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Facts
The assessee, engaged in packaged tea business, filed its return for AY 2020-21, which was assessed under Section 143(3) with certain additions. Subsequently, the PCIT invoked revisionary powers under Section 263 to set aside the assessment, deeming it erroneous and prejudicial, on two grounds: the allowability of Section 80G deduction for CSR donations and the non-disallowance of interest under Section 201(1A)/206C(7). The PCIT directed the AO to frame a fresh assessment.
Held
The Tribunal held that the issues questioned by the PCIT were already subject to detailed scrutiny by the AO, and the PCIT failed to demonstrate any specific error or prejudice to the revenue. It was noted that the interest under Section 201(1A) was not claimed as an expense, and Section 80G explicitly provides for restrictions on CSR donations in specific sub-clauses, implying no further restrictions. Thus, the assessment order was found not to be erroneous or prejudicial.
Key Issues
1. Whether the PCIT validly exercised revisionary jurisdiction under Section 263 without demonstrating that the assessment order was erroneous and prejudicial to the interest of the revenue, especially when the AO had conducted proper inquiry. 2. Whether the allowability of Section 80G deduction for CSR expenditure and non-disallowance of interest under Section 201(1A)/206C(7) rendered the assessment order erroneous and prejudicial.
Sections Cited
Section 263, Section 143(3), Section 14A, Section 37, Section 201(1A), Section 206C(7), Section 80G, Section 80G(2)(a)(iiihk), Section 80G(2)(a)(iiihl), Section 135(5) of Companies Act, 2013
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the assessee against the order passed by the Ld. Principal Commissioner of Income-tax, Ahmedabad (hereinafter referred to as "PCIT" for short), dated 12.03.2025, in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year (AY) 2020-21.
The assessee has raised the following grounds of appeal:
1. That on the facts and circumstances of the case and in law, the order passed by the PCIT is bad in law and void ab initio, and therefore ought to be quashed.
2. That on the facts and circumstances of the case and in law, the PCIT erred in arbitrarily holding that the assessment order passed under section 143(3) of the Asst. Year : 2020-21 - 2–
Act is erroneous and prejudicial to the interest of the revenue, without demonstrating how the twin conditions are getting satisfied in case of the Appellant.
3. That on the facts and circumstances of the case and in law, the PCIT erred in assuming jurisdiction under section 263 of the Act by merely setting aside the assessment order passed by the AO; (i) especially when the issues were verified by the AO during the assessment proceedings; (ii) and directing the AO to make further enquiries and undertake the assessment afresh in respect of issue of interest under section 201(1A)/206C(7) of the Act.
4. That on the facts and circumstances of the case and in law, the PCIT erred in not appreciating that the interest on Tax Deducted or Collected at Source was not claimed as an expense by the Appellant, and therefore, any disallowance in this regard is not warranted, thereby, demonstrating non-application of mind and vitiating the very basis of jurisdiction assumed under section 263 of the Act.
5. That on the facts and circumstances of the case and in law, the PCIT erred in not allowing the deduction under section 80G of the Act, as such deduction does not defeat the purpose of corporate social responsibility (‘CSR’) expenditure.
Your appellant prays for leave to add to alter and/or to amend any of the grounds before the final hearing of the appeal.
The brief facts of the case are that the assessee is engaged in the business of procuring, processing, blending and selling packaged tea to customers. The return of income for AY 2020-21 was filed on 13.02.2021 declaring total income of Rs.1,41,33,67,660/-. The case was selected for scrutiny and assessment was completed u/s 143(3) r.w.s. 144B of the Act on 22.09.2022, determining total income at Rs.1,41,92,12,839/-. During assessment, the Assessing Officer made additions of Rs.49,69,965/- u/s 14A and Rs.8,75,268/- on account of provision for employee benefits u/s. 37 of the Act.
Subsequently, the Ld. PCIT invoked revisionary jurisdiction under section 263 of the Act on two issues, viz.:-
(i) Allowability of deduction claimed u/s 80G in respect of donations stated to be CSR expenditure; and (ii) Non-disallowance of interest u/s 201(1A)/206C(7) of the Act amounting to Rs.1,70,234/-.
The Ld. PCIT held that the assessment order was erroneous and prejudicial to the interest of the Revenue and set aside the assessment order with directions to the AO to frame a fresh assessment on the above issues.
