Morgan Stanley India Company Private Limited Vs PCIT (ITAT Mumbai)
ITAT Mumbai has set aside the order passed by PCIT u/s 263 & restored the assessment order passed by AO. The Tribunal held that once AO had made inquiries on CSR expenditure & 80G deduction & had accepted the claim after due verification, PCIT could not invoke revisionary jurisdiction u/s 263 merely on the basis of Revenue Audit objection.
The Assessee had filed return declaring total income of Rs.5347.41 crores which was processed u/s 143(1). Assessment was later framed u/s 143(3) r.w.s. 144C(13) on 29.07.2022 at Rs.5387.08 crores. During the course of scrutiny, AO had issued specific queries regarding deduction claimed u/s 80G & CSR expenses of Rs.7.34 crores. The Assessee had furnished detailed replies with break-up of donations, receipts & computation of eligible deduction of Rs.3.62 crores u/s 80G. After considering the submissions, AO accepted the claim. However, PCIT in order dated 21.03.2025 invoked section 263 holding that CSR expenditure cannot be allowed as donation since it lacks voluntariness & directed AO to re-examine the claim.
The Tribunal noted that the record clearly showed AO had raised queries on CSR expenditure & 80G deduction, to which the Assessee had replied with full details & documentary evidence. The claim was therefore examined during assessment. The contention of PCIT that AO had moved on incorrect assumption of fact was rejected. ITAT observed that once inquiry was made & a plausible view taken, revision u/s 263 was not justified. The Bench relied on its recent decisions in Mahansaria Enterprises (P) Ltd. Vs. PCIT [2025] 175 taxmann.com 885 (Mum-Trib) & Chandan Steel Ltd. Vs. PCIT [ITA No.3444/Mum/2025, order dated 15.09.2025] where in similar circumstances 263 revisions on CSR linked 80G claims were quashed.
