WorldQuant Research (India) Private Limited Vs PCIT (ITAT Mumbai)
AO’s view on CSR Expenditure allowable u/s 80G is plausible – No ground for 263 Revision; ITAT Mumbai quashes Sec 263 revision on CSR donation & deduction u/s 80G: Calls it debatable Issue
Mumbai ITAT quashed the revisionary order passed by PCIT u/s 263, which had held the original assessment order as erroneous for allowing CSR expenditure as donation deductible u/s 80G.
The company had spent ₹29.95 lakh on CSR activities, out of which it claimed ₹14.97 lakh as deductible donation u/s 80G. AO completed assessment u/s 143(3) on 06.09.2022, allowing the deduction. Later, based on an audit objection, the PCIT initiated revision proceedings u/s 263, arguing that CSR expenses are not allowable as business expenditure u/s 37(1) & that allowing 80G deduction on such expenditure would create a loophole shifting statutory obligation to the exchequer.
ITAT observed that the issue of allowability of CSR donation under Section 80G is highly debatable. Several coordinate bench decisions were cited, supporting such deduction. Since a plausible view was already taken by the AO, the PCIT’s view amounted to a mere change of opinion. Therefore, Section 263 jurisdiction was invalidly invoked.
Judicial Precedent: In ITA No. 3575/Mum/2025 for A.Y. 2020–21, the Mumbai Tribunal in the case of Abhay Ispat (India) Pvt. Ltd. vs. PCIT, vide order dated 05.08.2025, held similarly.
