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Facts
Two assessees challenged the PCIT's revisional order under Section 263 for AY 2018-19. The PCIT found the AO's assessment erroneous and prejudicial to revenue interest because the assessees had self-disallowed CSR expenses but claimed a 50% deduction under Section 80G for donations made from these CSR expenses, which the PCIT believed the AO failed to properly examine.
Held
The Tribunal held that the PCIT's invocation of Section 263 was invalid as the AO had duly enquired into the matter. It clarified that while CSR expenses are not deductible under Section 37(1), donations made from them to eligible institutions can qualify for Section 80G deduction, except for specific restricted funds like Swachh Bharat Kosh and Clean Ganga Fund. The Tribunal concluded that the AO's action was plausible and in line with a co-ordinate bench decision, thus quashing the revisional proceedings.
Key Issues
Whether the PCIT validly invoked revisional jurisdiction under Section 263 when the AO had examined and allowed a deduction under Section 80G for donations made from CSR expenses, and whether such a deduction is permissible under the Income Tax Act.
Sections Cited
263, 143(3), 143(3A), 143(3B), 142(1), 80G, 37(1), 135(5) (Companies Act, 2013)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
These are appeals preferred by two assessee against the order of the Pr. Commissioner of Income Tax (hereinafter referred to as the “Ld. PCIT”] dated 31.03.2024 for the AY 2018-19.
The only issue raised by the assessee in the various grounds of appeal is against the invalid exercise of jurisdiction u/s 263 of the Act by ld. PCIT, thereby setting aside the assessment framed by the ld. AO u/s 143(3) read with section 143(3A) & 143(3B) of the Act dated 16th April, 2021.
The facts in brief are that the assessment was framed u/s 143(3)/ 143(3A) and 143(3B) of the Act on 16.04.2021 by National e- Assessment center, Dehi, assessing the income at ₹80,40,30,793/-. The ld. PCIT on examination of the assessment records found that the assessee has incurred CSR expenses of ₹1,38,50,000/- during the year which were suo-motto disallowed in the computation of income by the assessee. However, the assessee has claimed deduction u/s 80G of the Act of ₹69,25,000/- being 50% of the donation of such CSR expenses which according to the PCIT has rendered the assessment as erroneous and prejudicial to the interest of the Revenue. Accordingly, the ld. PCIT issued notice u/s 263 of the Act on 02.02.2024, which was not replied by the assessee. Finally, the ld. PCIT set aside the assessment framed by the ld. AO by passing an order u/s 263 of the Act on 31st March, 2024, by directing the ld. AO to modify the assessment to that extent of quantum mentioned in the revisionary order of ₹69,25,000/- after allowing a reasonable opportunity of hearing to the assessee.
The ld. AR of the assessee vehemently submitted before us that the ld. PCIT invalidly exercise the revisionary jurisdiction u/s 263 of the Act without satisfying the twin conditions as envisaged in Section 263 of the Act i.e. the order has to be erroneous and it has to be prejudicial to the interest of the Revenue. The ld. Counsel of the
The ld. DR on the other hand relied on the revisionary order and prayed that the appeal of the assessee may be dismissed.
After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has incurred CSR expense which were suo moto disallowed in the computation of income at the time of filing of return of income. However, simultaneously claiming 50% of the eligible donations u/s 80G of the Act as made during the year. In our opinion, there is no bar in the Act for the assessee to claim the deduction u/s 80G of course subject to satisfaction of conditions as envisaged in Section 80G of the Act. The case of the assessee is squarely covered by the aforesaid decision in the case of M/S JMS Mining Pvt. Ltd. Vs. PCIT (Supra), wherein the co-ordinate Bench has held as under:
923/KOL/2024
The issue raised in this appeal is similar to one as decided by us in except quantum of deduction. Accordingly, our decision would apply mutatis mutandis to this appeal of assessee in as well. Hence, the appeal of assessee in is allowed.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 24.02.2025.