GSP Crop Science Ltd. Vs PCIT (ITAT Ahmedabad)
Section 263 Can’t Be Invoked Without Specific Error: Mere Verification Direction Not Enough- ITAT Ahmedabad Quashes 263 Revision
Assessee had filed return declaring income of Rs.11.55 crore. Assessment was completed u/s 143(3) r.w.s. 144B on 29.09.2022 at Rs.11.84 crore after making addition of Rs.28.55 lakh u/s 40(a)(ia). Subsequently, PCIT examined records & held the assessment to be erroneous & prejudicial to the interest of Revenue, invoking jurisdiction u/s 263.
PCIT noted four issues:
- Weighted deduction u/s 35(2AB) of Rs.2.30 crore allowed by AO without verifying Form 3CL;
- Additional depreciation – Assessee claimed Rs.12.05 lakh as balance 50% depreciation of earlier year’s assets; AO failed to adjust WDV leading to alleged excess claim of Rs.1.80 lakh;
- CSR expenses – Deduction claimed u/s 80G for CSR donations, which PCIT directed to disallow;
- Set-off of unabsorbed depreciation – AO allegedly allowed excess set-off requiring verification.
PCIT, without giving conclusive findings, set aside order directing AO to re-verify these issues.
Before Tribunal, AR contended that:
- Form 3CL was duly available & furnished even in 263 proceedings, yet PCIT ignored it;
- Claim of additional depreciation was correctly made as per s.32(1)(iia);
- CSR donations made through eligible trusts are allowable u/s 80G, supported by Tribunal precedents;
- On unabsorbed depreciation, PCIT himself admitted explanation of Assessee had merit, yet still remanded for verification.
Tribunal observed that PCIT failed to point out any specific error or establish prejudice to Revenue. Directions for mere verification cannot justify invocation of s.263. On merits, Tribunal noted: deduction u/s 35(2AB) was supported by Form 3CL, claim of depreciation was plausible & duly examined, CSR donations eligible under s.80G are allowable even if forming part of CSR obligations, and unabsorbed depreciation issue was explained. Reliance was placed on Comtrade Commodities Services Ltd. Vs PCIT [2023] 156 taxmann.com 369 (ITAT Ahmedabad) & PCIT Vs Vimla Infrastructure (India) (P.) Ltd. [2025] 176 taxmann.com 78 (Chhattisgarh HC). Accordingly, Tribunal held that PCIT’s order u/s 263 was unsustainable & quashed the same. The original assessment order was restored. Thus, the appeal of Assessee was allowed.
