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2024 (6) TMI 329 - AT - Income TaxRevision u/s 263 by CIT - Eligibility to claim deduction u/s 80G for donations made under CSR activities - HELD THAT - Pr.CIT before holding the order of the A.O. is erroneous should conduct necessary inquiries. AR submitted that the Pr.CIT has not considered the facts that the A.O has called for the information in the scrutiny assessement and hence there cannot be any non application of mind by the A.O. Further if any query is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt with by the A.O. in the order cannot implied that there is no application of mind. We find that the A.O has considered one of the possible views based on the information and it is not necessary that the A.O should put all the discussions/observations in the assessment order, as per explanation (2) to sec 263 of the Act the authority has to invoke provisions only when there is no verification and enquiry conducted by the A.O. Whereas the A.O has applied his mind and verified the facts and has not doubted the genuineness of expenditure If any query is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt within by the A.O. in the order cannot implied that there is no application of mind and the A.O. has applied one of the possible view. We find the assessee is eligible to claim deduction u/sec. 80G of the Act under Chapter VIA and also there is no dispute on the genuineness of the contributions and the activities of the Donees i.e the institutions/trust registered u/s. 80G of the Act. Hence, the action of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Accordingly, we set aside the order of the Pr.CIT and allow the grounds of appeal in favour of the assessee.
Issues Involved:
1. Validity of proceedings u/s 263. 2. Allowability of deduction u/s 80G for CSR contributions. Summary: 1. Validity of Proceedings u/s 263: The assessee filed an appeal against the order of the Pr. Commissioner of Income Tax (Pr.CIT)-2, Mumbai, passed u/s 263 of the Income Tax Act, 1961. The Pr.CIT held that the assessment order dated 08.04.2021, passed u/s 143(3) read with sections 143(3A) & 143(3B), was erroneous and prejudicial to the interests of the revenue. The Pr.CIT found that the Assessing Officer (AO) did not conduct requisite inquiries regarding the allowability of deduction u/s 80G for donations made as part of CSR contributions. The Pr.CIT issued a revision notice and directed the AO to conduct further inquiries and frame a fresh assessment order. 2. Allowability of Deduction u/s 80G for CSR Contributions: The assessee argued that the provisions relating to the disallowance of CSR expenditure apply only to deductions u/s 37(1) and not to deductions u/s 80G. The assessee claimed a deduction of Rs. 48,59,170 u/s 80G for donations made to eligible institutions, forming part of CSR contributions. The Pr.CIT, however, was not satisfied with the assessee's explanations and submissions, and directed the AO to verify the nature of the donations and the donee institutions. Tribunal's Decision: The Tribunal held that the AO had considered the facts and submissions during the assessment proceedings and had applied his mind to the genuineness of the claim. The Tribunal noted that the assessee had provided detailed submissions and evidence in support of the claim during the revision proceedings. The Tribunal also referred to various judicial decisions to support the validity of the assessee's claim for deduction u/s 80G, even if the donations formed part of CSR expenditure. The Tribunal concluded that the Pr.CIT's order did not satisfy the twin conditions of being erroneous and prejudicial to the interest of the revenue. Consequently, the Tribunal set aside the Pr.CIT's order and allowed the appeal in favor of the assessee. Final Order: The appeal filed by the assessee was allowed. The order was pronounced in the open court on 03.06.2024.
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