YOBOHO NEW MEDIA PRIVATE LIMITED,MUMBAI vs. CIRCLE 8(3)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER)

ITA No. 4320/MUM/2025 Assessment Year: 2020-21

Yoboho New Media Private Principal Commissioner of Limited, Ground Floor, Income Tax, Circle 8(3)(1) Mezzanine Floor, Crystal Vs. Aayakar Bhavan, Maharshi Karve House, Plot 79, DR Annie Road, Mumbai – 400020, Besant Road, Worli Naka, Maharashtra. Worli Mumbai – 400018, Maharashtra. PAN NO. AACCI 2112 A Appellant Respondent

Assessee by : Shri Manoj Mundra, CA (Virtually)

: Shri Basavaraj Hiremath – CIT DR Revenue by a/w Shri Rajgopal Parthasarathi – SR DR.

Date of Hearing : 16/07/2026 Date of pronouncement : 29/07/2026

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against the order dated 18.03.2026, passed by the learned Principal Commissioner of Income-Tax – 8, Mumbai [in short, ‘the Ld. PCIT’], for Assessment Year ( ‘A.Y’), 2021-22, whereas he has held the assessment order

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passed u/s 143(3) of the Income Tax, 1961 [in short the Act], as erroneous insofar as prejudicial to the interest of the Revenue.

2.1 The assessment order is neither erroneous nor prejudicial to the interests of the Revenue, having been passed after due consideration of material available on record, including computation of income, audited financial statements and tax audit report. The invocation of jurisdiction under Section 263 of the Act merely on account of absence of specific discussion on CSR expenditure and deduction under section 80G is unsustainable, as non-discussion does not imply lack of enquiry.

2.2 The order u/s 263 is legally unsustainable because it seeks to reopen a concluded issue without satisfying the jurisdictional requirement that the order is both "erroneous" and "prejudicial to the interest of Revenue".

3.1 The learned Pr. CIT ped in considering the fact that there is no specific prohibition in Section 80G of the Act barring deduction for CSR expenditure except for sub- clauses (iiihk) and (uihl), Le. donations to Swachh Bharat Kosh and Clean Ganga Fund. Other donations to eligible and approved institutions u/s 80G(5) remain allowable even if forming part of CSR obligations.

3.2. The restriction under Explanation 2 to Section 37(1) of the Act applies only for computing business income and does not override specific deductions permissible under Chapter VI-A of the Act, including section 80G.

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3.3 The learned Pr. CIT has ignored binding judicial precedents that uphold the allowability of deduction u/s 80G on eligible CSR expenditure. The appellant relied upon numerous decisions, including but not limited to American Express (India) Private Limited v. PCIT [2024] 166 taxmann.com 91 (Delhi ITAT): JMS Mining Private Limited v. PCIT [2021] 130 taxmann.com 118 (Kolkata ITAT).” 3. Briefly stated facts of the case are that the assessee filed return of income for the year under consideration on 13.02.2021 declaring total income at Rs.21,98,18,140/- under normal provisions of the Act. The return of income was processed u/s 143(1) of the Act, a total income of Rs.22,02,12,700/-. Subsequently scrutiny assessment u/s 143(3) r.w.s 144B of the Act was completed on 29.08.2023 determining the income computed u/s 143(1) of the Act.

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of CSR expenses if the otherwise same meet the eligibility criteria of section 80G of the Act. The Ld. Counsel further submitted that the parliament has specifically excluded the sum spent under the CSR on ‘Swatch Bharat kosh’ and ‘Clean Ganga fund’ from the ambit of section 80G of the Act. But in respect of other CSR expenses no such exclusion has been mentioned.

“5.1 I have gone through the assessment order and seen the submissions of the assessee. On perusal of the assessment records, it is seen that return of income for the Financial Year 2019-20 relevant to the Assessment year 2020-21 was furnished by the assessee on 13.02.2021 declaring total income of Rs.21,98,18,140/-. The return was processed u/s 143(1) of the I.T. Act, 1961 assessing total income at Rs.22,02,12,700/-. Subsequently, the said return of income was selected for scrutiny through Computer Aided Scrutiny Selection (CASS) and notice u/s 143(2)/142(1) of the Income-tax Act, 1961 was issued and served upon the assessee. The issue pertaining to 80G/CSR expenses does not find any mention in the assessment order. The assessment order does not discuss the above deductions claimed by the assessee. It was the responsibility of the AO to verify the above issues. The assessee has claimed huge deduction i.e., Rs.37,79,570/- debited by the assessee towards CSR and deduction u/s. 80G of the Act has been claimed to the tune of Rs.26,09,290/- i.e. subject to qualifying amount. This aspect required verification because the claim with respect to CSR expenses is not allowable as per the provisions of section 37 of the Act. Moreover, perusal of the details on record clearly indicates that the payment towards charity which is purely voluntary in nature does not require any legal obligation to make that contribution. The expenditure for which deduction has been claimed by the assessee is purely CSR expenditure on which 80G deduction

