The Educational Society St. Marys Academy Vs DCIT (ITAT Delhi)
Donation for School Construction Is Not Automatically a Corpus Donation: Delhi ITAT Quashes Section 263 Revision
Capital Purpose Does Not Automatically Mean Corpus
The Delhi Bench of the Income Tax Appellate Tribunal has held that a donation to another charitable institution for construction of a school building does not automatically become a corpus donation. On the facts, the essential condition of a specific direction that the contribution should form part of the recipient’s corpus was absent.
The Tribunal also found that the Assessing Officer had examined both the donation and the treatment of loan repayment during scrutiny. Consequently, the Commissioner of Income Tax (Exemptions) could not invoke section 263 merely to revisit those issues on a different interpretation.
Background of the Dispute
The assessee, an educational society, filed its return declaring nil income for Assessment Year 2022–23. The case was selected for complete scrutiny because of repayment of a substantial amount of borrowed funds. After issuing notices and considering the explanations, the Assessing Officer completed the assessment under section 143(3), read with section 144B, accepting the returned income.
The CIT(E) subsequently revised the assessment on two issues. The first concerned a ₹5 crore donation to the Education Society of Mount St. Mary’s High School, Delhi Cantt., for school building construction. The second concerned bank term-loan repayment of ₹2,00,00,357, initially claimed as application of income and subsequently withdrawn through a revised computation during assessment.
The CIT(E) set aside the assessment and directed fresh examination. The society appealed.
Donation for Construction: The Commissioner’s Objection
The CIT(E) considered the contribution for school construction to be capital in nature and questioned its treatment as application of income. According to the revisional reasoning, the Assessing Officer had verified the payment without adequately examining the legal admissibility of the claim.
The assessee countered that this reasoning wrongly equated a donation for a specified capital purpose with a donation carrying a specific corpus direction.
It submitted that Explanation 2 to section 11(1) addresses contributions made with a specific direction that they shall form part of the recipient institution’s corpus. Merely specifying that money should be used for construction does not, by itself, satisfy that requirement.
No Specific Corpus Direction Existed
The assessee demonstrated that it had issued no direction to treat the contribution as corpus. The recipient society had also confirmed that the amount was received as a non-corpus donation, included in its income and utilised for educational purposes.
The Tribunal accepted that the essential conditions contemplated by Explanation 2 to section 11(1) were absent. It expressly concluded that the contribution constituted a non-corpus donation on the facts.
The significant distinction is between prescribing how a donation should be spent and directing that it should form part of corpus. Construction of a school building explains the intended use; it does not automatically determine the statutory character of the contribution.
The Assessing Officer Had Examined the Donation
The assessment record also contradicted the allegation of absence of enquiry.
Through the notice dated 9 October 2023, the Assessing Officer had specifically sought information concerning donations. The assessee responded with complete details of the contribution for school construction and furnished confirmation from the recipient.
Thus, the matter had been placed before the Assessing Officer during scrutiny. The Tribunal considered the actual assessment correspondence while rejecting the basis for revision.
Loan Repayment Had Been Withdrawn Through Revised Computation
The second issue concerned the claim of ₹2,00,00,357 as application of income towards loan repayment.
During assessment, the Assessing Officer called for complete details of the bank loan and its repayment. The assessee furnished the information and withdrew the repayment claim through a revised computation, stating that this was done as a measure of abundant caution to avoid alleged double deduction.
The CIT(E) objected that no revised return had been filed electronically and questioned the Assessing Officer’s acceptance of the computation.
The Tribunal found that the loan details had been called for and that filing of the revised computation during scrutiny was established on record. Considering the examination of both issues, it held the revision unsustainable.
This finding concerns withdrawal of an existing claim; it should not be expanded into an unrestricted ruling permitting every fresh deduction before the Assessing Officer without a revised return.
Section 263 Cannot Merely Substitute Another Opinion
The Tribunal referred to Malabar Industrial Co. Ltd. v. CIT, (2000) 243 ITR 83 (SC) and reiterated that section 263 cannot be invoked merely because of a difference of opinion.
The Revenue relied on CIT v. Amitabh Bachchan, [2016] 69 taxmann.com 170 (SC) and Pr. CIT v. Paramount Propbuild Pvt. Ltd., [2024] 161 taxmann.com 85 (Delhi) to argue that necessary further enquiry could justify revision. However, on the assessment record before it, the Tribunal found that both disputed issues had been examined and set aside the revisional order.