Aggrieved by the order of the Ld. PCIT, the assessee is now in appeal before the Tribunal.
The Ld. AR, before us, submitted that the assessment was completed after detailed scrutiny and due inquiry on the issues of deduction claimed u/s 80G and interest u/s 201(1A) of the Act. It was contended that all relevant details, including audited financial statements, tax audit report, donation receipts, computation of income, and interest details, were furnished during assessment proceedings and duly examined by the Assessing Officer. According to the Ld. AR, the revision under section 263 was initiated merely on a difference of opinion, without pointing out any lack of inquiry or error in the assessment order. It was, therefore, submitted that the twin conditions prescribed u/s 263 were not satisfied and the impugned order deserved to be quashed.
The Ld. DR, on the other hand, supported the order passed by the Ld. PCIT and submitted that the Assessing Officer had failed to make
We have heard the rival submissions and perused the material available on record. It is evident that the issues sought to be revised by the Ld. PCIT were specifically examined by the Assessing Officer during the course of assessment proceedings. The Assessing Officer had called for relevant details and the assessee had furnished the same, on the basis of which the assessment order under section 143(3) of the Act was passed. The Ld. PCIT has not brought on record any specific error or demonstrated how the assessment order is erroneous and prejudicial to the interests of the Revenue.
On merits:-
201(1A) – We find that the amount of Rs.1,70,198/- was not claimed as an expense during the year under consideration, the question of disallowing the same in the impugned assessment year does not arise. The Revenue could not bring anything contra on record. Therefore, the assessment order cannot be regarded as erroneous or prejudicial to the interests of the Revenue especially when no claim has been made by the assessee.
80G - On perusal of Section 80G of the Act, it is clear that restrictions on deductibility of a donation made pursuant to CSR obligations is expressly provided u/s 80G(2)(a)(iiihk) & 80G(2)(a)(iiihl) of the Act. Therefore,
For the sake of ready reference, the provisions 80G(2)(a)(iiihk) & 80G(2)(a)(iiihl) of the Act are reproduced hereunder:-
“Deduction in respect of donations to certain funds, charitable institutions, etc. 80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,— (i) in a case where the aggregate of the sums specified in sub- section (2) includes any sum or sums of the nature specified in sub- clause (i) or in sub-clause (iiia) or in sub-clause (iiiaa) or in sub- clause (iiiab) or in sub-clause (iiib) or in sub-clause (iiie) or in sub- clause (iiif) or in sub-clause (iiig) or in sub-clause (iiiga) or sub- clause (iiih) or sub-clause (iiiha) or sub-clause (iiihb) or sub-clause (iiihc) or sub-clause (iiihd) or sub-clause (iiihe) or sub-clause (iiihf) or sub-clause (iiihg) or sub-clause (iiihh) or sub-clause (iiihi) or sub-clause (iiihj) or sub-clause (iiihk) or sub-clause (iiihl) or sub- clause (iiihm) or in sub-clause (vii) of clause (a) or in clause (c) or in clause (d) thereof, an amount equal to the whole of the sum or, as the case may be, sums of such nature plus fifty per cent of the balance of such aggregate; and (ii) in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2). (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) any sums paid by the assessee in the previous year as donations to— ……… ……… (iiihk) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- Asst. Year : 2020-21 - 6– section (5) of section 135 of the Companies Act, 2013 (18 of 2013); or (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum i other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013 (18 of 2013); or…...”
We have also examined the following decisions:-
• TTEC India Customer Solutions (P.) Ltd. vs. PCIT: [2025] 176 taxmann.com 289/ITA No. 1026 of 2025 (Ahm - Trib) • Hemani Industries Ltd. vs. PCIT: [2025] 214 ITD 520 (Mum - Trib.) • Sonata Information vs. CIT: [2024] of 2024 (Mum - Trib.) • Agilent Technologies (International) P. Ltd. vs. ACIT: [2025] 172 taxmann.com 858/ of 2022 (Del- Trib.) • Jashan Jewels (P.) Ltd. vs. PCIT: [2025] 214 ITD 112 (Mum - Trib.)
Having gone through the provisions of the Act and the established judgments, on merits, we find the order of the Assessing Officer is not prejudicial to the interest of the Revenue.
In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 06.01.2026.