RELIANCE INDUSTRIAL INFRASTRUCTURE LIMITED ,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX -3, MUBMAI
Facts
The assessee claimed a deduction of Rs. 17,50,000 under Section 80G for donations made as part of CSR expenditure. The PCIT invoked revisionary powers under Section 263, holding the assessment order erroneous and prejudicial to revenue as the AO did not conduct proper inquiry.
Held
The Tribunal held that the PCIT's invocation of Section 263 was not justified. A lack of detailed inquiry by the AO does not automatically make the assessment order erroneous if the claim itself is legally tenable, and CSR expenditure is eligible for deduction under Section 80G.
Key Issues
Whether the PCIT's invocation of revisionary powers under Section 263 was justified when the AO's alleged lack of inquiry did not make the assessment order erroneous or prejudicial to the revenue, and whether CSR expenditure is eligible for deduction under Section 80G.
Sections Cited
80G, 263, 143(2), 142(1), 143(3), 144B, 14A, 8D, 37(1), 135
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI VIKRAM SINGH YADAV, AM
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI
BEFORE SHRI VIKRAM SINGH YADAV, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No.3751/Mum/2025 (Assessment Year: 2020-21)
M/s. Reliance Industrial Principal Commissioner of Income Infrastructure Limited, Tax – 3, 5th Floor, NKM International House, Aayakar Bhavan, Vs. 178 Backbay Reclamation Marine Maharshi Karve Road, Lines Mumbai – 400 020 Mumbai – 400 020 PAN:AAACR7637P (Appellant) : (Respondent)
: Shri Nimesh Vora, AR & Assessee by Ms. Moksha Mehta, AR Respondent by : Shri Umashankar Prasad, CIT-DR
Date of Hearing : 20.01.2026 Date of Pronouncement : 18.03.2026
O R D E R Per Kavitha Rajagopal, JM:
The appeal filed by the assessee challenges the order of the Learned Principal
Commissioner of Income Tax, Mumbai (‘Ld. PCIT’ for short) passed u/s 263 of the Income
Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2020-21 on
the issue of deduction claimed u/s 80G of the Act on donations made as part of Corporate
Social Responsibility (‘CSR’ for short) expenditure amounting to Rs.17,50,000/-.
Brief facts of the case are that the assessee company is engaged in infrastructure and
support service activity and had filed its return of income for the year under consideration
ITA No.3751/Mum/2025 M/s. Reliance Industrial Infrastructure Limited
dated 10.02.2021 declaring total income at Rs.17,37,25,670/-. The assessee’s case was
selected for complete scrutiny under CASS for the following reasons: “1. Reduction in profit because of application of Income Computation & Disclosure Standards.
Large refund claimed out of advance tax (Business ITR).
Deductees have claimed tax deduction against salary by a TAN in their ITRs, however, corresponding TDS statements are either not filed by the deductor, or show a substantially lower figure of tax deducted (Selection of case of deductor)”
Statutory notices u/s 143(2) & 142(1) of the Act were duly issued and served upon
the assessee. After considering the assessee’s submission the Learned Assessing Officer
(“Ld. AO” for short) passed the assessment order dated 28.09.2022 u/s 143(3) r.w.s. 144B
of the Act determining the total income at Rs.17,71,21,074/- after making an
addition/disallowance u/s 14A r.w.r 8D amounting to Rs.33,95,404/-. The Ld. PCIT
invoked the revisionary jurisdiction u/s 263 of the Act for the reason that the assessee had
debited an amount of Rs.35,00,000/- towards CSR expenditure and added the same to the
total income in the computation of income as it is not allowable u/s 37(1) of the Act but
had claimed 50% on the same amounting to Rs.17,50,000/- as CSR expenditure deductible
u/s 80G of the Act, which was allowed by the Ld. AO during the appellate proceeding.
The Ld. PCIT held that it is not an allowable deduction u/s 80G of the Act, thereby holding
the assessment order to be erroneous in so far as it is prejudicial to the interest of the
Revenue. The Ld. PCIT set aside the assessment order directing the Ld. AO to disallow
the deduction claimed by the assessee u/s 80G of the Act towards donation claimed out of
CSR expenditure.
ITA No.3751/Mum/2025 M/s. Reliance Industrial Infrastructure Limited
The assessee has preferred the present appeal challenging the revisionary order of
the Ld. PCIT.
The Learned Authorized Representative (“Ld. AR” for short) for the assessee
contended that during the assessment proceeding the Ld. AO had issued notice u/s 143(2)
of the Act dated 29.06.2021 where the issues raised pertained to ICDS compliance and
adjustment and refunds claimed. The Ld. AR further contended that the assessee duly
complied with the notices and had furnished all relevant details pertaining to the queries
raised by the Ld. AO including details of disallowance of CSR expenses and the deduction
claimed u/s 80G of the Act. Further, the Ld. AR stated that the tax audited report has also
reported the deduction claimed by the assessee u/s 80G of the Act which implies that all
the materials were available before the Ld. AO during the assessment proceeding and was
considered by the Ld. AO. The Ld. AR argued that the issue pertaining to the revisionary
proceeding has been decided in favour of the assessee by various decisions of the co-
ordinate Benches and hence the same is a debatable issue which does not fall under the
purview of the revisionary proceeding u/s 263 of the Act. The Ld. AR contended that the
impugned order of Ld. PCIT does not satisfy the twin condition where the assessment order
has to be erroneous and prejudicial to the interest of the Revenue. The Ld. AR relied on a
catena of decisions in support of the assessee’s contention.