Author’s Comments
The ruling usefully distinguishes capital expenditure from corpus contribution. A construction-related purpose cannot, without examining the donor’s directions and surrounding records, automatically establish corpus character.
For charitable institutions, clear donation letters, recipient confirmations and consistent accounting treatment remain valuable evidence. Equally, the decision demonstrates why assessment replies should expressly address the legal character of a transaction. Here, the documented enquiries and the absence of a corpus direction together defeated the revision.
Cases Discussed
- CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd.— 349 ITR 336 (Bombay High Court): Cited in assessee’s written submissions concerning claims made through revised computation; not separately analysed in the Tribunal’s reasoning.
- Malabar Industrial Co. Ltd. v. CIT— (2000) 243 ITR 83 (Supreme Court): Relied upon by the assessee and expressly invoked by the Tribunal on the limits of Section 263 revision.
- CIT v. Gabriel India Ltd.— (1993) 203 ITR 108 (Bombay High Court): Cited in assessee’s written submissions on erroneous and prejudicial assessment orders.
- Max India Ltd. v. CIT— (2007) 295 ITR 282 (Supreme Court): Cited in assessee’s written submissions on permissible views and revision.
- CIT v. Amitabh Bachchan— [2016] 69 taxmann.com 170 (Supreme Court): Revenue cited the need for further enquiry when circumstances require it.
- CIT v. Paramount Propbuild Pvt. Ltd.— [2024] 161 taxmann.com 85 (Delhi High Court): Revenue cited the minimum enquiry required under Explanation 2(a) to Section 263.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the Appellant/assessee is against order dated 31.03.2026 of Ld. Commissioner of Income Tax (Exemptions)-Lucknow [hereinafter referred to as “the CIT(E)”] undersection 263 of the ITA 5861/DEL/2026 M/S THE EDUCATIONALSOCIETY ST. MARYS ACADEMY Income Tax Act, 1961 (hereinafter referred to as “the Act”) arising out of assessment order dated 23.03.2024 of Ld. Assessing Officer/Assessment Unit, hereinafter referred to as ‘the Ld. AO’) u/s 143(3) read with Section 144B of the Act for A.Y. 2022-23.
2. Brief facts of the case are that, the Assessee filed return of income of NIL on 27.10.2022. The case was selected for complete scrutiny assessment for reason “repayment of large amount of borrowed funds by trust”. Notice under Section 143(2) dated 01.06.2023 and notices under Section 142(1) dated 09.10.2023 and 10.02.2024 were issued. The Assessee submitted submissions. On completion of proceedings Ld. AO vide order dated 23.03.2024 accepted income of NIL as submitted by the Assessee.
3. In pursuance of assessment order dated 23.03.2024 Ld. CIT(E) issued show cause notice underSection 263of the Act dated 15.12.2025. The Assessee filed replies dated 12.01.2025 and 13.01.2025 Ld. CIT(E) vide order dated 31.03.2026 set aside order dated 23.03.2024 of Ld. AO and directed the Ld. AO to pass fresh order.
4. Being aggrieved appellant/assessee preferred present appeal on following grounds:
“1. The order u/s 263 dated 31.03.2026 by the Ld. CIT(Exemption) is wrong and bad in law, without jurisdiction ITA 5861/DEL/2026 M/S THE EDUCATIONALSOCIETY ST. MARYS ACADEMY as there was no error in the order of the Assessing Officer passed u/s 143(3) neither it is prejudicial to the interest of revenue and hence it has to be quashed.
2. The appellant contends that the Ld. CIT(Exemption) has not undertaken any enquiry, verification but has only directed the AO to undertake enquiry. Therefore, without establishing any error in the order of the AO, which is a fundamental and preliminary condition for invoking the jurisdiction u/s 263, the directions so given are wrong and bad in law and hence the order u/s 263 setting aside the original order has to be cancelled and filed.
3. The AO had conducted detailed scrutiny proceedings u/s 143(3) read with Section 144B and specifically examined the issues now sought to be revisited by the Ld. CIT(Exemption). Therefore, the revisionary proceedings merely amount to substitution of opinion and are impermissible in law. It is settled that where inquiries were conducted by the Assessing officer and the claim was examined during assessment proceedings,Section 263cannot be invoked merely on the ground that further or deeper inquiries should have been conducted.
