JASHAN JEWELS PRIVATE LIMITED ,MUMBAI vs. PCIT -5, MUMBAI

PER OM PRAKASH KANT, AM

The present appeal arises from an revision order 12.03.2025
passed under Section 263 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), whereby the Principal Commissioner of Income-tax, Mumbai -5 (hereinafter, “PCIT”) has invoked revisionary juri iction for assessment year 2020-21, holding that the assessment order passed by the Assessing Officer was both erroneous and prejudicial to the interests of the Revenue, within the meaning of Section reproduced as under The Appellan passed by L
(PCIT), Mumb section 263 o following grou independent o
1. That on the in law, the Section 263
12.03.2025,
14.07.2022 p
Act is erroneo
2. That the claimed unde charitable ins
(CSR) expend conclusion h
Explanation 2
expenses whi
D and; that under section 3. That Ld. PC not voluntary, has ignored t
VI-A which mandatory be also supporte that so long a valid 80G reg of CSR oblig specifically ba
4. That Ld.
substantiating and prejudicia the return of i trusts to who was aware deduction un
J
ITA

263 of the Act. Relevant grou
:
nt appeals against the impugned 12. Learned Principal Commissioner of Inco bai-5, (hereinafter referred to as 'PCIT of the Income- tax Act, 1961 ('the Act') und amongst the other grounds each of w of and without prejudice to, one another:
e facts and in the circumstances of the c
Ld. PCIT erred in invoking juri ictio of the Act and passing an orde holding that the assessment orde passed under Section 143(3) r.w.s. 144
ous and prejudicial to the interest of the R
Ld. PCIT erred in holding that the d er Section 80G for donations made to stitutions out of Corporate Social Respo diture is not allowable. The PCIT in comin has ignored the fact that it is only
2 to section 37(1) which denies deduction ile computing 'business income' under Ch there is no bar from claiming the given n 80G, which falls under Chapter VI-A.
CIT erred in holding that since CSR dona
, benefit of section 80G is not available. T the fact that there is no provision under states that just because CSR donati enefit of 80G cannot be claimed. This po ed by various judicial precedents whic as donations are made to charitable funds gistration, even though these donations f gations, 80G benefit cannot be denied arred by law.
PCIT erred in applying Section 263
g as to how the order of the AO was e al to the interest of the Revenue. The app income had given details of each of the ch om donations were given and therefore of the entire break-up of donations o der section 80G was claimed. Since non
Jashan Jewels Pvt. Ltd.
2
A No. 2614/MUM/2025
unds raised are .03.2025
ome Tax
T") under ), on the which are case and on under er dated r dated
4B of the Revenue.
deduction o eligible onsibility ng to this y under n for CSR hapter IV- n benefit tions are The PCIT
Chapter ions are osition is ch states s, having form part d unless without rroneous pellant in haritable e the AO on which ne of the donations we was no reaso under section interest of rev
5. The Ld. PC
5,05,000 und between dona claimed and I which was v section 37 of facts that th under section loss account
INR 18,20,00
already suffe what was cla
INR 11,62,50
made during available on p appreciate tha profit and los considered w
2. Briefly stated, th income on 18.01.202
The case was selecte under Section 143(
14.07.2022. The Ass the returned income assessment records the order passed by t it was prejudicial to t a conclusion was deduction of ₹11,62
formed part of the a J
ITA ere to organisations specifically prohibite on for the PCIT to have tareted the order n 143(3) as erroneous as well as prejudic venue.
CIT erred in also directing a further additio der Section 37 of the Act, being the d ation of INR 23,25,000 on which 80G ben
INR 18,20,000 charged to profit and loss voluntarily disallowed by the appellan f the Act. The Ld. PCIT failed to apprec he appellant had always suo Moto dis n 37(1) the entire amount charged to the p towards CSR expenditure including dis
00. The amount of INR 23,25,000 had ered the disallowance under section 3
aimed under 80G was 50% of INR 23,2
00 as payment towards these donatio the year and deduction under section payment basis. Accordingly, the Ld. PCIT at there is no link between the amount ch ss account of INR 18,20,000 and INR 23
hile claiming 80G deduction.
he facts are that the assessee fi
21, declaring total income of ₹
ed for scrutiny and assessment
(3) read with Section 144B sessing Officer, after due verific
. Subsequently, the learned PC and, upon examination, forme the Assessing Officer was errone the interests of the Revenue. Th that the Assessing Officer h
,500/- under Section 80G of assessee’s corporate social resp
Jashan Jewels Pvt. Ltd.
3
A No. 2614/MUM/2025