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is not allowable. CSR expenditure forms part of mandatory requirement of the Companies Act, 2013 and consequently is not eligible for deduction u/s. 80G of the Act. Further there is no provision to allow such expenditure under the existing provisions of section 37 of the Income-tax Act. The finance (No.2) Act, 2014 introduced Explanation 2 to Section 37(1) (w.e.f. 01.04.2015) to disallow any expenditure incurred by the taxpayer on the activities relating to CSR referred to in section 135 of the Companies Act. As stated supra CSR expenditure forms part of the mandatory requirement of the Companies Act 2013 and consequently is not eligible for deduction u/s. 80G of the Act allowing deduction u/s. 80G will result in subsidizing these expenses incurred by the corporate which is not the intent of the Legislature. Hence, deduction u/s. 80G of the I.T. Act, 1961 to the tune of Rs.26,09,290/- claimed by the assessee is not eligible for deduction u/s. 80G of the Act. In this regard Explanation 2 to Section 37(1) is reproduced hereunder: “[Explanation 2.-For the removal of doubts, it is hereby declared that for the purpose of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.]” 7. We have heard the rival submissions and perused the material available on record. The controversy before us is whether the assessment order allowing deduction under section 80G in respect of donations forming part of CSR expenditure could validly be revised under section 263 of the Act. The ld PCIT has proceeded on the premise that the Assessing Officer ought not to have allowed deduction under section 80G in respect of CSR expenditure as such expenditure, being mandatory under section 135 of the Companies Act, 2013, is not eligible for deduction. In our considered opinion, the very premise adopted in the revisional order is contrary to the consistent view taken by the Coordinate Benches of the Tribunal in Val Organics Pvt. Ltd. v. DCIT (ITA No. 2473/Mum/2025) and Bharat Serums and Vaccines Ltd. v. DCIT (ITA No. 2780/Mum/2025), wherein it has been held that although CSR

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expenditure is specifically excluded from deduction under section 37(1) by virtue of Explanation 2 thereto, there is no corresponding embargo under section 80G except in respect of the specific exclusions enacted by the Legislature. Consequently, where the donation otherwise satisfies the statutory conditions prescribed under section 80G, the deduction cannot be denied merely because the payment also constitutes CSR expenditure. The finding in the case of Val Organics Pvt. Ltd vs. Deputy Commissioner of Income tax in ITA No.2473/M/2025 is reproduced as under:-

“4. We have heard the rival submissions advanced by the learned counsel for the parties and have carefully perused the record. The learned counsel for the assessee has reiterated the submissions earlier placed before the Principal Commissioner of Income-tax (PCIT). He has pointed out that the Assessing Officer, in the course of scrutiny, had issued a notice under section 143(2) of the Act dated 29.06.2021 calling for details with respect to the deduction claimed under Chapter VIA of the Act, whereupon the assessee, vide response dated 05.07.2021, furnished complete particulars of donations made. Thereafter, the Assessing Officer, by notice issued under section 142(1) of the Act dated 24.11.2021, specifically enquired into the claim of deduction under section 80G of the Act. In response, the assessee furnished detailed explanations together with supporting evidence, including justification regarding 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. 4.1 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 Tribunal. The Bangalore Bench of the Tribunal in FNF India Private Limited v. ACIT [(2021) 85 ITR (T) 18 (Bang.)] and the Kolkata Bench in JMS Mining Private Limited v. PCIT [(2021) 136 taxmann.com 118 (Kol-Trib.)] have upheld the admissibility of such deduction. Conversely, the Delhi Bench of the Tribunal in Agilent Technologies (International) Pvt. Ltd. v. ACIT [2024] 160 taxmann.com 238 (Del. Trib.) has taken a contrary view and disallowed the claim. Particular significance attaches to the decision of

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the Kolkata Bench in JMS Mining Private Limited v. PCIT (supra), which arose in the context of revisional proceedings under section 263 of the Act. In that case, the Tribunal held that the Assessing Officer’s decision to allow deduction under section 80G in respect of CSR expenditure constituted a plausible and legally sustainable view, and consequently, the revisional order passed under section 263 of the Act was quashed. 4.2 In the present case also, having regard to the existence of divergent judicial opinion and the fact that the Assessing Officer adopted one such plausible view, it cannot be said that the assessment order suffered from an error which was prejudicial to the interests of the Revenue. In this connection, reference may usefully be made to the decision of Hon’ble Supreme Court in CIT v. Max India Limited [2007] 295 ITR 282 (SC), wherein it was held that when two views are reasonably possible on a question of law and the Assessing Officer has adopted one such view, the mere preference of the Commissioner for another view does not justify invocation of revisional jurisdiction under section 263 of the Act. 4.3 In view of the foregoing discussion, we are of the considered opinion that the assessment order passed by the Assessing Officer does not fall within the ambit of section 263 of the Act. Consequently, the impugned order passed by the PCIT is unsustainable in law and is hereby set aside.”

9.The facts of the present case being identical to those considered by the Coordinate Benches in Val Organics Pvt. Ltd. (supra) and Bharat Serums and Vaccines Ltd. (supra), we respectfully follow the said decisions. We accordingly hold that the assumption of

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jurisdiction under section 263 is unsustainable. The impugned revisional order is, therefore, set aside and the assessment order is restored.

Order pronounced in the open Court on 29/07/2026.

Sd/- Sd/- (PAWAN SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai; Dated: 29/07/2026 M. Ranganath Vittal , Sr. P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai