TaxTMI 
TaxTMI 
2025 (8) TMI 1872
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....erred in law and on the facts of order the case in passing an u/s. 263 of the Income Tax Act holding that the assessment order is erroneous and prejudicial to the interest of revenue for allowing ineligible claim of deduction of Rs. 64,43,500/- u/s. 80G of the Income Tax Act. 2. The assessee craves leave to add, alter or amend the above ground of appeal." 2. Briefly stated, the facts of the case are that the assessee filed its return of income for the year under consideration on 03.02.2021 declaring a total income of Rs. 26,77,29,270/-. The said return was selected for scrutiny assessment and, in pursuance thereof, statutory notices under the Income-tax Act, 1961 (hereinafter referred to as 'the Act') were issued and duly compli....
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....f section 80G. The learned PCIT thus concluded that the omission on the part of the Assessing Officer constituted an error of law rendering the assessment order erroneous and prejudicial to the interest of the Revenue. The relevant finding of the ld. PCIT is reproduced as under: "4.1 After going through the findings in the assessment order, the issue raised in the audit objection and reply of the assessee in response to show cause notice u/s 263 of the Act, following facts are noted: 4.2 The assessment order was passed on 08/09/2022 and it was observed by the audit that Section 80G deduction claimed to the tune of Rs. 64,43,500/- was not allowable in view of the fact that the the assessee had claimed CSR expenses of Rs. 11....
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....n its support and argued that Section 80G only excludes the donation to Swachh Bharat Kosh and Clean Ganga Fund were not deductible under section 80G For the sake of convenience, Section80G(2)(iiihk)and (iiihl) is reproduced hereunder: ".... Deduction in respect of donations to certain funds, charitable institutions, etc 80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, - ....... (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) any sums paid by the assessee in the previous year as donations to - ....... (iiihk) the Swachh Bharat Kosh, set up by th....
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....Act. Para 5 of the said order is reproduced hereunder: "...5. Heard both the sides and perused the material on record. On perusal of the computation of total income filed by the assessee in the paper book it is noticed that assessee has claimed deduction u/s 80G in respect of donations given as per the detail mentioned in the note to the computation income to the amount of Rs. 18,83,000/-. We could not find any material on record to demonstrate that during the course of assessment proceedings the AO has examined the claim of deduction made as per provision of section 80G of the Act. Therefore, we restore this issue to the limited extent of verification of conditions for allowability of deduction in accordance with the provision of ....
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....se. 4.8 In common parlance, donations are made without any expectation of reciprocal return or benefits in lieu of the same whereas the expenses made under CSR head are for the benefits in the form of mandatory compliance as per section 135 of the Companies Act. Thus, voluntariness is lacking in the expenses made under CSR head. In the decision by Supreme Court in the case of Commissioner of Expenditure Tax vs. PVG Raju Raja of Vizianagaram (supra), the Hon'ble Apex Court held that for any payment to constitute as donation, it must satisfy the test of voluntariness. The assessee, in the current case incurred expenses under CSR head as part of mandatory compliance of the provisions of Companies Act and this certainly lacked volu....
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....ng the eligibility of the Corporate Social Responsibility (CSR) expenditure for deduction under section 80G of the Act. It was, therefore, submitted that the enquiry required in law had, in fact, been conducted by the Assessing Officer and, accordingly, the Explanation appended below section 263 of the Act could not have been invoked in the present case. The PCIT, however, proceeded on the premise that no enquiry had been undertaken on the specific issue of CSR expenditure vis-à-vis deduction under section 80G of the Act. 3.1 On the substantive issue of eligibility of CSR expenditure for deduction under section 80G of the Act, it is evident that divergent views have been expressed by various benches of the Income Tax Appellate Tri....