ORIX LEASING AND FINANCIAL SERVICES INDIA LIMITED,MAHARASHTRA vs. PRINCIPAL COMMISSIONER OF INCOME-TAX, MUMBAI

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ITA 6895/MUM/2026Status: DisposedITAT Mumbai11 September 2026AY 2020-215 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's view allowing 80G deduction on CSR expenditure was a plausible view, especially given divergent tribunal rulings. Therefore, the PCIT's revision order under Section 263 was not sustainable.

What were the facts?

The assessee claimed a deduction under Section 80G for CSR expenditure. The PCIT initiated revision proceedings under Section 263, holding that CSR expenditure is not eligible for 80G deduction as it's a mandatory corporate requirement.

What were the issues?

Whether the PCIT was justified in exercising revisionary powers under Section 263 when there were divergent views on the allowability of 80G deduction on CSR expenditure.

Which sections of the Income-tax Act were involved?

Section 80G,Section 263,Section 37(1),Section 135

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: S HRI SANJAY GARG & SHRI JAGADISH

Pronounced: 11.09.2026

Per Sanjay Garg, Judicial Member:

The present appeal preferred by the assessee is against the order of learned Principal Commissioner of Income-Tax, Mumbai-2, [hereinafter referred to as “the

ITA No.6895/Mum/2026 ORIX Leasing & Financial Services India Ltd :: 2 :: Ld. PCIT”] dated 25.03.2026 passed in exercise of his revision jurisdiction under Section 263 of the Income-Tax Act, 1961 [hereinafter referred to as "the Act"] for Assessment Year (AY) 2020-21. 2. The sole issue involved in this appeal is as to whether the Ld. PCIT was justified in exercising his revision jurisdiction u/s.263 of the Act, on an issue where there are divergent views of the Tribunal, one in favour of assessee and the other in favour the Revenue. 3. The Ld. PCIT noted from the assessment records that the assessee has claimed deduction u/s.80G of the Act amounting to Rs.44,13,746/- i.e. @ of 50% of the CSR (Corporate Social Responsibility) expenditure incurred by the assessee of Rs.88,27,492/-. He observed that the expenditure for which deduction was claimed was purely CSR expenditure on which 80G deduction was not allowable as the CSR expenditure by the assessee forms part of the mandatory requirement of the Companies Act 2013 and consequently not eligible for deduction u/s 80G of the IT Act. He observed that the Explanation 2 to Section 37 of the Income Tax mandates that CSR expenses shall not be allowed as business expenditure. He further observed that allowing deduction under section 80G would result in subsidizing these expenses incurred by the corporate, which was not the intent of the legislature.

ITA No.6895/Mum/2026 ORIX Leasing & Financial Services India Ltd :: 3 :: 4. The Ld. Counsel for the assessee submitted that the view taken by the Assessing Officer (AO) in allowing deduction u/s.80G of the Act on account of donation made by the assessee to the eligible Institutions, though, constituting part of mandated Corporate Social Responsibility (CSR) expenditure, was one of the plausible view and the order of the AO, thus, can’t be said to be erroneous. He, in this respect, he has relied upon the decision of the Co-ordinate Bench of this Tribunal in the case of Jay Chemical Industries Pvt. Ltd. v. PCIT in ITA No.543/Ahd/2025 vide order dated 26.08.2025 [Judicial Member here in being author of the said order]. The relevant part of the order is reproduced as under:

5.

Admittedly, the assessee, in this case, has made donation to eligible institutions as provided under the relevant provisions of section 80G of the Act, however, out of CSR expenditure, which the assessee otherwise was mandatorily liable to incur u/s.135 of the Companies Act, 2013. We note that the issue as to whether the donation made out of the expenditure earmarked and mandated for CSR u/s.135 of the Companies Act, 2013, can be allowed as deduction u/s.80G of the I.T. Act, has come for consideration before various Benches of the Tribunal. The Kolkata Bench of this Tribunal in the case of L&T Finance Ltd. v. DCIT (Judgment dated September 30, 2024), reported in [2024] 167 taxmann.com 503 (Kolkata - Trib.) has held that corporate donations made to eligible institutions, even when constituting part of mandated Corporate Social Responsibility (CSR) expenditure, qualify for a deduction under Section 80G of the Income-tax Act, 1961. The Coordinate Kolkata Bench, in this respect, observed that while CSR expenditure may be ineligible for deduction under Section 37(1), the distinct provisions of Section 80G allow deductions for donations made to approved institutions, unless explicitly excluded by the Act. That since the donations were made to institutions eligible under Section 80G, and there was no specific legislative restriction barring CSR-related donations from this deduction, hence the same were eligible for deduction, except for contributions to the Swachh Bharat Kosh and Clean Ganga Fund, which were explicitly excluded. Identical view in favour of the assessee on this issue has been taken by the Co-ordinate Ahmedabad Bench of the Tribunal in the case of “Gujarat State Financial Services Ltd. vs. DCIT” [174 Taxmann.com 461 (Ahmedabad- Trib.)] and the Delhi Bench in the case of “Interglobe Technology Quotient (P.) Ltd. vs. ACIT” [163 taxmann.com 542 (Delhi-Trib.)].

ITA No.6895/Mum/2026 ORIX Leasing & Financial Services India Ltd :: 4 :: 5.1. However, Delhi Bench of the Tribunal in the case of “Agilent Technologies (International) (P.) Ltd. vs. ACIT/NFAC, Delhi” [2024] 160 taxmann.come 238 (Delhi-Trib.) has taken a view on this issue in favour of the Revenue by holding that the CSR expenditure is not an allowable business expenditure u/s.37(1) of the Act, and further that no deduction u/s.80G of the Act, was allowable on such expenditure. Similar view in favour of Revenue has been taken by the Ahmedabad Bench in the case of “Gujarat State Fertilizers & Chemicals Ltd. vs. The ACIT”(supra). 5. The Ld.DR couldn’t produce any decision laying down any contrary proposition of Law. Therefore, in the light of the decision of the ITAT Kolkata Bench of this Tribunal in the case of L & T Finance Ltd. v. DCIT (judgment dated 30.09.2024 reported in [2024] 167 taxmann.com 503 (Kolkata-Trib.) and further the decision of the ITAT Ahmadabad Bench of this Tribunal in the case of “Jay Chemical Industries Pvt. Ltd.” (supra), the view taken by the AO, thus one of the plausible view and therefore, the order of the AO can’t be held to be erroneous in this case. Therefore, the revision order passed by the Ld. PCIT u/s.263 of the Act is not sustainable and the same is hereby quashed. 6. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 11.09.2026.

Sd/- Sd/- (JAGADISH) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 11.09.2026

ITA No.6895/Mum/2026 ORIX Leasing & Financial Services India Ltd :: 5 ::

Copy to:

1 ORIX Leasing & Financial Services India Ltd., Plot No.94, Marol Co- op. Indl. Estate, Andheri Kurla Road, Andheri, Mumbai-400 059. 2 The PCIT, Aayakar Bhawan, Mumbai. 3 THE PCIT / CIT, Mumbai 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY

ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI

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