KOTAK SECURITIES LIMITED,MUMBAI vs. DCIT 4(3)(1), MUMBAI

ITA 6619/MUM/2026Status: DisposedITAT Mumbai08 October 2026AY 2020-2113 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the revisional jurisdiction under Section 263 was not sustainable on both issues. Regarding the education cess, it was noted that the AO passed a rectification order under Section 154 r.w.s. 155(18) prior to the PCIT's revisional order, adding back the surcharge and education cess. Since the issue was already rectified by the AO, the PCIT's exercise of revisional jurisdiction was unwarranted. Concerning the CSR expenses and Section 80G deduction, the Tribunal found that the AO had made specific inquiries and examined the issue during the assessment proceedings, calling for details on Chapter VI-A deductions and CSR expenditure. The Tribunal relied on the jurisdictional High Court's decision in Castrol India Limited, which held that donations made out of CSR funds to eligible trusts would still qualify for deduction under Section 80G. The dismissal of the Revenue's SLP against this judgment by the Supreme Court further supported the assessee's position. The Tribunal also noted that one of the precedents relied upon by the Revenue, Triveni Turbine Ltd., had been recalled. Therefore, the assessment order was not erroneous or prejudicial to the revenue's interest, as the AO had made necessary inquiries and taken a view consistent with the law laid down by the jurisdictional High Court. The impugned revisional order was set aside.

What were the facts?

The assessee, Kotak Securities Ltd., filed its return for Assessment Year 2020-21. The assessment was completed under Section 143(3) r.w.s. 144B of the Income Tax Act, 1961, by the Assessing Officer (AO) on 29.09.2023. The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263, citing the assessment order as erroneous and prejudicial to the interest of revenue. The PCIT's concerns pertained to the assessee's debit of Rs. 6,31,46,000/- as "CSR Expenses" in its Profit & Loss account. While the AO had added back this amount under Section 37(1), the assessee claimed a deduction under Section 80G. Additionally, the PCIT noted that the assessee had voluntarily withdrawn the claim for deduction of education cess of Rs. 6,31,14,054/-, which the AO failed to disallow, resulting in under-assessment.

What were the issues?

1. Whether the revisional jurisdiction under Section 263 of the Income Tax Act, 1961, was validly exercised by the Ld. PCIT concerning the education cess of Rs. 6,31,14,054/-, when the AO subsequently rectified the assessment order. - Assessee's contention: The AO rectified the assessment order before the PCIT passed the revisional order, resolving the issue. The PCIT failed to consider this rectification. - Revenue's contention: Not recorded. 2. Whether the Ld. PCIT erred in holding that CSR expenses incurred by the assessee, which were alternatively claimed as deduction under Section 80G, were not eligible for deduction as they lacked voluntariness, thereby invoking Section 263. - Assessee's contention: The AO had duly examined the issue of deduction under Chapter VI-A, including Section 80G, and CSR expenses during the assessment proceedings. The assessee provided detailed explanations and supporting documents. The issue is covered by the jurisdictional High Court's decision in Castrol India Limited vs. DCIT, which was upheld by the Supreme Court. - Revenue's contention: Expenditure incurred towards statutory CSR obligations cannot be treated as voluntary donations eligible for Section 80G deduction. Relied on decisions in Agilent Technologies (International) Pvt. Ltd. and Triveni Turbine Ltd.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 144B,Section 37(1),Section 80G,Section 40(a)(ii),Section 154,Section 155(18),Section 139(5),Section 142(1),Section 135,Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI VIKRAM SINGH YADAV & SHRI ANIKESH BANERJEE

For Respondent: Smt. Amrita Singh, CIT DR

PER: SHRI ANIKESH BANERJEE, (JM): The instant appeal of the assessee filed against the order of the Ld. Principal Commissioner of Income Tax, Mumbai-4 [for brevity “Ld. PCIT”], order passed under Section 263 of the Income Tax Act, 1961 (for brevity ‘the Act’), for Assessment Year 2020-21, date of order 24.03.2026. The impugned order emanated from the order of the Assessment Unit, Income Tax Department (for ITA 6619/MUM/2026

brevity ‘Ld. AO

The order continues below.

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