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Facts
Shriram Finance Ltd. (the assessee) claimed deduction under Section 80G for CSR expenditure. The PCIT revised the assessment order under Section 263, directing the AO to disallow this deduction, holding that the AO had failed to conduct necessary inquiries and apply the law properly.
Held
The Tribunal held that the AO had conducted necessary inquiries and allowed the deduction after verification. The PCIT's order under Section 263 was found to be without jurisdiction as the issue was already examined, and the AO had applied the law correctly. Similar revision orders have been quashed by ITAT in other cases.
Key Issues
Whether the PCIT was justified in assuming jurisdiction under Section 263 to revise the assessment order when the AO had already examined the issue of Section 80G deduction for CSR expenses and applied the law correctly.
Sections Cited
263, 80G, 143(3), 144B, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2018-19 arises out of the order of Learned Principal Commissioner of Income Tax-3, Chennai [hereinafter “PCIT”] dated 31.03.2024.
ITA No.1644/Chny/2024 :- 2 -:
The effective ground of appeal in this appeal of assessee is against the order of Ld. PCIT assuming jurisdiction under section 263 and revising the assessment order by remitting back the issue of claim of deduction under section 80G to the file of A.O with a direction to disallow the claim of deduction u/s. 80G of the Act relating to the CSR expenditure .
The assessee-company has filed its return of income on 04.10.2018 declaring total income of Rs.26,21,68,06,720/-, which was further revised to Rs.26,22,02,91,770/- on 29.03.2019. The A.O in the order passed u/s.143(3) r.w.s 144B of the Act assessed the total income of Rs.27,26,70,79,707/- after considering eight issues for which case was selected for scrutiny. The Ld. PCIT called the assessment record and found that the assessee has claimed 50% deduction of Rs.6,19,24,027/- u/s. 80G of the Act on the payment to trusts as part of CSR expenses and A.O has allowed the deduction.
The Ld PCIT held that there is failure on the basis of assessing officer to cause necessary enquiries and also to apply law properly in respect of the said claim, therefore the order passed by the AO is erroneous and prejudicial to the interest of revenue and directed A.O to disallow the claim of deduction u/s. 80G of the Act.
ITA No.1644/Chny/2024 :- 3 -:
The Ld. Authorized Representative (A.R) of the assessee challenged the assumption of jurisdiction u/s. 263 of the Act as the issue has already been examined by the assessing officer during assessment and the Honorable Tribunals have consistently held that 80G deduction on such donations are allowed. The Ld AR took us through the notices issued u/s. 143(2) and 142(1) of the Act, where A.O has called for details of deduction from total income under chapter VIA and assessee has replied that only deduction claimed under chapter VIA was u/s 80G of the Act of Rs.6,19,24,027 and submitted the receipts of donation on 09.01.2020, 10.01.2020 & 24.01.2020. The Ld AR therefore, submitted that the issue has already been examined by the A.O therefore the Ld. PCIT does not have jurisdiction to revise u/s. 263 of the Act. The Ld. AR submitted that the Ld. PCIT, while referring to Explanation-2 to section 263 of the Act has not pointed as to what enquiry or verification, A.O has not conducted. The Ld. AR on holding the non application of law properly by the A.O submitted that the Honorable ITAT has consistently held, deduction u/s. 80G on such donations are to be allowed and submitted case laws. The Ld AR also relied on the order of ITAT, Delhi Bench in the case of American Express (India) P. Ltd. 166 taxmann.com 91 (Delhi-Trib), wherein :- 4 -: revision order section 263 order issued on the same issue, has been quashed.
The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities.
We have heard the rival submissions, and perused the materials available on record. The Ld PCIT has held the assessment order passed by AO erroneous and prejudicial to the interest of revenue as A.O has not caused necessary enquiry and also not applied the law properly on the issue of claim of deduction under section 80G of the Act. We find that the A.O in the notices issued under section 143(2) and 142(1) of the Act has called for the information and allowed the claim after verification. The Ld. PCIT has not made out a case as to what enquiry was not conducted by the AO in order to invoke Explanation 2 to section 263 of the Act. As regard to Ld. PCIT finding that A.O has not applied the law properly on the claim of deduction under 80G, we find that ITAT, Banglore Bench in the case of M/s Goldman Sachs Services Pvt Ltd in IT(TP)A No.2355/Bang/2019 dated 15.06.2020, ITAT Hyderabad Bench in the case of Power Mech Ltd 156 Taxmann.com 575 (Hyderabad-Trib.) and in several other cases, Tribunals have held such claim allowable. The ITAT Delhi
ITA No.1644/Chny/2024 :- 5 -:
Bench in the case of American Express (India) P. Ltd v PCIT reported in 166 taxmann.com 919 (Delhi-Trib) has quashed the similar revision order passed by PCIT under section 263 of the Act. We therefore, hold the order passed by Ld. PCIT under section 263 of the Act without jurisdiction and quash it accordingly. In view of the above, the appeal filed by the assessee is allowed.
In the result, both the appeal filed by the assessee is allowed.
Order pronounced on 3rd January, 2025.