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2025 (6) TMI 1712 - AT - Income TaxRevision u/s 263 - deduction of donation u/s 80G in respect of certain donation - HELD THAT - On careful perusal of assessment order we find that case was selected for scrutiny on the issue of large amount of donation. No doubt that the assessing officer during the assessment examined the issue and disallowed donation u/s 80G to Urvashi Foundations. Though there is no discussion about the donation to other charitable trust or institution however the assessing officer has sought details of donations to all about such charitable trust and institution. We find that the assessee also furnished all required details to the assessing officer. Thus the assessing officer impliedly accepted the donation to such charitable trust or institution. We find that recently in DCIT Vs Gabriel India 2025 (5) TMI 863 - ITAT MUMBAI on similar issue where the assessee company claimed deduction u/s 80G at the rate of 50% of CSR expenses and furnished receipts of donees evidencing eligibility of deduction under section 80G allowed claim of such assessee. Considering the fact that view taken by assessing officer while allowing 50% of donation under section 80G out of CSR expenses are in accordance with the decisions of various benches of Tribunal. Thus the view taken by assessing officer cannot be said to be erroneous. Thus the pre-requisite twin conditions for exercising jurisdiction u/s 263 has not meet out in the present case hence we quash / set aside the order of Pr. CIT. Grounds of appeal raised by assessee are allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal (AT) in this appeal under Section 254(1) of the Income Tax Act (the Act) are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality and correctness of invoking revisionary jurisdiction under Section 263 Relevant legal framework and precedents: Section 263 of the Income Tax Act empowers the PCIT to revise any order passed by the AO if such order is found to be erroneous and prejudicial to the interests of revenue. The jurisdiction under Section 263 is to be exercised sparingly and only when the AO's order is found to be legally unsustainable or incorrect on the face of the record. Judicial precedents cited by the assessee, including CIT vs. Nirav Modi, Moil Ltd. vs. CIT, and others, emphasize that revision cannot be invoked merely because the PCIT disagrees with a plausible view taken by the AO. Court's interpretation and reasoning: The Tribunal noted that the AO had scrutinized the claim of deduction under Section 80G extensively, disallowing only the donation to Urvashi Foundations due to lack of approval under Section 80G. For other donations, including those linked to CSR expenses, the AO accepted the assessee's submissions and allowed the deduction. The Tribunal emphasized that the AO's view was reasonable, plausible, and legally sustainable. Application of law to facts: Since the AO had taken a considered view after examination of facts and documents, the Tribunal held that the twin conditions for revision under Section 263-(i) the order is erroneous, and (ii) prejudicial to revenue-were not satisfied. The PCIT's order revising the assessment was therefore held to be without jurisdiction. Treatment of competing arguments: The revenue argued that the AO did not specifically address the CSR-related donations under Section 80G and therefore the assessment order was erroneous and prejudicial. The Tribunal rejected this, pointing out that the AO had called for and examined details of all donations and had implicitly accepted the claims except for one disallowance. Conclusion: The Tribunal quashed the revision order passed by PCIT under Section 263, holding that the AO's order was neither erroneous nor prejudicial to revenue and that the PCIT had exceeded jurisdiction. Issue 2: Eligibility of deduction under Section 80G while availing concessional tax rate under Section 115BAA Relevant legal framework and precedents: Section 115BAA provides a concessional tax rate for certain domestic companies subject to conditions and allows certain deductions. The question whether deduction under Section 80G is permissible along with Section 115BAA was considered. The Tribunal relied on the decision of the CIT(A) who accepted that deduction under Section 80G is allowable even when the assessee opts for concessional tax rate under Section 115BAA. Court's interpretation and reasoning: The Tribunal noted that the PCIT had initially raised this issue but was satisfied with the assessee's submissions and allowed the deduction under Section 80G in this regard. The Tribunal agreed with this view, consistent with the legislative scheme and judicial precedents. Application of law to facts: The assessee had furnished