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Facts
The assessee's claim for deduction of CSR expenses under Section 80G was allowed by the Assessing Officer. Subsequently, the PCIT initiated revision proceedings under Section 263, deeming the AO's order erroneous and prejudicial to the interest of the revenue. The assessee challenged the PCIT's revision order.
Held
The Tribunal, relying on its own previous decision in the assessee's case for an earlier assessment year and Supreme Court rulings (Malabar Industries), held that the PCIT's revision order was not sustainable. It clarified that the allowability of CSR expenditure under Section 80G is settled law and an AO's plausible view, if not unsustainable in law, does not warrant revision under Section 263.
Key Issues
1. Whether the PCIT was justified in invoking revisionary jurisdiction under Section 263 against an AO's order allowing deduction for CSR expenses under Section 80G. 2. Whether the AO's order allowing such deduction could be considered erroneous and prejudicial to the interest of the revenue.
Sections Cited
37, 80G, 143(2), 142(1), 263
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Tribunal vide order dated 20/08/2024 in ITA No.1114/Ahd/2024. Therefore, following the same, the assessee requested to the Ld.PCIT to drop the revision proceedings. However, the same was not considered by the Ld.PCIT and, therefore, requested to quash the revision order.
4.3. Per contra, Ld. CIT-DR Shri Rignesh Das appearing for the Revenue supported the Revision order passed by the Ld.PCIT and requested to uphold the same. However, he cannot dispute the order passed by this Tribunal in assessee’s own case for earlier AY 2017-18.
We have heard rival submissions and perused the material available on record. The only issue is to be adjudicated in this appeal whether the CSR expenses would be eligible for deduction u/s.37 of the Act. This issue is no more res integra by the decisions rendered by various Tribunals, which was considered by the Co-ordinate Bench of this Tribunal in assessee’s own case for AY 2017-18 in wherein it has held as follows:
“7. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and Case Laws filed by the assessee counsel. It is seen from Page No. 43 to 50 of the Paper Book, during the assessment proceedings, the A.O. issued notice u/s. 143(2) dated 30.01.2020 asking various details including documentary evidence in support of the deduction claimed under Chapter VI-A of the Act. In response, the assessee filed the details in Annexure-G namely the stamped receipt from H.N. Safal Foundation dated 27-03-2017 for a sum of Rs.32,51,000/- and u/s. 80G exemption certificate granted by Director of Income Tax (Exemption) dated 15-02- 2013. Again the ld. A.O. vide notice u/s. 142(1) dated 04-02-2021 requested the assessee to furnish details, assessee replied to the same. It is thereafter the assessing officer passed the assessment order dated 07-06-2021 and allowed the claim of deduction u/s. 80G in respect of CSR expenses which is a plausible view taken by the Ld. A.O. In the above circumstances, the Ld. PCIT is not correct in invoking Revision proceedings u/s. 263 of the Act.
7.1. The Hon'ble Supreme Court in the case of Malabar Industries Ltd. v. CIT [2000] 109 Taxman 66/243 ITR 83 (SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction 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 AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law, or (iii) Assessing Officer's order is in violation of the principle of natural justice, or (iv) if the order is passed by the Assessing Officer without application of mind. (v) if the AO has not investigated the issue before him; [because AO has to discharge dual role of an investigator as well as that of an adjudicator) then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order.
7.2. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd. (supra) held that this phrase i.e. "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue "unless the view taken by the Assessing Officer is unsustainable in law". Thus in our considered view following Apex Court ruling the Revision orders passed by Ld. PCIT are not sustainable in law.
On merits of the case, whether the CSR expenditure is allowable u/s. 80G of the Act is also no more res integra by a series of decisions by various Co-ordinate Benches of the Tribunal.