top of page

Revision under section 263 cannot be invoked by PCIT when the AO's view allowing deduction under section 80G for CSR expenses is supported by various Tribunal decisions: ITAT

Citation- American Express (India) P. Ltd. vs. PCIT

ITAT: Delhi

ITA No: 2468 (Delhi) of 2023

Assessment Year: 2016-17

Date of Order- August 30, 2024

 

Brief Facts:


  • The assessee incurred INR 5,20,00,000 on Corporate Social Responsibility (CSR) as mandated under section 135 of the Companies Act, 2013. While the assessee voluntarily disallowed the CSR expenditure in the computation of income, it claimed a deduction of INR 3,21,43,427 under section 80G of the Income Tax Act.

  • During the assessment, the AO examined and allowed the deduction under section 80G. However, the Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under section 263, contending that the AO's allowance of the deduction was erroneous since CSR expenses are not eligible for deduction.

  • Aggrieved, the assessee filed an appeal before the ITAT.

 

Observations of the Tribunal:

The Tribunal observed that:

  1. The issue had been examined in various cases by the Tribunal, which consistently held that while CSR expenses mandated by section 135 of the Companies Act are not deductible under section 37(1), if any part of the CSR contribution qualifies for a deduction under Chapter VI-A, there is no prohibition on claiming the deduction under section 80G.

  2. Merely because the PCIT disagrees with the AO's decision does not render the assessment order erroneous. The AO's view in allowing the deduction under section 80G for CSR expenses was supported by several Tribunal decisions.

  3. For the PCIT to invoke revisional jurisdiction under section 263, both conditions must be satisfied: (i) the order must be erroneous; and (ii) it must be prejudicial to the interest of the Revenue. If either condition is not met, the PCIT cannot exercise revisional powers.

  4. The Tribunal, citing a similar decision in JMS Mining P Ltd. v. PCIT (2021) 130 taxmann.com 118 (Kol. Trib.), ruled in favour of the assessee, quashing the PCIT's revisional order.


Accordingly, the Tribunal allowed the assessee’s appeal and set aside the PCIT's order under section 263.

3 views0 comments

Comments


bottom of page