GSP CROP SCIENCE LIMITED,AHMEDABAD vs. THE PR.CIT-1, AHMEDABAD

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee drew our attention to paragraph 4.1 of 263 order wherein the assessee had submitted Form 3CL is available on-line and the same was also submitted during the course of 263 proceedings. However, Principal CIT set aside the assessment order on this issue without even looking into the contents of Form 3CL. Accordingly, the Counsel for the assessee submitted that order passed by Principal CIT is clearly erroneous since he has not even looked into the contents Form 3CL submitted before him. In fact, Principal CIT has only set aside the issue to the file of the Assessing Officer to “verify” the claim of the assessee vis-à-vis certification in Form 3CL and there is no GSP Crop Science Ltd. vs. PCIT Asst.Year –2020-21 - 4– specific finding with respect to Form 3CL submitted by the assessee. It was submitted that Principal CIT cannot resort to 263 proceedings only for giving a direction to carry out a verification of the claim of the assessee. With respect to claim of additional depreciation, the Counsel for the assessee submitted that the assessee had correctly claimed additional depreciation of Rs. 12,05,222/- as balance 50% additional depreciation related to the previous year’s assets put to use for less than 180 days and there is no excess depreciation claim of Rs. 1,80,783/- as alleged by Principal CIT. On the issue of claim of 80G deduction on CSR expenditure, the Counsel for the assessee submitted that various judicial precedents, including those of jurisdictional ITAT have decided this issue in favour of the assessee. Accordingly, there is no infirmity in the order of the Assessing Officer so as to call for any interference. Finally, on the issue set-off of unabsorbed depreciation, Principal CIT has himself noted that submissions of the assessee carries weight, however, the matter is set aside to the Assessing Officer for carrying out necessary verification. The Counsel for the assessee submitted that it is a well settled law that 263 proceedings cannot be resorted to for the purpose of carrying out verification and a specific defect has to be pointed out in the assessment order.

In response, the Ld. DR placed reliance on the observations made by the Principal CIT in his order.

We have heard the rival contentions and perused the material on record. Having considered the rival submissions and after perusing the material available on record, we are of the view that the revisionary order passed by the Principal Commissioner of Income Tax under section 263 of the does not satisfy the statutory requirements for invoking revisionary jurisdiction. The Principal CIT has merely directed the Assessing Officer to verify various claims of the assessee without pointing out any specific error GSP Crop Science Ltd. vs. PCIT Asst.Year –2020-21 - 5– in the original assessment order or establishing how such errors were prejudicial to the interest of the revenue. On the issue of deduction under section 35(2AB), the assessee had duly submitted Form 3CL during the course of the proceedings under section 263, and the Principal CIT has not recorded any finding as to how the deduction claimed was in excess of the certified amount. A mere direction for verification, without identifying an actual error, cannot form the basis for invoking section 263, as held by the Ahmedabad Tribunal in Comtrade Commodities Services Ltd. vs. PCIT [2023] 156 taxmann.com 369. With regard to the additional depreciation of Rs. 12,05,222/-, we find that the assessee had claimed the balance 50% additional depreciation as per the provisions of section 32(1)(iia), and the same had been examined and allowed by the Assessing Officer. The Principal CIT has not brought on record any evidence to show that this depreciation was incorrectly claimed or allowed. A plausible interpretation of law adopted by the Assessing Officer, even if not explicitly discussed in the order, cannot render the assessment erroneous, particularly when no contrary judicial precedent has been cited. On the issue of deduction under section 80G for donations made as part of CSR, we find merit in the submissions of the assessee. The deduction under section 80G is governed by its own provisions and cannot be denied merely because the payment forms part of the CSR obligation. In fact, the Ahmedabad Tribunal in Gujarat State Financial Services Ltd. [2025] 174 taxmann.com 461 and Gujarat Mineral Development Corporation Ltd. [2025] 176 taxmann.com 227 has held that donations made to eligible institutions, even if part of CSR, are allowable under section 80G, so long as all conditions of that section are fulfilled. The restriction on allowability only applies to specific funds such as the Swachh Bharat Kosh or Clean Ganga Fund, which is not the case here. Finally, regarding the set-off of unabsorbed depreciation, the Principal CIT has accepted that the assessee’s explanation carries weight and has nonetheless remanded the matter for verification. We reiterate that such a direction, in the absence of a demonstrated error or prejudice, cannot be sustained under section 263 in view of the decision in Principal CIT v. Vimla Infrastructure (India) (P.) Ltd. [2025] 176 taxmann.com 78 (Chhattisgarh), where the Hon’ble High Court held that setting aside an assessment without conducting an independent inquiry or identifying a specific error is not justified. In view of the above facts and in light of the binding judicial precedents, we are of the considered opinion that the order passed by the Principal CIT under section 263 is unsustainable in law. Accordingly, the impugned order passed under section 263 of the Act is hereby quashed and the assessment order passed by the Assessing Officer is restored.

In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 18/09/2025