Blueberry Trading Company Private Limited Vs PCIT (ITAT, Mumbai Bench)
PCIT Cannot Turn “Enquiry Made” into “Enquiry Missing”: Revision u/s 263 Over CSR Deduction u/s 80G Quashed
Return, Scrutiny & CSR Contribution
Blueberry Trading Company Private Limited filed its return of income for AY 2022-23 on 7 November 2022, declaring a total income of ₹2,65,65,270. The case was selected for complete scrutiny, inter alia, because of the large deduction claimed under Chapter VI-A.
The assessment was completed u/s 143(3) r.w.s. 144B on 9 March 2024, accepting the returned income.
The assessee had incurred expenditure of ₹11,29,000 towards its corporate social responsibility obligations u/s 135 of the Companies Act, 2013. Since CSR expenditure is not allowable while computing business income, the assessee had itself added back the amount in its computation.
However, as the contribution had been made to an eligible institution, the assessee separately claimed a 50% deduction u/s 80G amounting to ₹5,64,500.
PCIT’s Objection u/s 263
On examining the assessment records, the PCIT took the view that CSR expenditure was incurred pursuant to a mandatory statutory obligation u/s 135 of the Companies Act, whereas a donation contemplated u/s 80G was ordinarily voluntary.
According to the PCIT, expenditure undertaken to discharge a compulsory CSR obligation could not assume the character of a voluntary donation merely because the payment was made to an institution approved u/s 80G.
