 
2023 (6) TMI 1486
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....bai-2 has erred in holding that the reassessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue, without appreciating the fact that mere adopting of one view out of two possible views based on the specific inquiries conducted by the Assessing Officer in respect of the issue under consideration cannot render the order so passed to be erroneous, though the same might be prejudicial to the interests of the revenue. 2 On the facts and circumstances of the case and in law, the learned Pr. CIT, Mumbai-2 erred in holding that the deduction of Rs. 1,72,80,948 claimed under Section 80G of the Act (being 50% of the total CSR expenditure incurred by the appellant) should be disallowed, without appreciating the fact that the same was validly claimed under Section 80G(2)(iv)(a) of the Act in respect of donations paid to an eligible institution approved under Section 80G(5) of the Act." 3. The relevant facts in brief are that the Appellant filed its return of income for the Assessment Year 2018-19 on 16/10/2018 declaring total income of INR 69,14,92,410/-. The case of the Appellant was selected for scrutiny assessment under the E-Ass....
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....the Act for 50% of the CSR Expenses incurred by the Appellant. All the relevant details/documents were filed before the Assessing Officer during the assessment proceedings which were duly examined by the Assessing Officer before accepting the claim of the Appellant made under Section 80G of the Act. The Assessment Order, dated 22/01/2021 was neither erroneous nor prejudicial to the interest of the Revenue. Therefore, the PCIT erred in exercising powers of revision under Section 263 of the Act. In this regard, he relied upon judicial precedents including the judgment of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs CIT : [2004] 243 ITR 83 (SC) and the decision of Kolkata Bench of the Tribunal in the case of JMS Mining Pvt. Ltd. Vs. Pr.CIT :[2021] 91 ITR (T) 80 (Kolkata - Trib.). 8. Per contra, Ld. Departmental Representative supported the order dated 28/03/2023, passed by the PCIT. He submitted that in view of Explanation 2 to Section 37(1) of the Act CSR Expenses are not allowable as a deduction. In case, deduction under Section 80G of the Act is allowed in respect of CSR Expenses, which the Appellant is required to incurred mandatorily as per the provision....
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....al facts and circumstances, the Kolkata Bench of the Tribunal had, in the case of JMS Mining Pvt. Ltd. (supra) -relied upon by the Ld. Authorised Representative for the Appellant, quashed the order of revision passed under Section 263 of the Act. The relevant extract of the decision of the Tribunal read as under: "14. We have heard both the parties and perused the records. Before we advert to the facts and law involved in this lis before us, let us revise the law governing the issue before us. The assessee has challenged in the first place, the very usurpation of jurisdiction by ld. Principal CIT to invoke his revisional powers enjoyed u/s 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the Pr. CIT rightfully exercises his revisional power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. v. CIT....
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....ine and find out whether the issue/fault on the basis of which the Ld. PCIT has interfered with the order of the A.O dated 3-12-2018 was erroneous or not i.e. whether the AO had erroneously allowed the claim of the assessee under Chapter VIA in respect of CSR expenditure amounting to Rs. 67,50,000/- i.e. [50% of Rs. 1,35,00,000/-] u/s 80G of the Act. This action of AO, according to Ld. PCIT, is erroneous since as per Section 37 of the Act, there is express prohibition to allow any amount of CSR expenditure by virtue of Explanation 2 to Section 37 of the Act and so irrespective of the fact that the assessee had made the CSR expenses as donation to any Fund or Institution (donee) which enjoys approval of PCIT/CIT u/s. 80G of the Act, still the AO could not have allowed the claim u/s. 80G of the Act. Therefore, the Ld. PCIT was of the view that the claim of the assessee for deduction of the CSR expenses to the tune of Rs. 67,50,000/- [50% of Rs. 1,35,00,000/-] should have been disallowed by the AO and added back to the total income of the assessee. Further according to Ld. PCIT the A.O has passed the assessment order without making enquiries or verification which should have been made....
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....IT's action of brushing aside the reply given by the assessee and his finding that the A.O has not verified/enquired into the issue smacks of arbitrariness and non-application of mind making the impugned order bad in law. 17. Coming next to the legality/correctness of the deduction allowed by the AO in respect of CSR/donation u/s. 80G of the Act, first of all, we agree with the Ld. CITDR that CSR expenses which are required to be mandatorily incurred by the assessee Company as per Section 135 of the Companies Act are not entitled to deduction u/s 37(1) of the Act for A.Y 2015-16 by virtue of the fetter placed by Explanation 2 to section 37(1) of the Act which was inserted by the Finance Act vide no. 2.2014. The relevant provisions of Explanation 2 to section 37(1) of the Act read as follows: "Explanation 2. -For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013)27 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the busine....