LIVLONG INSURANCE BROKERS LIMITED ,MUMBAI vs. PCIT -4 , MUMBAI
What did the Tribunal hold?
The Tribunal held that the PCIT's order under Section 263 was not sustainable in law. Regarding the deduction of CSR expenses claimed under Section 80G, the Tribunal found that the issue was open for adjudication before the AO, and the assessee had disclosed the facts. The AO, after taking note of these facts, preferred to allow the claim. The Tribunal considered this a plausible view taken by the AO. Citing the Supreme Court in Malabar Industries Ltd. v. CIT (2000) 243 ITR 83, the Tribunal stated that for the revisional jurisdiction under Section 263 to be exercised, the order must be both erroneous and prejudicial to the revenue. The Tribunal noted that the AO had examined the issue and allowed the claim, which was a permissible view. It distinguished between 'lack of inquiry' and 'inadequate inquiry', stating that only a 'lack of inquiry' would justify Section 263 action. The Tribunal found that the AO had made necessary inquiries and applied his mind, thus the assessment order was not erroneous. The Tribunal also referred to CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) and CIT vs. Sun Beam Auto (2011) 227 CTR 113 (Delhi) to support its reasoning that the PCIT cannot substitute his judgment for that of the AO if the AO has applied his mind and taken a plausible view. The judgment did not explicitly address the ESOP expenses, the opportunity of being heard, or the audit objection as separate issues but subsumed them within the broader discussion of the Section 263 invocation. The Tribunal did not decide on the merits of whether CSR expenditure is allowable under Section 80G, as it found the PCIT's revision order unsustainable.
What were the facts?
The assessee, Livlong Insurance Brokers Limited, filed an appeal against an order passed by the Principal Commissioner of Income-tax (PCIT)-4, Mumbai, under Section 263 of the Income-tax Act, 1961. This order revised an assessment order dated September 27, 2022, passed under Section 143(3) read with Section 144B for Assessment Year 2020-21. The PCIT's revision was based on the observation that the assessee had claimed Rs. 18,06,528/- as a deduction under Section 80G, which the PCIT believed was not allowable. The PCIT noted that the assessee had claimed Corporate Social Responsibility (CSR) expenses of Rs. 37,21,056/-, and a portion of this was claimed under Section 80G. The PCIT found that the Assessing Officer (AO) had not conducted sufficient inquiry on this issue, making the assessment order erroneous and prejudicial to the revenue.
What were the issues?
1. Whether the PCIT erred in passing an order under Section 263, setting aside the assessment order passed under Section 143(3) r.w.s 144B, on account of deductions under Section 80G amounting to Rs. 18,06,528/-, and directing the AO to disallow these deductions? 2. Whether the PCIT erred in passing an order under Section 263, setting aside the assessment order passed under Section 143(3) r.w.s 144B, on account of deduction of ESOP expenses amounting to Rs. 1,98,715/-, and directing the AO to disallow these expenses? 3. Whether the PCIT erred in passing the order under Section 263 without granting sufficient opportunity of being heard to the appellant? 4. Whether the PCIT erred in passing the order under Section 263 merely on the basis of an audit objection? Assessee's Contentions: - The assessee argued that the AO had made necessary inquiries regarding the CSR expenses and the claim under Section 80G. The AO, being satisfied with the submissions, did not make any further disallowance. - The assessee contended that the PCIT erred in passing the order under Section 263 without providing sufficient opportunity of being heard and solely based on an audit objection. - The assessee relied on the distinction between 'lack of inquiry' and 'inadequate inquiry' as per CIT vs. Sun Beam Auto (2011) 227 CTR 113 (Delhi). Revenue's Contentions: - The revenue, through the PCIT, argued that the CSR expenses, being mandatory under the Companies Act, 2013, do not qualify for voluntary deduction under Section 80G, as established by the Supreme Court in Commissioner of Expenditure Tax vs PVG Raju (1967) 1 SCR 1017. - The revenue contended that the AO's failure to conduct proper inquiry on the allowability of CSR expenses as Section 80G deduction rendered the assessment order erroneous and prejudicial to the interest of revenue.
Which sections of the Income-tax Act were involved?
Section 263,Section 143(3),Section 144B,Section 80G,Section 37,Section 135
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Cases cited in this judgment(6)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Malabar Industrial Co. Ltd. v. CIT2,943 citing243 ITR 83 · 2000 · SC · Read judgment
- CIT v. Gabriel India Ltd.990 citing203 ITR 108 · 1993 · HC
- Rampyari Devi Saraogi v. CIT616 citing67 ITR 84 · 1968 · SC
- CIT v. Biocon Ltd.242 citing121 Taxmann.com 351 · 2020 · HC
- Alubound Dacs India (P.) Ltd. v. DCIT24 citing163 Taxmann.com 536 · 2024 · ITAT
- CIT v. Sun Beam Auto22 citing227 CTR 113 · HC
Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Principal Commissioner of Income-tax, PCIT-4, Mumbai [hereinafter referred to as “PCIT"] u/s 263 of the Act dated 28.03.2025 pertaining to assessment order passed u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 27.09.2022 for the Assessment Year [A.Y.] 2020-21. 2. The grounds of appeal are as under:-
On the facts and circumstances of the case as well as in law, the Learned CIT has erred in passing order u/s 263, setting aside assessment order passed u/s 143(3) r.w.s 144B on account of deductions u/s.80G amounting to Rs. 18,06,528/-.
