Ruby Mills Ltd Vs PCIT (ITAT Mumbai)
Assessee company challenged a revisionary order passed u/s 263 buy which PCIT had set aside the completed assessment u/s 143(3), directing a fresh assessment to disallow CSR-related donations claimed u/s 80G. PCIT held that CSR expenditure is statutorily mandated & not voluntary, hence not eligible u/s 80G. Citing Explanation 2 to section 263, PCIT viewed the assessment as erroneous & prejudicial to revenue & directed reassessment.
On appeal, Tribunal noted that AO while passing the assessment order made various disallowances. Though there is no discussion about the issue identified by PCIT while exercising his jurisdiction u/s 263, Vide notices u/s 142(1) AO sought explanation on various issues including on the deduction u/s 80G along with supporting documents. In reply, Assessee furnished various details including the detail of examination claimed u/s 80G. Assessee also furnished receipt of donations & explained that they have claimed deduction of 50% of total donation. Though AO has not made such references in the assessment order, he has impliedly accepted the explanation offered by assessee.
Tribunal ruled that in accepting the claim of donation u/s 80G @ 50% of total donation in the assessment order is not erroneous as the action of AO is legally sustainable view. The twin conditions prescribed u/s 263 is not fulfilled in the present case. As the pre-requisite conditions for exercising jurisdiction u/s 263 has not meet out in , Tribunal quashed/set aside the 263 order