Form No. 10IC and complied with procedural requirements. The Tribunal found no legal bar to claiming deduction under Section 80G while availing concessional tax rate under Section 115BAA. Conclusion: Deduction under Section 80G is allowable notwithstanding the concessional tax regime under Section 115BAA. Issue 3: Deduction under Section 80G in respect of CSR expenses Relevant legal framework and precedents: CSR expenses are mandatory under the Companies Act, 2013, and are disallowed as business expenditure under Section 37(1) of the Act by insertion of Explanation 2 (Finance Act, 2014). However, no corresponding amendment was made to Section 80G of the Act. The Tribunal relied extensively on recent coordinate Bench decisions, including DCIT vs. Gabriel India Ltd. and Ericsson India Global Services Pvt. Ltd., which held that deduction under Section 80G cannot be denied merely because the donations form part of CSR expenses, provided the donee institutions are registered under Section 80G and other conditions are met. Court's interpretation and reasoning: The Tribunal observed that the legislative intent behind disallowing CSR expenses under Section 37(1) was to prevent deduction of mandatory business expenses. However, Section 80G is a separate provision granting deduction to donors of eligible donations to registered charitable institutions. Since no amendment was made to Section 80G to exclude CSR-related donations, the Tribunal held that deduction under Section 80G is allowable subject to fulfillment of conditions. Key evidence and findings: The assessee produced receipts and evidence that the donee institutions were registered under Section 80G. The AO had not specifically examined the CSR-related donations under Section 80G but had accepted the claim except for one disallowance. Application of law to facts: Following the coordinate Bench decisions, the Tribunal directed that the AO should verify the eligibility of donee institutions and allow deduction under Section 80G accordingly. The Tribunal rejected the revenue's argument that allowing Section 80G deduction for CSR donations would amount to subsidizing mandatory expenses. Treatment of competing arguments: The revenue contended that CSR expenses are mandatory and thus deduction under Section 80G should be disallowed. The Tribunal distinguished the present case from cases disallowing CSR expenses under Section 37(1), noting that the assessee claimed deduction under Section 80G and not under Section 37(1). The Tribunal found the revenue's reliance on contrary decisions misplaced. Conclusion: Deduction under Section 80G is allowable for donations forming part of CSR expenses, subject to verification of donee's registration and compliance with Section 80G conditions. Issue 4: Whether the AO properly examined and disallowed deduction under Section 80G Relevant legal framework and precedents: The AO is required to examine claims of deduction and disallow those not in compliance with the Act. The Tribunal noted the AO had disallowed deduction for donation to Urvashi Foundations due to lack of approval under Section 80G but allowed other donations. Court's interpretation and reasoning: The Tribunal found that the AO had issued notices under Section 142(1), sought details, and considered the submissions of the assessee. The AO's order reflected a detailed examination and a plausible view. Application of law to facts: The AO's acceptance of other donations under Section 80G implied acceptance of the CSR-related donations as well, given the documentation provided. The PCIT's revision on this ground was held to be unjustified. Conclusion: The AO's order was not erroneous or prejudicial to revenue in respect of Section 80G deductions except for the one disallowed donation. 3. SIGNIFICANT HOLDINGS "The view taken by assessing officer cannot be said to be erroneous. Thus, the pre-requisite twin conditions for exercising jurisdiction under section 263 has not meet out in the present case hence we quash / set aside the order of Pr. CIT dated 17.03.2025." "There is no restriction in the Act that expenditure when disallowed for CSR cannot be considered u/s 80G of the Act. Hence, we remit the issue to the file of AO to examine the same whether the payments satisfy the claim of donation u/s 80G of the Act or not, if they qualify as donation u/s 80G of the Act then the requisite amount deserves to be allowed." "Deduction under section 80G is allowable notwithstanding the concessional tax regime under section 115BAA." "The AO's order was neither erroneous nor prejudicial to the interest of revenue as the AO had taken reasonable and legally sustainable view on the claim of deduction under section 80G." Core principles established include:
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