The Learned Departmental Representative (“Ld. DR” for short), on the other hand,
controverted the said fact and stated that the expenditure claimed by the assessee is not
allowable u/s 37(1) of the Act as per the explanatory notes to Finance Bill, 2014 provided
ITA No.3751/Mum/2025 M/s. Reliance Industrial Infrastructure Limited
in Explanation-2 of the said provision. The Ld. DR contended that the Ld. AO has failed
to conduct any enquiry with regard to the assessee’s claim of deduction which itself
tantamounts to holding that the assessment order is erroneous and prejudicial to the interest
of the Revenue. Further, the Ld. DR contended that the CSR expenditure is not a voluntary
donation given by the assessee but rather a mandatory condition to be complied with as per
the provisions of section 135 of the Companies Act and therefore the same would not be
eligible for claiming deduction u/s 80G of the Act. The Ld. DR extensively relied on the
order of the Ld. PCIT.
We have heard the rival submissions and perused the materials available on record.
The moot issue that requires adjudication is whether the Ld. PCIT was right in invoking
the revisionary jurisdiction u/s 263 of the Act pertaining to the issue towards the claim of
CSR expenditure claimed as deduction u/s 80G of the Act and whether the action of the
Ld. AO allowing the said claim amounts to the assessment order being erroneous and
prejudicial to the interest of the Revenue in the absence of enquiry conducted by the Ld.
AO as alleged by the Revenue. It is observed that the assessee company had claimed
deduction of Rs.17,50,000/- being 50% of the donation amounting to Rs.35,00,000/- given
to “Reliance Foundation” towards CSR expenditure, claiming the same u/s 80G of the Act
as eligible donation as per the provisions. The first issue relates to whether the assessment
order would be erroneous and prejudicial to the interest of the Revenue merely because the
Ld. AO has failed to look into the issue of the claim of deduction of the assessee and that
the same would entitle the Ld. PCIT to invoke revisionary jurisdiction u/s 263 of the Act.
For this proposition, the Ld. AR had relied on the decision of the Hon’ble Jurisdictional
ITA No.3751/Mum/2025 M/s. Reliance Industrial Infrastructure Limited
Bombay High Court in the case of PCIT vs. Coastal Gujarat Power Ltd. (2019) Taxman
244 (Bombay) which has held that the Assessing Officer not conducting detailed inquiry
itself would not be sufficient to invoke the revisionary power when all the material facts
were already in record for deciding a legal issue and further if the claim of the assessee
was legally tenable then the Assessing Officer not examining the said claim does not
amount to the assessment order being erroneous. The relevant extract of the said decision
is cited hereinunder for ease of reference: “9. The Revenue may be correct in contending that, the Assessing Officer had not carried out detailed enquiries with respect to this claim of assessee. However, this by itself would not be sufficient to enable the Commissioner to exercise revisional power. In a given case, as in the present one, if the answer to the legal issue can be had on the basis of the material already on record, there would be no useful purpose in asking the Assessing Officer to carry out the same exercise and come to the same conclusion as the Tribunal in the present case has. In this context, we do not accept the contention of the Counsel for the Revenue that, answer in law had to come from the Assessing Officer and not the Tribunal. He had argued that even if the Tribunal was right in law, since the Assessing Officer had not come to the said conclusion, the order of the Commissioner should not be disturbed. In our opinion, if the Tribunal has come to the correct conclusions in law and said conclusions are based on materials already on record, it would be futile to reinstate the order of the Commissioner, which in turn, would require the Assessing Officer to carry out the same exercise and axiomatically come to the same conclusion. This line, we are adopting, is within the fold of the requirement of the order of Assessing Officer being 'erroneous'. In other words, if it can be demonstrated that the order was not erroneous, the order of revision would, in any case, require an interference. The matter can be looked from slightly different angle. If while examining the order of the A..O. Commissioner notices that, though the A.O. was not examined for claim of the assessee, but the claim itself is legally tenable, would be judicial in exercising and set aside the assessment? The answer may be in the negative.”
From the above observation, it is evident that when the claim of the assessee is in
itself allowable, no enquiry or rather lack of detailed enquiry per se would not render the
assessment order as “erroneous”. On the merits of the issue it is now a settled proposition
of law by various decisions of the co-ordinate Benches that the payments made towards
CSR expenditure though not voluntary but a mandatory requirement as per the Companies
ITA No.3751/Mum/2025 M/s. Reliance Industrial Infrastructure Limited
Act would be eligible for claiming deduction u/s 80G of the Act for the reason that the
provision does not explicitly mandate that the donation claimed u/s 80G of the Act should
be voluntary in nature. Though the Revenue claims that appeal has been preferred in the
Hon’ble High Courts on this issue, the law that stands now favours the assessee. The
Assessing Officer not conducting enquiry on this issue and failing to make
addition/disallowance will not prejudice the Revenue. For the PCIT to invoke revisionary
powers u/s 263 of the Act the twin conditions namely the assessment order ought to be
erroneous and prejudicial to the interest of Revenue should be complied with, which in the
present case has not been satisfied. We, therefore, deem it fit to hold that the assessment
order is neither erroneous nor prejudicial to the interest of Revenue and hence the Ld.
PCIT’s jurisdiction u/s 263 of the Act is not justified and hence is hereby quashed.
In the result, the appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 18.03.2026
Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 18.03.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai
