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Facts
The Ld. AO allowed deduction under section 80G of the IT Act after due application of mind and inquiry during scrutiny proceedings under section 143(3). The Ld. PCIT assumed jurisdiction under section 263 of the Act, stating the AO had not conducted proper inquiries.
Held
The Tribunal held that the Ld. PCIT was factually incorrect in stating that the AO had not conducted enquiries. The AO had taken a plausible view, and since two views were possible, the PCIT could not assume jurisdiction under section 263.
Key Issues
Whether the Ld. PCIT was justified in assuming jurisdiction under section 263 of the Act when the Ld. AO had allowed deduction under section 80G after due enquiry and had taken a plausible view.
Sections Cited
80G, 263, 143(3), 135
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Income Tax Appellate Tribunal, Mumbai “B” Bench, Mumbai.
Before: Shri Narender Kumar Choudhry (JM) & Shri Omkareshwar Chidara (AM)
Per Omkareshwar Chidara (AM) :- In the above cited appeal, the appellant company has taken a main ground that the Ld. AO has allowed the deduction under section 80G of the I.T. Act after due application of mind and hence the assumption of jurisdiction by Ld. PCIT under section 263 of the Act is incorrect and against the provisions of law.
The only issue to be adjudicated in this appeal is whether Ld. PCIT is correct in assuming the jurisdiction under section 263 of the Act when the Ld. AO allowed the exemption under section 80G of the Act after calling for details during scrutiny proceedings under section 143(3) of the Act.
The Ld. AR of the appellant has argued during the proceedings that the Ld. AO has called for the details during the scrutiny proceedings and after getting himself satisfied only, the deduction under section 80G of the Act claimed by the company was allowed. In fact, paragraph 3.4 of the 2 Nippon Life India AIF Management Limited assessment order refers to this particular question and reply of appellant company. Finally, the Ld. AO concluded that the company is entitled for the deduction and then only allowed the deduction. For this proposition, the Ld. AR of the appellant company relied on several cases-law including CIT Vs. Future Corporate Resources Ltd. (Bom) 132 Taxman.com 173, PCIT Vs. Sumatichand Tolamal, 111 Taxman.com 286 (Bom), PCIT Vs. Shreeji Prints (P) Ltd., 130 Taxman.com 293. The Ld. AR of the appellant company has also relied on the decisions of Mumbai and Delhi Tribunals FDC Ltd. Vs. PCIT (157 Taxamnn.com 387, Alubound Dacs India (P) Ltd. Vs. DCIT, 163 Taxamnn.com 536 for the proposition that Corporate Social Responsibility (CSR) donations are not barred under section 80G of the Act and Revision under section 263 of the Act is not permissible when the Ld. AO has taken a plausible view after due enquiry.
Per contra, Ld. DR relied on the decision of Delhi ITAT in the case of Agilent Technologies (International) (P) Ltd. (2024) 160 Taxmnn.com 238, where it was held that deduction under section 80G of the Act is not allowable on amounts spent towards Corporate Social Responsibility (CSR). The Ld. DR in his written submission relied on this decision by arguing that the CSR contributions are made to fulfill a legal obligation under section 135 of the Companies Act, 2013 and therefore lacks the voluntary nature which is a necessary condition to qualify as “donation” under section 80G of the Act. The Ld. DR has also argued that the donation must be voluntary and not forced by law as held by Hon'ble Supreme Court in the case of PVG Raju, Rajah of Vizianagaram.
The Ld. DR placed reliance on the decisions of Hon'ble Supreme Court in the cases of CIT Vs.Amitabh Bachchan, (2016) 384 ITR 200 and Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83, for the proposition that if the Ld. AO does not make proper enquiries, the assessment order becomes erroneous and can be revised under section 263 of the Act.
1. 3 Nippon Life India AIF Management Limited 5. Heard both sides. The Revenue as well appellant have decisions on merits in their favour. In this case, the Ld. AO has issued notice and completed the assessment under section 143(3) of the Act after enquiring into the issue relating to allowing the deduction under section 80G of the Act. So, it cannot be said that the Ld. AO has not conducted enquiries as the issue was discussed in the assessment order. To this extent, the Ld. PCIT is factually not correct in stating that the Ld. AO has not conducted enquiries and hence revisionary jurisdiction under section 263 of the Act was not legally assumed. Hence, the Ld. DR’s argument that the Ld. AO has not conducted enquiries and placing reliance of the decisions of Hon'ble Supreme Court in the cases of Amitabh Bachchan and Malabar Industrial Co. Ltd. (supra) is not correct. These decisions will come to the rescue of Revenue where Ld. AO does not conduct any enquiries on the issue in question. But, in the impugned case, the assessment order clearly says that the Ld. AO has enquired into the issue and allowed the deduction under section 80G of the Act. Both the above decisions of Hon'ble Supreme Court have laid down the law that where the Revenue has taken a plausible view of law when two views are possible, the PCIT cannot assume jurisdiction under section 263 of the Act. In this case, even the amended provisions of section 263 of the Act will not come to the rescue of Revenue because the Ld. AO has conducted enquiries and took one of the two views and deduction under section 80G was allowed. The reliance placed by Ld. DR on the decision of M/s. Agilent Technologies (supra) is not applicable to the facts of this case as the Ld. AO has disallowed the deduction under section 80G of the Act while completing the assessment under section 143(3) of the Act whereas in the case on hand, the Ld. AO has conducted enquiries and allowed the deduction under section 80G of the Act. Thus, the primary requirement of assuming the jurisdiction under section 263 of the Act is lacking in this case because two views are possible and Ld. AO took a plausible view coupled with the fact that the Ld.AO conducted enquiries and allowed deduction under section 80G of the Act. Hence, without going into the merits of the 4 Nippon Life India AIF Management Limited case relating to allowability of deduction, the assumption of jurisdiction under section 263 of the Act is held invalid and consequent setting aside the assessment is not valid in the eyes of law. 6. The appellant’s appeal is allowed.
Order pronounced in the open Court on 25/07/2025.