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Facts
The assessee company claimed deduction for CSR expenses under Section 80G. The AO allowed the claim, but the PCIT revised the order under Section 263, holding that CSR expenses are statutory obligations and not eligible for deduction under Section 80G. The assessee is in appeal against the PCIT's order.
Held
The Tribunal held that the issue of claiming CSR expenses as a deduction under Section 80G is highly debatable. The AO had already examined the issue during the assessment. A mere difference of opinion between the AO and the PCIT does not make the assessment order erroneous and prejudicial to the revenue.
Key Issues
Whether CSR expenses are eligible for deduction under Section 80G of the Income Tax Act and if the PCIT can revise an order under Section 263 based on a debatable issue where the AO had already examined it.
Sections Cited
263, 139(1), 143(2), 142(1), 80G, 143(3), 144B
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI PRABHASH SHANKAR
O R D E R Per Anikesh Banerjee (JM):
The instant appeal of the assesse is filed against the order of the Learned Principal Commissioner of Income-tax (in short, ‘the Ld.PCIT) passed under section 263 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2020-21, date of order 20/03/2025. The impugned order emanated from the order of the Assessment Unit, Income-tax Department (in short, ‘the Ld. AO’) passed under section 143(3) read with section 144B of the Act, date of order 28/09/2022.
2 ITA 3599/Mum /2025 KKR India Advisors Pvt Ltd 2. The brief facts of the case are that the assesse company filed the return under section 139(1) of the Act by declaring total income at Rs.24,09,26,470/-. Finally, the case was selected for scrutiny under CASS and notice under section 143(2) of the Act was issued. During the assessment proceedings, the Ld.AO verified by issuing notice under section 142(1) related to the claim of deduction under section 80G of the Act in relation to the CSR expenses and on such verification, the Ld.AO, being satisfied with the assessee’s submission, allowed the claim of the assessee. The Ld.PCIT, by invoking provisions of section 263 has considered that as per the Companies Act, 2013 mandates the CSR expenses which is a statutory obligation not the voluntary. So the CSR expenses cannot be claimed as deduction under section 80G of the Act. So, the CSR Expenses was allowed by the Ld.AO amount to Rs.13,90,000/- as deduction under section 80G of the Act is held as erroneous and prejudicial to the interest of the revenue. On invoking provisions of section 263, the Ld.PCIT set aside the impugned assessment order and the revisional order was passed. Being aggrieved, the assesse filed an appeal before us.
The Ld.AR argued and filed a paper book containing pages 1 to 91, which is kept on record. The Ld.AR in argument stated that the said issue pertains to the claim of deduction under section 80G towards CSR expenses, is a debatable issue and the issue was already considered by the co-ordinate bench of the ITAT, Mumbai Bench, in favour of the assessee. Further, related to verification of this issue, the Ld.AR invited our attention on APB page 59. The letter dated 20/01/2022 where the assessee has explained the alleged expenses against the notice under section 142(1) dated 03/12/2021. The Ld.AR invited our attention to APB Page 67, 3 ITA 3599/Mum /2025 KKR India Advisors Pvt Ltd where at paras 9 & 10, the Ld.AO asked the specific question related to claim of expenses under section 80G of the Act. The assessee submitted details of expenses which is enclosed at APB page 70 and the relevant clarification related to the allowability of the deduction under section 80G of the Act which is annexed at APB pages 81 to 91. The Ld.AR relied on the order of the ITAT, Mumbai Bench in the case of WNS Global Services (P) Ltd vs Assessment Unit, NFAC (2025) 174 taxmann.com 1031 (Mumbai- Trib.) where the same bench has considered the issue in favour of the assessee.
The Ld.DR argued and stands in favour of the revisional order, but was unable to bring any contrary judgement against the submission 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. 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 (supra), Motilal Oswal Securities Ltd. (ITA No. 4 ITA 3599/Mum /2025 KKR India Advisors Pvt Ltd 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, 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.