ed, there r passed ial to the on of INR difference nefit was s account nt under ciate the sallowed profit and sallowing therefore
7(1) and 5,000 at ns were n 80G is T failed to harged to 3,25,000
iled its return of 12,38,42,550/-.
t was completed of the Act on cation, accepted
IT called for the ed the view that eous in so far as he basis for such had allowed a the Act, which ponsibility (CSR) expenditure. A show
14.03.2025. 2.1 After considerin held that the nat mandated, lacked the not qualify for ded observed that only obligations, could qu relied upon the CBD various judicial pre assessee had suo m
CSR expenditure of ₹5,05,000/- ought al
2 to Section 37(1) assessment order to Officer to pass a fres and also initiate pen
PCIT is reproduced a “5. I have per by the assess
CSR expense to AY 2020-21
that the a Rs.18,20,000
Section 37(1)
However, the disallowable
37(1) of the A J
ITA cause notice under Section 263
ng the submissions of the ass ture of CSR expenditure be e element of voluntariness and, duction under Section 80G.
y voluntary donations, and ualify under Section 80G. In su
T Circular No. 01/2015 dated ecedents. The PCIT further n motu disallowed ₹18,20,000/- o f ₹23,25,000/-, and therefore lso to have been disallowed und of the Act. Accordingly, the o be erroneous and directed sh assessment order after prop nalty proceedings.The relevant s under:
rused the facts of the case and submissio see. The assessee has stated that it has s of Rs.23,25,000/- during FY 2019-20
1. From perusal of the details furnished, i assessee has suo-moto added bac
0/- as per the provisions of Explanati
) of the Act while computing its total e total CSR expenditure of Rs.23,25,0
as per the provisions of Explanation 2 to Act. Accordingly, the difference of Rs.5,0
Jashan Jewels Pvt. Ltd.
4
A No. 2614/MUM/2025
3 was issued on essee, the PCIT eing statutorily therefore, could
It was further not statutory upport, the PCIT
21.01.2015 and noted that the out of the total the remaining der Explanation
PCIT held the the Assessing per examination finding the Ld.
ons made incurred relevant it is seen ck only ion 2 to income.
000/- is o Section 05,000/- also needs t provisions of computing its that expendit be claimedas donation cann
5.1 Section 3
expenses pro for the purpo introduced th disallows CS considered b
This provision obligations w intended to p ensure they fu of the Comp introduction introduced th in the Expla
Circular No.1
below:-
"CSR e incurre carryin not allo taxable cannot taxable of CSR providi worth/
expens result expens expend
From the abo any form to government a claim of the regarding allo is against the what cannot be allowed in J
ITA to be disallowed and added back as Explanation 2 to Section 37(1) of the A total income. Further, contention of the a ture on Corporate Social Responsibility (C s deduction u/s 80G of the Act for any not be accepted for the following reasons:
37(1) of the Act allows for deduction of b vided they are incurred "wholly and exc oses of business. Explanation2 to Sectio hrough the Finance (No. 2) Act, 2014, sp
SR expenses, noting that these expenses usiness- related and thus cannot be d n underscores the legislative intent to imp without tax relief. CSR expenditures we provide fiscal advantages to companie fulfill their statutory obligations under Sec mpanies Act, 2013. The legislative in of Explanation 2 to Section 37(1) of rough the Finance (No. 2) Act, 2014, is ela anatory Notes to the Finance Bill 2014
/2015 dated 21.01.2015) which is rep expenditure, being an application of incom ed wholly and exclusively for the purp ng on business. As the application of in owed as deduction for the purposes of co e income of a company, amount spent t be allowed as deduction for compu e income of the company. Moreover, the R is to share burden of the Govern ing social services by companies hav
/turnover/profit above a threshold.
ses are allowed as tax deduction, thi in subsidizing of around one-third ses by the Government by way diture.”
ve, it is clear that the CSR expenditure is o avoid subsidizing of CSR expendi and therefore re is not to be allowed as d assessee and the contention of the a owability of CSR expenditure under sec e basic intent of the provision. It is trite be allowed in view of specific provision directly unless specifically provided in th
Jashan Jewels Pvt. Ltd.
5
A No. 2614/MUM/2025
per the Act while assessee
CSR) can y eligible
:- business clusively"
on 37(1), pecifically s are not deducted.
pose CSR ere never s but to ction 135
ntent of the Act, aborated
4 (CBDT produced me, is not poses of ncome is omputing on CSR uting the objective nment in ving net
If such is would of such of tax s CSR in iture by deduction assessee tion 80G law that ns cannot e Act.