4. The above grounds are independent and without prejudice to one and another.
5. The appellant may be allowed to add, alter, forgo any of the ground at the time of hearing.”
5. The Ld. Representative for appellant/assessee submitted that Ld. CIT(E) had not undertaken any enquiry, verification but only directed A.O. to undertake enquiry without establishing any error in order of Ld. AO. The revisionary proceedings merely amounted to substitution of opinion which is impermissible in law. In written submissions dated 23.09.2026 it was pleaded as under:-
“The present appeal is arising from the Order passed by the CIT(Exemption). Lucknow dated 31.03.2026 undersection 263 of the Act.
The allegation is there is lack of enquire by AO on the follows issues;
i) Donation of Rs. 5.00 Crs for educational purpose to another charitable society, namely, for school building construction,
ii) Repayment of loan of Rs. 2,00,00,357/- reduced as application inrevised computationfiled during the course of assessment proceedings and not by way of filing revised computation.
1. The impugned order dated 31.03 2026 passed by the Ld. CIT (Exemption), Lucknow underSection 263 of the Income- tax Act is wholly illegal, arbitrary, beyond jurisdiction and liable to be quashed both on facts and in law.
2. The foundational requirement for assumption of jurisdiction underSection 263, namely that the assessment order of the AO must be BOTH:
-
-
-
-
- erroneous; and
- prejudicial to the interests of revenue,
-
-
-
Unless both conditions are cumulatively satisfied, recourse tosection 263is impermissible. Both conditions in the present case have not been satisfied and this takes the case out of the ambit of Section 263.
3. The Assessing Officer after raising queries and after considering the detailed submissions of the assessee concluded the scrutiny proceedings under Section 143(3) dated 23.03.2024 read with Section 144B. The AO specifically examined the two issues now sought to be revisited by the Ld. CIT(E) u/s 263 of the Act. Therefore, the revisionary proceedings merely amount to substitution of opinion and are impermissible in law. It is settled legal position that where enquiries were conducted by the Assessing officer and the claim was examined during assessment proceedings,Section 263 cannot be invoked
Issue no.1 Donation was NOT corpus donation within meaning of Explanation 2 tosection 11(1) of the Act or under Section 11(1)(d).
4 The entire foundation of the impugned order proceeds on an incorrect assumption that donation given to another charitable society of Rs 5.00 Crs utilized for school building construction automatically becomescorpus donationand thus cannot be allowed as application of income. The statutory language of Section 11(1) Explanation 2 is explicit and unambiguous and clearly applies only where “contribution is made with a specific direction that it shall form part of the corpus shall not be treated as application of income for charitable or religious purposes.” Thus, the legislative intent/requirement is not merely specification of purpose, but a clear and express direction that the contribution shall constitute corpus of the donee Society.
5 In the present case during the course of assessment proceedings vide notice dated 9.10.2023 (PB pg 20-24) specific query was raised by AO (query no.16. page 23 of PB), the assessee responsed vide letter dated 18.11.2023 (relevant pg 28 of PB) giving complete details of donation filed to another charitable society for educational purpose of school building construction and also filed confirmation from the Donee (PB Pg.32 and 33), there is
(a) no such direction existed.
(b) no corpus instruction was issued by the assessee,
(c) the donee society itself confirmed that the amount was treated as income andnon-corpus donation;
(d) the amount was utilized for educational purposes namely for school construction. Therefore, the essential statutory conditions contemplated under Explanation 2 tosection 11(1) is absent in this case and legally the donation constitutes a non-corpus donation as a matter of fact. The learned CIT (E) has proceeded to create an entirely superficial doctrine that a donation for capital purposes is “implied corpus” and recharacterized the amount of donation as corpus donation which is his own inference without pointing any error in the order of AO.
6. The statute requires a SPECIFIC DIRECTION TO TREAT THE AMOUNT AS CORPUS.
The legislature consciously used explicit language and not inferred intention. The Ld. CIT(E) has attempted to rewriteSection 11(1) read with explanation 2 by importing the concept of “implied corpus” or “deemed corpus”, which finds no place in the Act. The Income-tax Act nowhere provides that the donation for capital purpose equates with corpus donation. The interpretation adopted in the impugned order is therefore contrary to plain statutory language and settled principles of strict interpretation of exemption provisions.