On the facts and circumstances of the case as well as in law, the Learned CIT has erred in passing order u/s 263, directing the assessing officer to modify the assessment order passed u/s 143(3) r.w.s 144B by dis-allowing deductions u/s 80G amounting to Rs.18,06,528/-.
On the facts and circumstances of the case as well as in law, the Learned CIT has erred in passing order u/s 263, setting aside assessment order passed u/s 143(3) r.w.s 144B on account of deduction of ESOP expenses amounting to Rs.1,98,715/-.
On the facts and circumstances of the case as well as in law, the Learned CIT has erred in passing order u/s 263, directing the assessing officer to modify the assessment order passed u/s 143(3) r.w.s 144B by dis-allowing ESOP expenses amounting to Rs.1,98,715/-.
On the facts and circumstances of the case as well as in law, the Learned CIT has erred in passing order u/s 263 without granting sufficient opportunity of being heard to the appellant.
The Learned CIT has erred in passing order u/s 263, merely on the basis of issue raised in audit objection.
Ground no. 1 and 2 pertain to the deduction of CSR expenses claimed u/s 80G of the Act. In this case,assessment order u/s 143(3) was passed determining total income of Rs 20,48,42,090/-.The ld.PCIT noted that subsequent to passing of the order, it was observed that section 80G deduction to the tune of Rs.18,06,528/- was not allowable in view of the fact that the assessee had claimed Corporate Social Responsibility(‘CSR') expenses of Rs.37,21,056/- and out of which Rs.18,06,528/-was claimed as deduction u/s 80G of the Act. In the order, the AO had not mentioned about any enquiry conducted on the issue of claim of CSR expenses as well as deduction u/s.80G of the Act. It is stated by him that the CSR expenses are mandatory in nature incurred by virtue of compliance to Section 135 of Companies Act 2013 read with Schedule VII of this Companies Rules, 2014. Further, Explanation 2 to Section 37 of the Act mandates that CSR expenses shall not be allowed as business expenditure. It is also an undisputed fact that the donations u/s 80G have to be voluntary and this has been upheld by Hon'ble Apex Court in 1 SCR 1017G(1967) in the case of Commissioner eligible for deduction u/s.80G of the Act. Accordingly, it was concluded that the deduction u/s.80G could not be allowed for deduction.
1 In response to show cause issued in this regard, the assessee made a submission dated which is also reproduced in the revision order stating that specific query was raised by the AO in the matter and in response to which it was submitted to him that no deduction of CSR expenses u/s 37 was claimed being personal in nature.However,it was claimed that the assessee made claim u/s 80G of the 50% of such expenses and the AO being satisfied did not make any further query nor made any disallowance. Therefore, it was claimed that necessary enquiry was indeed was made and no action u/s 263 of the Act was deemed necessary. However, the ld.PCIT concluded that as noted from the assessment order, the AO had not carried out any enquiry on the issue and to this extent the assessment order was prima facie, erroneous and prejudicial to the interest of revenue in terms of section 263 of the Act.
We have carefully considered all relevant facts of the case,rival submissions and also the contents of the revisions order. In so far as the issue of deduction of CSR expenses claimed u/s 80G is concerned, it was open for adjudication before the AO. We observed that the assessee had duly disclosed such facts on record during assessment proceedings and the AO taking note of such facts with specific reference to CSR expenditure claimed as deduction, preferred to allow the claim of the assessee u/s 80G of the Act. Therefore, on facts and the circumstances of the case, it can be safely construed that the issue has been taken note of by the AO who accepted the claim of the assessee. Thus, the AO has considered the issue and allowed the claim of deduction u/s.80G in respect of CSR expenses which is a plausible view taken by him.
The Hon'ble Supreme Court in the case of Malabar Industries Ltd. v. CIT 243 ITR 83has held that twin conditions needs to be satisfied before exercising revisional juri iction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the aside an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the aside an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the aside an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interest of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interests of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interests of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interests of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on observed that the said expenses pertaining to CSR has been claimed as deduction u/s.
business expenditure and also there has been an express bar specified in sub clause claim deduction for the donations contributed during the year under consideration u/s 80G of the Act. The decision relied upon by the ld. A.O in the case of PVG Raju by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses deduction u/s 80G of the Act.
On the above observation, we deem it fit to hold that the assessee is entitled to deduction claimed u/s.80G of the Act towards the CSR expenditure incurred by it.
the Act. Hence, ground no. 2 raised by the assessee is allowed.
In the case under consideration, the proposed revision is interest of the revenue and thereby proceedings under section 263 of the and 2 of appeal raised by the assessee are allowed.
