HSBC PROFESSIONAL SERVICES (INDIA) PVT. LTD,MUMBAI vs. THE PR. CIT, MUMBAI

Ground no. 4 is on the non granting of deduction u/s. 80G of the Act where the ld. PCIT has held that the claim for deduction u/s. 80G of the Act in respect of CSR expenses of Rs.9,36,530/- was allowed by the A.O. without verification of the receipts and without verifying the fact that the said donation was eligible for deduction u/s. 80G of the Act. The assessee submits that an amount of Rs.9,36,530/- was debited in its profit and loss account towards CSR expenditure and the same was disallowed in the computation of income. The assessee further stated that the assessee had claimed deduction of Rs.4,68,265/- u/s. 80G for which deduction has been granted by the A.O. while computing the total income of the assessee, whereas in the IT computation form which was annexure with the assessment order, the A.O. has not granted the impugned deduction. It is observed that the assessee has furnished the receipt of the donation payment amounting to Rs.9,36,530/- which was enclosed as Annexure 8 before the ld. PCIT. The assessee further stated that it had filed rectification application before the A.O., requesting to rectify the mistake which was apparent from the record and to grant deduction of donation u/s. 80G of the Act. The ld. PCIT has held that the A.O. is said to have allowed the deduction without verification of the receipts and without verification of the fact that the said donation was eligible for deduction u/s. 80G and thereby invoked the provision of section 263 of the Act as the assessment order being erroneous and (A.Y. 2016-17) HSBC Professional Services (India) Pvt. Ltd. vs. The Pr. CIT prejudicial to the interest of the Revenue. The assessee relied on the provision of section 35AC and section 80G which provide for allowability of CSR expenses which is subject to fulfillment of conditions mentioned in the said provision. The assessee further stated that the intention of the legislature was not to deny the deduction of expenses towards CSR activities and that there was no explicit provision under the Act for denial of deduction u/s. 80G of the Act. The assessee further stated that the A.O. has rightly allowed the claim of deduction u/s. 80G and relied on various judicial precedence for allowing the said claim.

We have heard the rival submissions and perused the materials available on record. We find that the A.O. has allowed the impugned deduction on CSR expenses to the assessee under the provisions of the Act. The A.O. has rightly granted the benefit of claim of Chapter VIA which cannot be denied merely because such payments forms part of CSR and that the same would lead to double disallowance, was not justifiable in our view.

From the above observation, we are of the considered view that the ld. PCIT has invoked the provision of section 263 of the Act on the ground that the assessment order was prejudicial to the interest of the Revenue. We find no justification in holding the same. We are also of the considered opinion that the A.O. has rightly assessed the total income of the assessee on the above mentioned grounds specified by the ld. PCIT in his order u/s. 263 of the Act and has taken one of the plausible view. We hold that the order passed by the ld. PCIT u/s. 263 has to be quashed as the assessment order was not erroneous insofar as it is prejudicial to the interest of the Revenue.