7. Donee treated amount as non-corpus income. The donee institution categorically confirmed:
(i) amount was not treated as corpus:
(ii) amount formed part of income:
(iii) amount was utilized for educational activities
Once the recipient itself does not recognize the amount as corpus, the donor cannot unilaterally be subjected to Section 11(1)(d). The Ld. CIT(E) has ignored the actual accounting treatment and substituted it with hypothetical assumptions. The finding that construction-related donations are “inherently corpus is unsupported by any statutory provisions. The income tax does not provide that every donation used for construction automatically becomes corpus. Therefore, the impunged order proceeds entirely on interpretational assumptions rather than statutory mandate.
8. No violation of Section 11
The donation was made to another charitable institution having similar educational objects. Inter-charitable donations have consistently been held to constitute valid application of income unless specifically barred by statute. Since there was no corpus direction, the bar under Explanation to Section 11(1) does not apply. Consequently, the donation constituted valid application of income and was rightly accepted by the Assessing Officer. The impugned order misapplies the principles of “substance over form” The learned CIT(E) relies heavily upon generalized concepts such as,
Substance over form;
Capital nature;
Endowment principle;
Implied corpus
Double deduction
These expressions cannot override explicit statutory language. Where legislature intend to disallow corpus donations, it expressly did so through section 11(1)(d). Legislature does not prohibit donations for construction purposes. The commissioner cannot enlarge disallowances by his own volition.
9. Findings based on assumption and conjectures
The impugned order repeatedly uses expressions such as: “inherently capital”, “mirrors corpus”, “implied corpus”, “functional definition”, which are unknown to the statute. Tax liability cannot be imposed on inferential doctrines contrary to express legislative language. The Ld. CIT(E) has effectively legislated a new category of deemed corpus donation, which is beyond revisionary jurisdiction under Section 263
10. No Prejudicial Interest to the Revenue.
The reason for the introduction of disallowing the corpus donation as application of income is the entitlement of the recipient donee to treat the amount of corpus donationas capital receipt which is not an item of Income. Thus it creates a situation where the donor treat the donation amount as application where as the donee treat the same as a capital receipt
In the present situation the donor has treated the donation as an application of Income The recipient Society has treated the amount as an income item and included the same in the total income of the year.
Thus the treatment of the contribution as an application has not caused any situation which is prejudicial to the interests of the Revenue
ISSUE 2: Repayment of bank term loan of Rs. 2,00,00,357/- should have be disallowed as application of income by filing revised ITR and not by way ofrevised computationduring the course of assessment proceedings.
11. During course of assessment AO called for complete details of loan from bank and the repayment vide notice dated 10.02.2024. PB pg 34-37. Assessee provided complete details vide letter dated 14.02.2024. PB pg no. 38-46.
12. The assessee during assessment proceedings had reduced the amount of loan repaid of Rs. 2,00,00,357/- to avoid any alleged double deduction as a measure of abundant caution. The revised computationwas duly filed before the Assessing Officer during scrutiny proceedings. The Assessing Officer consciously examined and accepted the computation after considering all relevant material. It is settled law that an assessee is entitled to make a lawful claim otherwise than through revised return during assessment proceedings Reliance is placed upon: CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (349 ITR 336) (Bom), wherein it was held that appellate and assessment authorities can consider lawful claims even if not made through revised return. The impugned order incorrectly assumes that absence of revised return automatically invalidates revised computation. There exists no prohibition upon the Assessing Officer from considering a corrected computation during scrutiny assessment.
ASSESSMENT ORDER WAS NOT ERRONEOUS
13. The assessment was completed after
(i) issuance of notices,
(ii) replies by assessee.
(iii) examination of documents
(iv) verification of claims.
Therefore, this is not a case of “lack of inquiry At best, the Ld. CIT(E) alleges: “inadequate inquiry.” It is settled law that inadequate inquiry does not justify revision under Section 263 where the Assessing Officer has taken a plausible view.
14 Reliance is placed on
(i) Malabar Industrial Co. Ltd. v. CIT (243 ITR 83)(SC): wherein it was held that where the Assessing officer adopts one of the permissible views, the order cannot be revised merely because the commissioner prefers another view.
(ii) CIT v. Gabriel India Ltd. (203 ITR 108) (Bom)
(iii) Max India Ltd. v. CIT (295 ITR 282)(SC). The Assessing Officer adopted a legally permissible and plausible view after examination of material. Therefore, jurisdiction underSection 263could not have been invoked merely because the Ld. CIT(E) prefers another interpretation.
