TMI Blog2016 (2) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... such situation when the learned Commissioner has not directed to disallow the claim, or in other words, the directions were not conclusive in nature, we hereby hold at this stage that no prejudice has been caused to the assessee. The assessee has ample opportunity to explain his case. We, therefore, conclude that there is no fallacy in the directions of the learned Commissioner to the AO to pass a fresh assessment after making necessary enquiries in respect of the expenditure claimed under the head “Corporate Social Responsibility.” The order of the learned Commissioner passed u/s 263 dated 27-03-2014 is hereby confirmed. - Decided against assessee. - I.T.A. No. 56/Nag/2015 - - - Dated:- 25-2-2016 - Mukul K. Shrawat (Judicial Member) And Shamim Yahya (Accountant Member) For the Appellant : K. P. Dewani For the Respondent : Anita Rupavataram ORDER Mukul K. Shrawat (Judicial Member) This is an appeal filed by the assessee arising from the order of learned Commissioner of Income Tax-I, Nagpur dated 27-03-2014 passed u/s 263 of I.T. Act. The assessee has challenged the jurisdiction of the learned Commissioner as per the following grounds: For that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee towards, Welfare Fund in order to obtain export license from the District Collector was held to be allowable u/s 37. Reference was also made to the decision in the case of Patnaik Co. Ltd. Vs. CIT 58 CTR 92 (SC) and in the case of Addl. CIT Vs. Kubersingh Bhagandas 118 ITR 379 (MP) in which similar payments made or loss incurred by the assessee in making investment towards the Govt. bonds at the instance dof the Govt., was held to be allowable. It was also submitted that when the assessee incurs expenditure on Corporate Social Responsibility, it increases its Performance Rating which in turn, would help the assessee company to apply for Navratna status. The PSUs with Navratna status are eligible for more benefits as compared to any other PSU Reliance was also placed on the decision dated 28/2/2014 of ITAT Hyderabad in the case of NMDC Ltd. Vs. JCIT, ITA No. 885/Hyd/2012 in which contribution of ₹ 5 cr. made by the assessee for establishing a Medical College debited under the head Corporate Social Responsibility (CSR) was held to be allowable u/s 27 of the I.T. Act. Therefore, it was contended that the amount of ₹ 5.42 cr. incurred by the assessee towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Badminton Association, Lucknow on 1/4/2008. It is not known how the said payment has been incurred wholly and exclusively for the purpose of assessee s business. Similarly, payment of ₹ 2 cr. has been made to Bihar Relief Fund. Such payments cannot be allowed u/s 37 of the I.T. Act. Clearly, deduction on account of expenses incurred under the head CSR has been allowed by the AO without any application of mind. 6. In the following decisions, it has been held that the order passed by the AO without application of mind would be erroneous and prejudicial to the interest of revenue: 1. CIT Vs. Emery Stone Manufacturing Co., 213 ITR 843 (Raj.) 2. Mofussil Warehouse Trading CVo. Ltd.Vs. CIT 238 ITR 867. 3. Ashok Leyland Ld. Vs CIT 260 ITR 599 4. CIT Vs. Bhagwandas 272 ITR 367. 5. Sheraffudin Vs CIT 41 DTR(Ker) 263 6. CIT Vs Assam Tea House 344 ITR 507 (P H) 7. CIT Vs Himachal Pradesh Financial Corpn. 186 Taxman 105. In the case of Malabar lndustrial Company Ltd. Vs CIT 243 ITR 83(SC), it was held that where the order was passed without application of mind, it would be an erroneous order. Since the A.O. has passed the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n line with the show cause notice issued u/s 263 of the I.T. Act. Hence the directions were illegal in nature. Reliance was placed on the following decisions : 1. Maxpak Investment Ltd. vs. ACIT (2006) 104 TTJ 0881 (Del.). 2. Synergy Enterpreneur Solutions (P) Ltd. (2011) 13 ITR 0377. 3. B S Sangwan vs. ITO (2015) 38 ITR (Trib) 0011 (Delhi). 5. From the side of the Revenue, learned D.R. Smt. Anita Rupavataram appeared and strongly supported the directions of the learned Commissioner. She has argued that the assessment order was silent on the issue of allowability of CSR expenditure. As per the learned D.R. the claim was erroneously allowed by the AO. She has also pleaded that in reply to the notice u/s 263 the assessee has addressed the allowability of CSR expenditure. It was factually incorrect on the part of the assessee to argue that the proper opportunity was not allowed by the learned Commissioner. Learned D.R. has also pleaded that the expenditure in question was not connected with the business activities of the assessee, hence not allowable under the provisions of the Act. 6. We have heard both the sides at some length. We have also examined the contents of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case law cited is Sri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT 223 ITR 101 (SC). 7. Learned D.R. from the side of the Revenue has countered that exactly that was a reason that the learned Commissioner has opined that even this aspect was not addressed by the AO in the impugned assessment order. 8. As far as the question of invocation of jurisdiction through a notice u/s 263 is concerned, we have perused the said notice, photo copies placed before us and in our considered opinion the learned Commissioner was very much clear in his mind about the genuineness of the claim of expenditure, therefore, he had issued the said notice providing an opportunity to the assessee to explain the legality of the claim. Moreover, the assessee has also answered this query vide a reply without raising any doubt at that point of time. Hence we hereby hold that the objection is not sustainable in the eyes of law. 9. We have examined the findings of the learned Commissioner according to which he has directed the AO to make necessary enquiries as regards the allowability of the said expenditure that too after providing opportunity to the assessee. This is not the case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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