Ground no. 3 and 4 pertain to the issue of ESOP which records thatas per the Profit and Loss account that under the head 'Employee Benefit Expenses', the assessee had debited an amount of Rs.1,98,715/- towards Employee Stock Compensation Expenses [ESOP).
of the Act. He concluded that there were two aspects to the claim of the was disallowable u/s.37(1) of the Act while completing the assessment.
prejudicial to the interest of revenue in terms of section 263 of the Act.
decision of CIT vs. Biocon Limited 121 taxmann.com 351 (Karnataka case of Biocon Ltd(supra) he pointed out that the Department has filed case of Biocon(supra) which has been admitted by the Hon'ble Apex Court.
During hearing, the ld.DR argued that on facts of the case and counts.
Before us, the ld.AR has submitted that in the course of assessment proceedings u/s 143(3), the assessee has submitted detailed could be observed that the assessee had debited an amount of Rs.1,98,715/- being share based payment which was on account of expenses and he passed assessment order on the basis of his satisfaction.
expenses.
We have heard rival submissions. On perusal of the facts and the impugned issue which basically revolves around the applicability of the ld.PCIT has drawn support from Explanation 2 below section of the Revenue.
In so far as the requirement of due enquiry to be conducted hon'ble Supreme Court in Rampyari Devi Saraogi versus CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal (Smt) versus whatsoever, the order was erroneous and prejudicial to the interest of Revenue. These two decisions show that it is not necessary for the total absence of enquiry or verification.
1 In the case of PVS Multiplex India Ltd V CIT in ITA No. 2370/Del/2013 on identical facts it was held that, by the CIT in the notice issued to the assessee and impugned order u/s 263 of the the same."
2 The co-ordinate bench of ITAT, Patna in ITA Nos.356 to 360/PAT/2024 in the case of Gandhipati Construction Private Limited observed as below:
necessary inquiries are not conducted or necessary verifications are not done, with regard to exercise of power s under section 263, read with and verifications.
perhaps the situation in which, in our humble understanding, the side an order, for lack of proper inquiry or verification, and the afresh."
3 The co-ordinate Mumbai Bench of the ITAT w.r.t Explanation 2 thorough an elaborate order in the case of Madhurima that, in proper perspective and in the manner indicated under law as detailed above. Moreover, explanation 2 to Section 263 of the 1961 Act is inserted by Finance Act, 2015, which deems an order to be erroneous in so far as prejudicial to the interest of enquiries were not made by the AO before passing assessment order dated 23-03- the Act, which we uphold/sustain.."
the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & to have been made by the AO.
At this juncture, it is apposite to point out that clause (a) of Explanation 2 under Section 263 of the Act."
5 The co-ordinate bench of ITAT, Mumbai in the case of Commissioner Of Income Tax dated 9.12.2024 in ITA “1. The Ld.PCIT, however, did not object the above said contentions of the assessee.
erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT assessment orders rendered erroneous and prejudicial to the interest of revenue on this count also. In support of this proposition, the Ld.PCIT took support of the decision rendered by Hon'ble Karnataka High Court in the case of Infox Technologies Ltd. [341 ITR erroneous and prejudicial to the interest of Revenue. Accordingly, the Ld.PCIT consideration are rendered erroneous and prejudicial to the interest of the Revenue.
both the years under consideration.
We heard rival contentions and perused the record. We may first refer to the laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC). The relevant observations made by Hon'ble Bombay High Court are extracted below:
prejudicial to the interests of the Revenue. In the following circumstances, the order of the prejudicial to the interests of the Revenue "unless the view taken by the to the decision of the juri ictional High Court in the case of CIT vs of juri iction by the PCIT in the para below:
that the estimate made by the officer concerned was on the lower side and left to the opinion of the Commissioner the order in question is prejudicial to the interests of the erroneous, is absent." (Emphasis supplied)
case of CIT vs. Sun Beam Auto 227 CTR 113 wherein the Hon'ble inadequate inquiry. The following observations of the Hon'ble Delhi High Court are worth noting:
not give any reasons while allowing the entire expenditure as revenue expenditure.
under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open".
We find from the assessment records that the AO has brought the Act.
of decisions by various Co-ordinate Benches of the Tribunal.The Mumbai Bench of the Tribunal in the case of Alubond Dacs India provisions of Companies Act and I.T. Act and held as follows:
record. The only morn question to be decided here is whether the expenditure towards governed by section 135 of the Companies Act, 2013, Schedule VII of the Act and the Companies Act, 2011. The above mentioned companies are liable to spend atleast 25% of its average net profit for the immediately preceding three financial years on CSR activities.
More judgments on Section 263
- Gillette India Limited, Mumbai vs Principal Commissioner of Income Tax, JaipurITA 1316/JPR/2026[2018-19]Status: Disposed16 Oct 2026AY 2018-19
- Neo Structo Construction P. Ltd., Ahmedabad vs The Pr. CIT- 3, AhmedabadITA 1216/AHD/2026[2015-2016]Status: Disposed16 Oct 2026AY 2015-2016
- Vimal Harilal Baldania, Gandhidham vs The ITO Ward 2, GandhidhamITA 770/RJT/2025[2017-18]Status: Disposed15 Oct 2026AY 2017-18
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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