SHALBY LTD.,AHMEDABAD vs. THE PCIT, AHMEDABAD-3, AHMEDABAD

ITA 1227/AHD/2025Status: DisposedITAT Ahmedabad26 March 2026AY 2020-21Bench: MS SUCHITRA KAMBLE (Judicial Member), SHRI NARENDRA PRASAD SINHA (Accountant Member)8 pages
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What did the Tribunal hold?

The Tribunal held that the AO's order could not be considered erroneous and prejudicial to the revenue. Adjustments to book profit for CSR expenses are not permissible under section 115JB as per Supreme Court and Delhi High Court rulings. Similarly, disallowances under section 14A cannot be added to book profit for MAT calculation, especially when the assessee's tax liability is under MAT provisions.

What were the facts?

The assessee claimed a deduction under section 80G for a Rs. 3 crore donation to AISECT for CSR activity, which was later found to be a bogus donation scheme. The PCIT initiated proceedings under section 263, holding the AO's order erroneous and prejudicial to revenue for not disallowing the donation and for not invoking Rule 8D for exempt income disallowance.

What were the issues?

Whether the PCIT was justified in revising the AO's order under section 263 for failing to disallow a CSR donation and not invoking Section 14A/Rule 8D, when the assessee's tax liability was under MAT provisions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 263,Section 80G,Section 132,Section 14A,Section 8D,Section 115JB

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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: MS SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Aseem Thakkar, AR
For Respondent: Shri R P Rastogi, CIT-DR
Hearing: 23.02.2026Pronounced: 26.03.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is directed against the order of Principal Commissioner of Income Tax, Ahmedabad – 3, [hereinafter referred to as ‘PCIT’], dated 30.03.2025 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s. 263 of the Income Tax Act.

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2020-21 on 28.05.2021 declaring total income of Rs.6,83,24,890/-. The case was selected for complete scrutiny under CASS. In the course of assessment of the AO had made disallowance of Rs. 35,96,047/- on account of deduction claimed under section

The order continues below.

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