Tribunal says AO rightly allowed 80G deduction on CSR donations to registered institutions; Section 263 revision invalid as AO’s view was plausible
Meetu Kumari | Aug 5, 2025 |
ITAT Quashes Section 263 Revision on CSR Donation Deduction Allowed Under Section 80G
The assessee filed its return for AY 2020-21 declaring Rs. 31.64 crore. During scrutiny, the AO examined Corporate Social Responsibility (CSR) expenses of Rs. 70.40 lakh, out of which donations of Rs. 35.09 lakh (50% deduction claimed) and Rs. 31 lakh to CMRF (100% deduction claimed) were claimed under Section 80G. After detailed verification, the Assessing Officer allowed a total deduction of Rs. 48.54 lakh under Section 80G.
Proceedings Before PCIT: The Principal CIT, invoking Section 263, issued a show cause notice, holding that CSR expenditure being mandatory could not be considered voluntary, and thus no deduction under Section 80G should have been allowed. The AO was directed to pass a fresh order by the PCIT.
The assessee challenged the reassessment before the Hon’ble tribunal on the ground that the AO had already examined the claim in depth through notices under Section 142(1), and placed reliance on several Tribunal decisions allowing 80G deduction on CSR donations.
Central Issue: Whether the AO’s order allowing deduction under Section 80G for CSR donations was “erroneous and prejudicial to the revenue” so as to justify revision under Section 263.
Tribunal’s Decision: The Tribunal ruled in favour of the assessee, holding that the AO had taken a legally sustainable and plausible view in allowing deduction under Section 80G, and therefore the prerequisites for invoking Section 263 were not satisfied.
The Bench observed that the AO had specifically sought details of CSR donations during assessment, which the assessee had furnished along with supporting receipts of donee institutions registered under Section 80G. It relied on consistent rulings of coordinate benches, including Gabriel India Ltd., Vistex Asia Pacific Pvt. Ltd., and Dalal & Broacha Stock Broking Pvt. Ltd., which upheld 80G deductions on CSR donations. The Tribunal clarified that Explanation 2 to Section 263 could not be used for endless inquiries where the AO had already made adequate verification and decided.
Thus, the tribunal quashed the PCIT’s revisionary order, and therefore allowed the appeal filed by the assessee.
To Read Full Judgment, Download PDF Given Below
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