80G of the Act provides tax deduct nations made to specified charitable ins he core purpose of this section is to en and voluntary social contributions. The hether mandatory CSR contributions as donations under this section. It is impe ection 80G was designed to incentivize donations, not statutorily mandate
Allowing CSR expenditures to qualify would undermine the legislative intent be introduced in Section 37(1).CSR expen y law, and as such, they lack the e of voluntariness, which is a core require ductions under Section 80G.The essen confirmed by several judicial preceden ature, which is absent in the case
The Hon'ble Supreme Court in the case of Vizianagaram [1976 SCR (1) 10
held that donations refer to payment without coercion or legal obligation. This plicable here since CSR payments are m payments made by the assessee towar nnot be construed as voluntary donations ns under Section 80G. While contribution rat Kosh and Clean Ganga Fund are re r deductions under Section 80G, this elig voluntary contributions. However, whe are made as part of the statuto under Section 135r.w. Schedule VII
Act, 2013, they cease to qualify as v he exclusion for deduction u/s80G of th er's National Relief Fund, Swachh Bhar a Fund or other specified funds d mean that all other donations made out are entitled for claim u/s80Gof the Ac re provided for claiming deduction under Act, hence it cannot be inferred that the section 135(5) of the Companies Act, 2
also eligible for deduction u/s80G of the ssessee may be satisfying the requisite co r deduction u/s 80G of the Act.
isions of Sections 37(1) (including Explan
80Gof the Act must be read harmo
R expenditures to be deductible under Sec ould render Explanation 2 to Section 37( y and would effectively nullify the Jashan Jewels Pvt. Ltd.
6
A No. 2614/MUM/2025
tions for stitutions ncourage issue at can be erative to e purely ed
CSR fy under ehind the nses are essential ement for nce of a nts, is its of CSR e of PVG
17] has ts made principle mandated rds CSR, s eligible ns to the ecognized gibility is en these ory CSR of the voluntary e Act for rat Kosh, does not t of CSR ct. These r Section e amount
2013, the Act even onditions nation 2) oniously.
ction 80G
(1) of the specific disallowance harmonious c in a manne rendering any the case of S
Board of Re haslaid down whole and co parts of the s mandates tha and each par
Accordingly, a Section 80G w under Section which would governing CS legislature w expenditure c
CSR expendit
5.4 CSR expe specified com
Companies A upon certain the activities reason that th not incurred through Expla
Ministry of C
12.01.2016 c extended to reinforces th deductions as by extension
Section 80G.
135(5) of the a mandate to three years on 2.2 It was further before the Hon’ble allowing CSR-related consideration, and J
ITA legislated by the Parliament. The prin construction requires that statutes be int er that gives effect to all provisions y part redundant. The Hon'ble Supreme outh India Corporation (Pvt.) Ltd. V/s. S evenue, Trivandrum &Anr. [AIR 1964
n the principle that statutes must be re nstruction must be adopted that gives eff statute. The principle of harmonious con at provisions must be interpreted to avoid rt of the statute should be given meaningf allowing CSR expenditures to be claime would negate the specific statutory disa n 37(1) and result in unintended tax be inconsistent with the legislative fra
SR and tax deductions. The intention was never to allow deduction u/s 80G carried out, else it would result in subsid ture.
enditure has to be mandatorily incurred b mpanies as per provisions of Section 13
Act. Accordingly, it is a statutory obligat companies to share certain portion of p towards social responsibilities. It is his expenditure was clarified to be an exp fully and wholly for the purpose of b anation 2 to the section 37(1) of the Act.
Corporate Affairs Circular No. 01/201
larifies that no specific tax exemptions ha
CSR expenditures. The Circular at CSR expenditures are not eligible s business expenditures under Section 3
should not qualify as voluntary donation
The expression "shall ensure" used in Companies Act, 2013 clearly implies that spend 2% of average net profits of the p n CSR activity.”
recorded that appeals filed b
Bombay High Court, agains d deductions under Section 80
therefore reliance on such de
Jashan Jewels Pvt. Ltd.
7
A No. 2614/MUM/2025
nciple of terpreted without
Court in ecretary,
SC 207]
ead as a fect to all nstruction conflicts ful effect.
ed under llowance benefits amework n of the for CSR dizing the y certain
35 of the tion cast profits to for this penditure business
Further,
6 dated ave been explicitly for tax
37(1) and ns under n Section t there is preceding by the Revenue st ITAT orders
0G, are pending ecisions by the assessee was mispla reproduced as under “5.5 As rega assessee, it before the H pending for ad
Sr. No Name o
Assessee
1. Blue
Laborator
Ltd.
2. Worley S
Industries
Ltd.
Since the issu
High
Cour cannot be ac
2.3 After consideri impugned order, the a fresh assessment reproduced as under “9. Further, oversees the examine the s of the Act the Commissione nature. A bar makes it clea twin condition sought to be r interests of th that the Com final conclusio
10. Consideri that the as u/s.143(3) r.w prejudicial to J
ITA aced. The relevant noting of t
:
ards the judicial pronouncements cited is stated that appeals filed by the Dep
Hon'ble Bombay High Court on this is djudication in the following cases:- of the PAN
ITAT Order No.
Cross ries Pvt.
AAACB1549G
1806/Mum/2023
Services s
Pvt.
AAACH0456J
554/Mum/2024
ue is sub-judice before the juri ictional rt, the contention of the a ccepted.”
ing the various decisions r
Ld. PCIT directed the Assessing order. The relevant finding of :
under normal circumstances the Comm issues and directs the Assessing O same. As per provisions of Section 263 of e power of suo-moto revision exercisabl r of Income Tax is undoubtedly superv re reading of Section 263 of the Act of the ar that the Commissioner has to be sat ns namely, (i) the order of the Assessin revised is erroneous; and (ii) it is prejudic he Revenue. It has also been held in man missioner is not necessarily required to on on the issue at hand.
ing the above facts and circumstances, i ssessment order dated
14.07.2022
w.s. 144Bof the Act is erroneous in so fa the interests of the revenue within the Jashan Jewels Pvt. Ltd.
8
A No. 2614/MUM/2025
the Ld. PCIT is d by the partment ssue are High Court Loading
No.
ITXAL/30782/2024
ITXAL/4392/2025
Bombay assessee eferred in the g Officer to pass the Ld. PCIT is missioner
Officer to of the Act e by the visory in e Act also tisfied of ng Officer cial to the ny cases record a it is held passed ar as it is meaning of Section 26
directed to m order and provisions of 3. Before us, learn
Paper Book containin regarding allowability
CSR expenditure is a various Benches of t further submitted th queries and exam proceedings, had ado action cannot be dee a different opinion.
4. On the other supported the order expenditure, being st condition of volunta
Section 80G of the Ac
5. We have heard the relevant materia expenditure for dedu views of various benc
Bangalore Bench of t
Private Limited v. A J
ITA

