CREDIT SUISSE SECURITIES (INDIA) PRIVATE LIMITED,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX - 4, MUMBAI, MUMBAI

The brief facts of the case are that the assessee filed the return by declaring total income Rs. 515,26,37,570/-. The assessee is primarily engaged in stock brokers, sub-brokers and related activities. Subsequently, the assessee's case was selected for scrutiny under CASS for different reasons. The assessee had complied with the notices issued by the Ld. AO from time to time. Finally, the assessment was completed u/s. 143(3) of the Act. Later, it was observed that the assessee had debited in Profit & Loss Account under the head “CSR Expenses” amount to Rs. 7,59,81,082/-. While computing the income under the head “income from business”. It has added the said expense debited in P & L A/c u/s. 37(1) of the Act. However, against the said payment, the assessee company had claimed deduction u/s. 80G of the Act. The Ld. PCIT observed that the provision of Section 80G of the Act, sub-section (1), provides that the sums specified in sub-section (2) of Section 80G of the Act are eligible for deduction at the rate of 100% or 50%, depending upon the entity to which the sum is paid. Section 80G(2) of the Act deals with various sums which are referred to in sub-section (1) of Section 80G of the Act. Further, it is seen that the assessee has claimed deduction u/s. 80G amounting to Rs. 3,68,45,882/-. In the absence of the details, CSR and donation was claimed u/s. 80G which is treated as erroneous by the Ld. PCIT. The Ld. PCIT observed that the Ld. AO had not considered the issue in the impugned assessment order. So, by invoking the provisions of Section 263 of the Act, the Ld. PCIT by exercising the revisional jurisdiction has set aside the impugned assessment order as erroneous and prejudicial to the interest of the revenue. Being aggrieved on the revisional order, the assessee filed an appeal before us.

The Ld. AR argued and filed a paper book comprising pages 1 to 62, which has been placed on record. The Ld. AR contended that during the assessment proceedings, the Ld. AO had issued the notice u/s. 142(1) dated 02.08.2023 and subsequently, raised the issue about the claim of deduction u/s. 80G of the Act. In compliance with the notice, the assessee filed the explanation on dated 07.08.2023 online. The copy of the “e-Proceedings Response Acknowledgement” is duly placed on record. The Ld. AR argued that the assessee had by a letter dated 14.08.2023, further explained the assessee's claim related to CSR vis-à-vis 80G in the computation of income. The claim of 80G vis-à-vis CSR expenditure is a debatable issue, and various coordinate benches of ITAT had considered the claim of CSR expenses u/s. 80G. So, the issue is already decided in favour of the assessee by the different coordinate benches of ITAT.

The Ld. AR further argued that the Ld. PCIT, by invoking the provisions of Section 263, had issued the notice u/s. 263 and asked to comply the claim of expense u/s. 80G of the Act. The copy of the notice and the reply of the assessee are duly annexed in APB, pages 10 to 25. The Ld. AR invited our attention specifically to the letter dated 14.08.2023, filed in response to the notice dated 02.08.2023 before the Ld. AO, where the assessee had duly explained the entire issue.

The Ld. AR contended that the identical issue was duly adjudicated and considered in favour of the assessee by the Coordinate Bench of ITAT, Mumbai in the case of Polynova Industries Limited vs. DCIT, ITA No. 2982/Mum/2025, date of pronouncement 19.06.2025. The observations of the Coordinate Bench contained in the following paragraphs are reproduced as below: “6.5 With regard to the second aspect, namely, the eligibility of CSR expenditure for deduction under section 80G of the Act, we find that divergent views have been expressed by various Benches of the Income-tax Appellate Tribunal. The Bangalore Bench, in FNF India Private Limited v. ACIT (supra), and the Kolkata Bench, in JMS Mining Private Limited v. PCIT (supra), have upheld the claim of deduction under section 80G in respect of CSR expenditure. Conversely, the Delhi Bench in Agilent Technologies (International) Pvt. Ltd. v. ACIT (supra) has taken a contrary view and disallowed such claim. 6.6 The decision of the Kolkata Bench of the Tribunal in JMS Mining Private Limited (supra) assumes particular significance, as it arose in an identical factual context involving the exercise of revisionary jurisdiction under section 263 of the Act. In that case, the Tribunal unequivocally held that the Assessing Officer's view allowing the deduction under section 80G in respect of CSR expenditure was both plausible and legally sustainable. Consequently, the revisionary order passed under section 263 was quashed. 6.7 In view of the existence of two divergent yet plausible interpretations of law, and the fact that the Assessing Officer has adopted one such view, which finds support in judicial precedents, it cannot be held that the assessment order is erroneous or prejudicial to the interests of the Revenue. In this context, reference may be made to the decision of this Court in CIT v. Max India Ltd. [(2007) 295 ITR 282 (SC)], wherein it was authoritatively laid down that where two views are reasonably possible on a particular issue, and the Assessing Officer has taken one such view, the mere preference of the Commissioner for an alternative interpretation does not justify the invocation of revisionary jurisdiction under section 263 of the Act. 6.8 Accordingly, in view of the above discussion, we hold that the assessment order passed by the Assessing Officer does not fall within the scope of section 263 of the Act. The impugned order passed by the learned PCIT is therefore liable to be set aside, and is hereby quashed.”

The Ld. DR argued and stood in favour of the revisional order but was unable to provide any contrary judgment in response to the submissions of the Ld. AR.

We heard the rival submissions and considered the documents available on the record. On careful consideration, we find that the issue was duly examined by the Ld. AO in the impugned assessment order, wherein the claim for deduction under section 80G of the Act was verified. Therefore, no lapse is found in the verification of the interest income claimed as deductible under section 80G of the Act. So, the imposition of Explanation 2 of section 263 of the Act by the Ld. PCIT is unjustified. The applicability of the CSR expenses towards 80G was explained by pursing the notice U/s 142(1) of the Act. We have given a thoughtful consideration to the order of the Ld. PCIT. We are of the considered view that the issue raised by the Ld. PCIT is a highly debatable issue as the Co- ordinate Benches of the Tribunal have taken a consistent view that CSR expenditure can be claimed as expenditure u/s 80G of the Act in the cases of WNS Global Services (P) Ltd vs. Assessment unit, NFAC reported in [2025] 174 taxmann.com 1031 (Mumbai-Trib), Motilal Oswal Securities Ltd. (ITA No.1795/Mum/2023, order dated 18.08.2023), Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019) and JMS Mining Pvt. Ltd. [130 taxmann.com 118 (Kolkata Trib.)]. As the issue is highly debatable, any view taken by the Ld. AO during the course of original assessment proceeding has to be considered as a plausible view and the view taken by the Ld. PCIT, howsoever plausible, is nothing but a change of opinion for which jurisdiction u/s 263 of the Act cannot be assumed. In light of the above discussion & respectfully relied on the order of Polynova Industries Limited (supra), it is clear that a mere difference of opinion between the Ld. AO and the Ld. PCIT cannot render the assessment order erroneous and prejudicial to the interests of the revenue. Considering the facts of the case in totality, we set aside the order of the Ld. PCIT and restore the order of the Ld. AO.

In the result, the appeal of the assessee bearing ITA No.5695/Mum/2026 is allowed. Order pronounced in the open court on 03rd day of September 2026.