Inter Gold (India) Private Limited Vs PCIT (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has delivered a significant ruling in favor of Inter Gold (India) Private Limited, setting aside a revisionary order issued by the Principal Commissioner of Income Tax (PCIT) for the Assessment Year 2018-19. The Tribunal’s decision, pronounced today, restores the original assessment order passed by the Assessing Officer (AO), concluding that it was neither erroneous nor prejudicial to the interest of the Revenue.
The case stemmed from an appeal filed by Inter Gold (India) Private Limited against the PCIT’s order dated November 3, 2023, which had invoked Section 263 of the Income Tax Act, 1961. The PCIT’s intervention followed a complete scrutiny assessment where the AO had initially accepted the company’s return of income after detailed inquiries. The PCIT’s show-cause notice under Section 263 was based on three primary grounds, alleging that the AO failed to adequately examine:
- A claim of Rs. 25,47,175/- as donation under Section 80G, purportedly related to Corporate Social Responsibility (CSR) activities.
- Bank charges amounting to Rs. 1,13,95,084/-.
- Provisions aggregating to Rs. 3,37,39,599/-, which included provisions for gratuity, leave salary, and tax.
Assessee’s Defense and PCIT’s Contentions
Inter Gold (India) Private Limited, represented by its counsel, presented detailed submissions to both the PCIT and later the ITAT. Regarding the Section 80G claim, the company clarified that while it had incurred CSR expenses of Rs. 50,94,350/-, it had not claimed this amount as a revenue expenditure under Section 37(1) of the Act. Instead, a portion of this amount was given as a donation to Rosy Blue Foundation, an entity recognized under Section 80G. The assessee argued that the AO had specifically examined this issue and accepted the Section 80G deduction. They cited various Tribunal decisions and referred to the Ministry of Corporate Affairs’ (MCA) FAQs (General Circular No. 01/2016 dated January 12, 2016, FAQ No. 6), which clarified that while CSR expenditure itself is not a business deduction, donations made to eligible institutions under other sections of the Income Tax Act, such as Section 80G, could still qualify for deduction if conditions are met. The assessee further emphasized that Section 37(1) and Section 80G operate independently, and the disallowance under Section 37(1) does not automatically preclude a deduction under Section 80G unless specifically provided, such as for contributions to “Swacha Bharat Kosh” or “Clean Ganga Fund” under Section 80G(2)(a)(iiihk) and (iiihl), which were not applicable in this case.