63 of the Act. Accordingly, Assessing O modify the assessment by passing a s also initiate penalty proceedings f the Act.”
ned counsel appearing for the ng pages 1 to 265 and submitte y of deduction under Section 80
a debatable one, with conflicting the Income Tax Appellate Trib hat the Assessing Officer, having mined the matter during th opted one of the plausible legal v emed erroneous merely because hand, learned Departmental passed by the PCIT and subm tatutory in nature, cannot be sa ariness essential for a valid d ct.
d rival submissions of the parti als on record. As far as eligibi uction u/s 80G of the Act ther ches of the Income-tax Appellate the Income-tax Appellate Tribun
ACIT [(2021) 85 ITR (T) 18 (B
Jashan Jewels Pvt. Ltd.
9
A No. 2614/MUM/2025
Officer is speaking as per assessee filed a ed that the issue
0G in respect of g views taken by bunal (ITAT). He g raised specific he assessment views, and such e the PCIT holds
Representative mitted that CSR aid to satisfy the deduction under ies and perused ility of the CSR re are divergent e Tribunal . The nal in FNF India
Bang.)] and the Kolkata Bench in JM taxmann.com 118 (K allowable for deduct impugned order has Bench of the Tribun
Ltd. in ITA No. 180
Pvt. Ltd. in ITA No.
expenses have been Delhi Bench in Agile
[(2024) 160 taxman disallowed such claim
5.1 In the face of s position that emerge the issue. It is trite la such plausible view, alternative view does context, reference ma
Court in CIT v. Max I is laid down that w particular issue, and the mere preferenc interpretation does juri iction under se
J
ITA

MS Mining Private Limited v. P
Kol-Trib.)], has held that CSR tion u/s 80G of the Act. The L s also referred two decision nal in the case of Blue Cross L
6/Mum/2023 and Worley Serv
554/Mum/2024, wherein the allowed u/s 80G of the Act.
ent Technologies (International) P nn.com 238] has taken a con m.
such conflicting judicial preced s is that two views are reasona aw that where the Assessing Of the mere fact that the Commiss s not render the assessment err ay be made to the decision of H
India Ltd. [(2007) 295 ITR 282 ( where two views are reasonably the Assessing Officer has taken ce of the Commissioner for not justify the invocation ction 263 of the Act.
Jashan Jewels Pvt. Ltd.
10
A No. 2614/MUM/2025
PCIT [(2021) 136
R expenditure is Ld. PCIT in the of the Mumbai
Laboratories Pvt.
vices Industries e CSR activities
Conversely, the Pvt. Ltd. v. ACIT ntrary view and dents, the legal ably possible on fficer adopts one sioner prefers an roneous. In this Hon’ble Supreme
(SC)], wherein it y possible on a n one such view, an alternative of revisionary

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

////

J
ITA he appeal of the assessee is stan ced in the open Court on 17/0
-
AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

Jashan Jewels Pvt. Ltd.
12
A No. 2614/MUM/2025
ds allowed.
07/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai