TaxTMI 
TaxTMI 
2025 (8) TMI 450
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.... case as well as in Law, the Learned Principal CIT has erred in considering the order passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 by the Learned Assessing officer as erroneous and prejudicial to the interest of the revenue, without appreciating the facts and circumstances of the case. 3. On the fact and circumstances of the case as well as in Law, the Learned Principal CIT has erred in set aside the assessment order passed by the Learned Assessing Officer, without considering the facts and circumstances of the case. 4. On the fact and circumstances of the case as well as in Law, the Learned Principal CIT has erred in directing the Learned Assessing Officer to make enquiries about the claim of section 80G deduction out of CSR expenses, without considering the facts and circumstances of the case. 5. The appellant craves leave to add, amend, alter or delete the said ground of appeal. 6. On the fact and circumstances of the case as well as in Law, the Learned Principal CIT has erred in passing Revision Order u/s. 263 of the Income Tax Act, 1961 for the assessment order u/s. 143(3) r.w.s. 144B of the Act, 1961, passed by the Learned Ass....
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....y virtue of the provisions of Explanation - 2 to section 37 of the Act. In support of its submission, the assessee placed reliance upon the following decisions, wherein deduction under section 80G of the Act was allowed in respect of CSR expenditure: - a. FDC Ltd. vs. PCIT, 157 taxmann.com 387 (Mumbai - Trib) b. Allegis Services (India) (P.) Ltd. vs. Asstt. CIT, [ITA No.1693 (Bang.) of 2019 c. JMS Mining (P.) Ltd. vs. Pr.CIT (2021) 130 taxmann.com 118 (Kol. - Trib) d. First American (India) (P.) Ltd. vs. Asstt. CIT [ITA No.1762 (Bang.) of 2019 dated 29.04.2020. e. AluboundDacs (India) P. Ltd. 163 Taxmann.com 536 (Mumbai - Trib). 6. The learned PCIT, vide impugned order, disagreed with the submissions of the assessee and held that the CSR expenditure, being statutorily mandated, cannot be considered as a voluntary donation under section 80G of the Act. The learned PCIT also placed reliance upon the decision of the Coordinate Bench of the Tribunal in Agilent Technology (International) Pvt. Ltd. vs. ACIT, reported in (2024) 160 taxmann.com 238 (Delhi - Trib), wherein CSR contribution was held to be not allowable as deduction under sectio....
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.... 9. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee incurred expenditure of Rs. 1,55,000/- towards CSR and disallowed the same while computing its income under the head "income from business" in terms of provisions of Explanation - 2 to section 37(1) of the Act. However, while computing the deduction under section 80G of the Act, the assessee claimed a deduction of Rs. 77,500/- (50% of Rs. 1,55,000/-) being the CSR expenditure covered under the provisions of section 80G of the Act. Thus, undisputedly, the assessee has not claimed the CSR expenditure under section 37(1) of the Act, and its claim is only restricted to section 80G of the Act. It is evident from the record that the learned PCIT, on the basis that the said expenditure was incurred voluntarily and therefore cannot be called a donation, initiated the revisionary proceedings under section 263 of the Act. We find that while disagreeing with the submissions of the assessee and setting aside the assessment order, the learned PCIT, vide impugned order, placed reliance upon the decision of the Delhi Bench of the Tribunal in Agilent technologies ....
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....ted to on a similar basis as in the present case. While deciding the issue in favour of the taxpayer, the Bangalore Bench of the Tribunal, vide order dated 29/04/2020, observed as follows: - "We have perused submissions advanced by both sides in light of records placed before us. 10. Section 135 of Companies Act, 2013 requires companies with CSR obligations, with effect from 01/04/2014. Finance (No.2) Act, 2014 inserted new Explanation 2 to sub- section (1) of section 37, so as to clarify that for purposes of sub- section (1) of section 37, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. 11. This amendment will take effect from 1/04/2015 and will, accordingly, apply to assessment year 2015-16 and subsequent years. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head Income Business and Profession. Further, clarification regarding of Explanation 2 to s....
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.... * In-house R&D is eligible for deduction, under this section. * Section 35CCD provides deduction for skill development projects, which constitute the flagship mission of the present Government. * Section 36 provides deduction regarding insurance premium on stock, health of employees, loans or commission for employees, interest on borrowed capital, employer contribution to provident fund, gratuity and payment of security transaction tax. Income Tax Act, under section 80G, forming part of Chapter VIA, provides for deductions for computing taxable income as under: * Section 80G(2) provides for sums expended by an assessee as donations against which deduction is available. a) Certain donations, give 100% deduction, without any qualifying limit like Prime Minister's National Relief Fund, National Defence Fund, National Illness Assistance Fund etc., specified under section 80G(1)(i). b) Donations with 50% deduction are also available under Section 80G for all those sums that do not fallunder section 80G(1)(i). Under Section 80G(2) (iiihk) and (iiihl) there are specific exclusion of certain payments, that are part ....
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....rred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. 20. Under such circumstances, we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility." 12. We find that the issue of the allowability of CSR expenditure under section 80G of the Act has been decided in favour of the taxpayer in various other decisions, as relied upon by the assessee in its submissions before the learned PCIT. Therefore, at the outset, it is evident that without going into the question whether there was an examination by the AO during the assessment proceedings, this issue itself is debatable in nature and thus is outside the purview of revisionary powers of the learned PCIT under section 263 of the Act. 13. At this stage, it is relevant to note the following observations....