Hapag Lloyd India Private Limited Vs PCIT (ITAT Mumbai)
Debatable Issue Beyond 263 Jurisdiction- CSR Donation to Approved Entity Eligible for 80G: ITAT Mumbai Quashes 263 Order- Revisionary Powers Cannot Deny 80G on CSR- CSR Expenses Not Deductible u/s 37(1), But 80G Relief Available if Donated to Approved Trust
Hapag Lloyd India Pvt. Ltd. filed appeal against revisionary order u/s 263 passed by PCIT for AY 2020-21. Assessee had filed return declaring income of ₹10.73 Cr. AO completed assessment u/s 143(3) r.w.s. 144B on 05.09.2022, accepting returned income.
PCIT, while examining records, noticed that Assessee had incurred CSR expenses of ₹35.58 Lakh, added back in computation, but claimed 50% deduction of ₹17.69 Lakh u/s 80G. He held that CSR being not allowable u/s 37(1), AO wrongly allowed deduction u/s 80G. He also noticed sundry balance write back of ₹84,742 not considered u/s 41(1). However, after Assessee’s explanation that sundry balance was already offered, he dropped that issue. On 80G claim, he set aside assessment directing AO to disallow & initiate penalty.
Tribunal observed that there is no bar in section 80G against allowing deduction for CSR contributions, provided donation is made to an institution approved u/s 80G. Since donee’s approval was not in dispute, AO’s order allowing deduction could not be termed erroneous or prejudicial. At best, it was a debatable issue where two views were possible. Tribunal also noted several coordinate bench rulings (RPG Life Sciences Ltd., Elan Pharma, Stulz-CHSPL India, Vistex Asia Pacific Pvt. Ltd.) holding CSR donations to approved entities as eligible u/s 80G.