15. EXPLANATION 2 TO SECTION 263 NOT APPLICABLE Explanation 2 to section 263does not enlarge revisionary powers to permit substitution of opinion. Even after insertion of Explanation 2, courts have consistently held that inquiry actually conducted by AO bars revision merely on adequacy grounds. The assessment records clearly establish examination of:
(i) donation;
(ii) application of income,
(iii) repayment of loan;
(iv) revised computation. Hence, the allegation of “no inquiry” is factually incorrect.
IMPUGNED ORDER BASED ON IRRELEVANT AND DISTINGUISHABLE AUTHORITIES
16. Several judicial precedents (some without citation and could not be found) cited in the impugned order are either:
(i) distinguishable on facts;
(ii) unrelated toSection 11(1)(d); or
(iii) general observations on tax avoidance. Hence are not applicable to the present case where the transaction is bona fide and fully disclosed and examined by AO.
REVISION BASED ON CHANGE OF OPINION
17. The impugned order merely substitutes the subjective interpretation of the Ld. CIT(E) in place of the Assessing Officer’s lawful view. Such substitution is impermissible underSection 263. Revisionary powers cannot be exercised for fishing or roving enquiries.”
6. The Ld. Departmental Representative in written submissions submitted as under:-
“May it please your Honours,
1. The present appeal arises from the order passed undersection 263of the Act on the ground that the assessment order dated 23.03.2024 was erroneous insofar as it was prejudicial to the interests of the Revenue. The assessment had been completed at Nil income. The learned PCIT, on examination of the assessment record, noticed that certain material issues having direct bearing on the computation of application of income had not been properly examined by the Assessing Officer.
2. The first issue relates to the ₹5 crore contribution made to the Education Society of Mount St. Mary’s High School, Delhi Cantt. The payment was specifically stated to be for construction of the school building. During the revisionary proceedings, the assessee relied upon the absence of an express corpus direction and also furnished the recipient’s accounts and confirmation. The Revenue submits that the important question before the Assessing Officer was not merely whether the payment had been made, but whether, having regard to the statutory requirements ofsection 11and the nature and terms of the contribution, the amount could properly be treated as application of income.
3. The learned PCIT was therefore justified in examining whether the Assessing Officer had applied his mind to the relevant statutory conditions. The assessee itself states that the assessment proceedings contained only a general query regarding donations and that the documents furnished included the confirmation, utilisation certificate and registration documents of the recipient. The material placed on record, however, required examination of the precise legal character of the contribution and the effect of the restriction attached to its use.
4. The Hon’ble Supreme Court in CIT v. Amitabh Bachchan, [2016] 69 taxmann.com 170 (SC), paras 21-22, has made it clear that althoughsection 263cannot be invoked merely because another possible view exists, where the circumstances call for further enquiry, the failure to make that enquiry can render the assessment erroneous and prejudicial to the Revenue. Significantly, the Supreme Court upheld revision even where the assessee had subsequently withdrawn the claim, observing that withdrawal of a claim does not, by itself, bring the matter to an end where the circumstances call for further investigation.
5. The above principle is particularly relevant to the present case because the second issue also concerns the Assessing Officer’s acceptance of arevised computationin respect of repayment of loan. The assessee had claimed repayment of loan of ₹2,00,00,357/- as application of income, while the corresponding capital expenditure of 24,90,71,846/- had been incurred out of income. During the assessment proceedings, the assessee subsequently withdrew the claim of loan repayment in its revised computation, but no revised return was filed electronically. The learned PCIT therefore required examination of the legal effect of such revised computation and the manner in which the application of income was finally determined.
6. The assessee’s contention that the Assessing Officer had made enquiry does not, by itself, conclude the matter. Where an issue having a material bearing on the computation of exemption is not examined in the manner required by law, the mere raising of a query or obtaining of documents cannot substitute the necessary verification. The Hon’ble Delhi High Court in Pr. CIT v. Paramount Propbuild Pvt. Ltd., [2024] 161 taxmann.com 85 (Delhi), paras 21 and paras 24-26, held that where the assessment record does not reflect the minimum enquiry which the circumstances of the case required, invocation ofsection 263under Explanation 2(a) is justified.
