TaxTMI 
TaxTMI 
2025 (11) TMI 2069
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw. The proceedings were initiated u/s 263 of the Act on account of deduction claimed u/s 80G of the Act of CSR expenditure incurred. The impugned order fails to satisfy the statutory preconditions for revision and is liable to be quashed 2. The learned Pr. CIT has erred in law and on facts of the case in invoking jurisdiction u/s 263 of the Income Tax Act, 1961, and setting aside the assessment order u/s 143(3) r.w.s 144B of the Act dated September 29, 2022. The assumption of jurisdiction is invalid, as the foundational conditions for invocation of Section 263 are not satisfied. 2.1 The assessment order passed is neither erroneous nor prejudicial to the interest of Revenue. The same was passed after due inquiry and application of mind by the learned A.O, who had specifically called for details of deduction claimed u/s 80G during the course of assessment proceedings. 2.2 The deduction u/s 80G was scrutinized pursuant to notice issued u/s 142(1) wherein the appellant furnished a detailed break-up of donations, including those forming part of CSR expenses, along with documentary evidence. 2.3 The order u/s 263 is legally unsustainable because it se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cal and biotechnical products. It is also engaged in the research and development activities in biomedical / biotechnical fields. It also has an approved research facility. The assessee company filed its return of income for the captioned assessment year which was selected for complete scrutiny through CASS and accordingly, notices u/s 143(2) and 142(1) of Act were issued against which the assessee duly made submissions from time to time. One such notice was issued u/s 142(1) of the Act dated December 17, 2021 wherein the assessee was asked to furnish details regarding deduction claimed of Rs. 1,21,16,465/- u/s 80G of the Act. In response to the said notice, assessee submitted details of donations made for which deduction had been claimed u/s 80G of the Act along with documentary evidence. Subsequently, the assessment was completed u/s 143(3) r.w.s 144B of the Act wherein certain disallowances were made i.e. disallowance of additional deduction claimed u/s 35(2AB) of the Act of Rs. 17,19,29,097/-, disallowance of Provision for Sales return disallowed in earlier year claimed as deduction on write back of Rs. 12,00,00,000/-and disallowance of Education cess claimed as deduction of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, being statutorily mandated, cannot be considered "voluntary donations" under Section 80G, which was intended to incentivize voluntary, altruistic contributions. In this regard, reliance is placed on the decision of the Apex Court in the case of Commissioner of Expenditure Tax vs PVG Raju of Vizianaram [1967] SCR (I) 1017C and Agilent Technologies (International) (P.) Ltd. v. ACIT [(2024) 160 taxmann.com 238 (Delhi - Trib.)], and finally concluded that the assessment order passed was erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, the said assessment order passed by the Assessing Officer was set-aside on the issue of claim of deduction under section 80G of the Act of CSR expense amounting to Rs. 98,80,296/-. The AO was directed to make an enquiry in this matter and reassess the income after giving an opportunity of being heard to the assessee. 6. Before us, the ld.CIT(DR) has relied on the revision order claiming that such deduction of CSR expenses u/s 80G of the Act is not in accordance with provisions of law and legislative intention behind bringing in Explanation 2 to section 37 of the Act to specifically deny CSR expenditure as allowa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue "unless the view taken by the Assessing Officer is unsustainable in law". Thus, in our considered view following Apex Court ruling the Revision orders passed by ld. PCIT are not sustainable in law. 7.2 Reference could also be made to the decision of the hon'ble jurisdictional High Court in the case of CIT vs Gabriel India Ltd. (203 ITR 108) (Bom) with regard to assumption of jurisdiction by the PCIT in the para below: "12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decisions is hel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open". 8. On merits of the case, whether the CSR expenditure is allowable u/s. 80G of the Act is also no more res integra by a catena of decisions by various Co-ordinate Benches of the Tribunal. The Mumbai Bench of the Tribunal in the case of Alubond Dacs India (P.) Ltd.in (2024) 163 taxmann. com 536 (Mum)considered the provisions of Companies Act and I.T. Act and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pulated u/s. 80G of the Act are satisfied. In the present case in hand, the contributions made by the assessee would not fall under the two exceptions specified above which clearly mandates that the assessee is entitled to claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju (supra) is distinguishable on the facts of the present case where there is no requirement of proving the voluntariness of the donation contributed by the assessee for claiming deduction u/s. 80G of the Act. The amendment brought about by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses (iiihk) and (iiihl) to be the exception for qualifying a donation for claiming us. 80G of the Act could also be an evidencing factor to substantiate that CSR expenditures which falls under the nature specified in section 30 to 36 of the Act are an allowable deduction u/s 80G of the Act. 12. On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s. 80G of the Act towards the CSR expenditure incurred by it. We, therefore, direct the ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income Tax Act, that means it continues to form part of the Total income of the assessee. Section 80G(1) of the Act provides that in computing the total income of an assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Further, section 80G(2) lists down the suns on which deduction shall be allowed to the assessee. Section 80G falls in Chapter VIA, which comes into play only after the gross total income has been computed by applying the computation provisions under various heads of income, including the Explanation 2 to section 37(1) of the Act. Thus, there is no correlation between suo- moto disallowance in section 37(1) and claim of deduction under section 80G of the Act. 7.5 As with regard to the reasoning that CSR expenditure are not voluntary but mandatory in nature due to penal consequences, we are of considered view that voluntary nature of donation is by nature of fact that it is not on the basis of any reciprocal promise of done. The CSR expenditures are also without any reciprocal commitment from beneficiary being philanthropic in nature. The Act permits deduction o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave gone through the orders of lower authorities carefully. On careful perusal of assessment order, we find that case was selected for scrutiny on the issue of large amount of donation. No doubt that the assessing officer during the assessment examined the issue and disallowed donation under section 80G to Urvashi Foundations. Though, there is no discussion about the donation to other charitable trust or institution, however the assessing officer has sought details of donations to all about such charitable trust and institution. We find that the assessee also furnished all required details to the assessing officer. Thus, the assessing officer impliedly accepted the donation to such charitable trust or institution. We find that recently Co-ordinate Bench of Mumbai Tribunal in DCIT Vs Gabriel India (2025) 173 taxmann.com 219 (Mum) on similar issue where the assessee-company claimed deduction under section 80G at the rate of 50% of CSR expenses and furnished receipts of donees evidencing eligibility of deduction under section 80G allowed claim of such assessee. The tribunal while allowing relief to the assessee followed various other decisions of the different benches of the Tribunal.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TR(T) 80 (Kolkata - Trib.) Goldman Sachs Services (P) Ltd. v. JCIT (2020) ([2020] 117 taxmann.com 535 (Bangalore - Trib.) ) (ITAT Bangalore) First American (India) Pvt. Ltd. (ITA No. 1762/Bang/2019) Allegis Services (India) Pvt. Ltd. (ITA No. 1693 /Bang/ 2019) Ld. Counsel further submitted that if the intention was to deny deduction of CSR expenses under section 80G, appropriate amendments on lines of section 37(1) should also have been made The Ruby Mills Limited under section 80G of the Act. In the absence of any such amendment, CSR expenses should not be disallowed under section 80G of the Act. 18. We have heard both the parties and perused the records. We find that ITAT, Bangalore Bench in the case of Goldman Sachs Services (P.) Ltd. (supra) has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction/s 80G of Ericsson India Global Services Pvt. Ltd. v. DCIT the Act subject to satisfying the requisite conditions prescribed for deduction u/s 80G of the Act. For this purpose, the issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of don....