Dalal And Broacha Stock Broking Pvt. Ltd. Vs PCIT -4 (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai has quashed a revision order issued by the Principal Commissioner of Income Tax (PCIT)-4, Mumbai, for the assessment year 2020-21. The PCIT had invoked Section 263 of the Income-tax Act, 1961, to revise an assessment order related to Dalal And Broacha Stock Broking Pvt. Ltd.’s claim for deduction under Section 80G on Corporate Social Responsibility (CSR) expenses. The ITAT ruled that the original assessment order was neither erroneous nor prejudicial to the interest of the revenue, thereby invalidating the PCIT’s revision.
Dalal And Broacha Stock Broking Pvt. Ltd., engaged in share broking and trading, had filed its return declaring an income of ₹12.274 crore for A.Y. 2020-21. The case was selected for scrutiny specifically due to a large deduction claimed under Section 80G. The Assessing Officer (AO), after due inquiry and considering the assessee’s replies, had disallowed a certain portion of the Section 80G deduction, but accepted the rest in the assessment order dated September 27, 2022.
However, the PCIT initiated revision proceedings under Section 263, issuing a show cause notice to the assessee on two grounds:
1. Eligibility for Section 80G deduction under the concessional tax regime of Section 115BAA of the Act.
2. The claim of 50% deduction under Section 80G on CSR expenditure amounting to ₹38,15,000. The PCIT’s view was that CSR expenses, being mandatory under the Companies Act, 2013, should not be eligible for Section 80G deduction, as this would amount to an unintended subsidization by the Legislature.
In its reply dated February 14, 2025, Dalal And Broacha Stock Broking Pvt. Ltd. clarified that its case was indeed scrutinised on the issue of Section 80G claims. The assessee had donated ₹38,15,000 and claimed a 50% deduction of ₹19,07,500. The company confirmed that it had opted for the concessional tax rate under Section 115BAA and filed Form 10IC. It further stated that during the original assessment, all details of donations to various charitable institutions/trusts were furnished, and the AO, after examining the matter, had only disallowed a specific donation to Urvashi Foundations due to the lack of 80G approval, effectively allowing the balance. The assessee argued that Section 115BAA, for A.Y. 2020-21, did permit Section 80G deductions. Without prejudice, the assessee also cited numerous judicial pronouncements that supported the eligibility of Section 80G deduction for CSR expenses.