7. In the present case, the learned PCIT did not merely substitute his opinion for that of the Assessing Officer. He examined the assessment record, considered the assessee’s replies and identified the specific areas where verification was required, namely, the proper characterisation of the 25 crore inter-charity contribution and the legal treatment of the loan-repayment claim. The order under section 263 thereafter directed a fresh examination after providing due opportunity to the assessee.
8. It is therefore respectfully submitted that the case is not one of a mere difference of opinion, but of an assessment order in which the relevant statutory issues required further examination. The exercise of revisionary jurisdiction undersection 263was accordingly within the scope of the provision.
9. In view of the above, the Revenue respectfully submits that the order passed by the learned PCIT undersection 263 ITA 5861/DEL/2026 M/S THE EDUCATIONALSOCIETY ST. MARYS ACADEMY may kindly be upheld and the appeal of the assessee may be dismissed.”
7. From examination of record, in light of aforesaid rival contention, it is crystal clear that Ld. CIT(E) in impugned order dated 31.03.2026 underSection 263of the Act set aside assessment order dated 23.03.2024 of Ld. AO and directed the Ld. AO to pass fresh order after obtaining required details and examination of issues raised above and after providing de-opportunity to the Assessee. Ld. CIT(E) regarding classification of inter charity donations for capital purposes in Para No. 6A(iii) (c) observed as under:-
“The assessee’s argument fails to distinguish between a “judgmental error” (where 263 is limited) and a “jurisdictional/legal error” (where 263 is mandatory). By allowing a 5 crore capital donation to be treated as revenue application, the AO passed an order that is:
1. Erroneous: Because it contradicts the statutory scheme of Section 11.
2. Prejudicial: Because it allows a substantial deduction that is not permissible in law.
Consequently, the invocation of Section 263 is not just valid but necessary to protect the interest of the Revenue. The “application of mind” by the AO, if any, was directed at the fact of the payment, but not at the legality of the deduction, thus leaving the door wide open for revisionary action.”
8. Regarding issue No. 2 of Ld. CIT(E) in Para No. 6B(iii) Page No. 19 of PB reads as under:
“(iii) The submission made by the assesse has been duly perused and considered. It is further noticed that during the course of assessment proceedings, the assessee submitted a revised computation of income, purportedly modifying certain claims. However:
As per records, no revised return of income was filed electronically as mandated under the Act.
Despite the absence of a valid revised return, the AO appears to have accepted therevised computation, without examining its legal admissibility.
The AO failed to verify whether the revised claims could at all be considered in law without a revised return and without following due procedure.”
9. From perusal of above observations and findings it is evident that the donation given to another charitable society of Rs. 5,00,00,000/- utilized for school building construction automatically became corpus donation which cannot be allowed s application of income during assessment proceedings in response to notice dated 09.10.2023 Page No. 20-24 of Paper Book specific query was raised by Ld. AO, query No. 16 Page No. 23 of Paper Book, the Assessee had responded vide letter dated 18.11.2023 Page No. 28 of Paper Book giving complete details of donations filed to another charitable society for educational purpose of school building construction and also filed confirmation from doneee Page No. 32 and 33 of Paper Book. The essential conditions contemplated under Explanation 2 to Section 11(1) is absent in this case and legally donation constitute a non-corpus donation as a matter of fact. Moreover, the recipient of donation did not recognize the amount as corpus the donor cannot be utilizing as be subjected to Section 11(1)(d).
10. Regarding repayment of bank term loan of 2,00,00,357/- application of income by filing revised ITR during assessment proceedings. Ld. AO called for complete details of the loan from bank and the repayment vide notice dated 10.02.2024 Page No. 34, 37 of Paper Book. The Assessee provided complete details vide letter dated 14.12.2024 Page No. 38 to 46 of Paper Book. The revised computation was duly filed before Ld. AO during scrutiny proceedings is proved on record.
10.1. Hon’ble Supreme court in Malabar Industrial Company Vs. CIT Standard it is held that Section 263 of the Act cannot be used for a mere difference of opinion, it must be used when an order is passed without applying the relevant provisions of the Act.
11. In view of above material facts of examination, analysis of the both the issues by Ld. AO and above well settled principle of law it is sufficient to hold that the exercise of power under Section 263of the Act by Ld. CIT(E) in passing impugned order dated 31.03.2026 being illegal is set aside. Grounds of Appeal are allowed.
12. In the result, appeal filed by the Assessee is allowed.
Order pronounced in the open court on 12th November, 2026
