VAL ORGANICS PVT. LTD., MUMBAI V. DCIT 4(3)(1), MUMBAI

ITA 1603/MUM/2023

AI Insights

Val Organics Pvt. Ltd. appealed against the order passed by the CIT(A)-4, Mumbai, which was dated 30.03.2023 for the assessment year 2018-19. The primary contention was regarding the reopening of the assessment under section 263 of the Income Tax Act and the disallowance of a deduction under section 80G amounting to Rs.18,83,000, which was claimed for CSR activities. The CIT had found the original assessment to be erroneous and prejudicial to the interest of the revenue due to several reasons including the lack of separate books of accounts for each unit claiming deduction under section 80IA, and the absence of documentary evidence for the deduction under section 80G. The Tribunal, after hearing both parties, decided to restore the matter concerning the deduction under section 80G to the assessing officer for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130144 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: F
• Next Hearing Date: 17-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 08-05-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 143(3); 80G; 80IA

Judgement Text

P a g e | 1 ITA No.1603/Mum/2023 Val Organics Pvt.Ltd. Vs. DCIT, C-4(3)(1) IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1603/Mum/2023 (A.Y. 2018-19) Val Organics Pvt. Ltd. Plot No. 95, Chadha Building, Wadala, Mumbai – 400031 Vs. Dy. Commissioner of Income Tax, Circle 4(3)(1) Room No. 649, 6 th Floor, Aaykar Bhavan, M.K. Road, Mumbai - 400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACV4456E Appellant .. Respondent [ Appellant by : Shekhar Gupta Respondent by : Ms. Zeenia Handa Date of Hearing 18.07.2023 Date of Pronouncement 24.07.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A)-4, Mumbai, dated 30.03.2023 for A.Y. 2018- 19. The assessee has raised the following grounds before us: “1. The learned Principal CIT has erred in law and on the facts of the case in reopening the assessment u/s. 263 of the Income Tax Act. 2. The learned Principal CIT has erred in law and on the facts of the case in holding that the deduction u/s. 80G to the extent of Rs.18,83,000/- was not allowable since the amount was spent on CSR activities. 3. The assessee craves leave to add, alter or amend the above grounds of appeal.” P a g e | 2 ITA No.1603/Mum/2023 Val Organics Pvt.Ltd. Vs. DCIT, C-4(3)(1) 2. Fact in brief is that assessment u/s 143(3) was finalised on 26.02.2021. Subsequently, the ld. PCIT, Mumbai-4, on examination of the record observed that assessment order passed u/s 143(3) of the Act on 26.02.2021 by the assessing officer is erroneous insofar as it is prejudicial to the interest of the revenue because of the following reasons: “i. On perusal of case record, it is seen that assessee has claimed deduction u/s 80IA of the Act to the tune of Rs. 85,46,370/- in respect of windmill at Umergaon, Gujarat. One of the mandatory conditions for claiming deduction u/s 801A(4)(iv) and its allowance is maintenance of separate books of accounts in respect of each enterprise/unit in respect of which such deduction is claimed. On perusal of the Form No. 10CCB filed by the assessee, it is seen that Audited Financials of the Umbergaon Unit have not been furnished Instead, the audited P&L pertaining to unit at Jamnagar has been submitted. Also, the working of the deduction has not been furnished. Thus, the deduction u/s 801A(4)(iv) has been allowed without the mandatory financials of the enterprise/undertaking ii. A sum of Rs. 39,02,100/- debited in P&L under the head "Donation" has not been added back by assessee in its computation of income in the ITR- 6 Further, the assessee has claimed and allowed deduction under Chapter VIA of Rs.18,83,000/- u/s 80G of the Act. However, no documentary evidence in support of the claim has been filed by the assessee. The deduction has been allowed to the assessee without any documentary evidence in support of the claim. iii. The Assessing Officer has allowed the deduction to the assessee u/s 80IA(4)(iv) & 80G without the mandatory financials of the enterprise/undertaking & without any documentary evidence in support of the claim being submitted respectively. Further, the sum of Rs.39,02,100/- debited in the P&L under the head "Donation" has not been added back by assessee in its computation of income in the ITR-6. iv. The failure of the Assessing Officer to make the enquiries which were warranted under the facts and circumstances of the case and under the provisions of law have rendered the assessment order dt 26.02.2021as erroneous in so far it is prejudicial to the interest of revenue.” In view of the aforesaid reasons the ld. CIT(A) has issued show cause notice to the assessee on 22.02.2023 to show cause as to why action u/s 263 should not be taken, considering the above referred issues in para 2(1) to 2(iv) of this order. In response, with regard to deduction u/s 80IA of Rs.85,46,370/- the assessee submitted that it had put up the P a g e | 3 ITA No.1603/Mum/2023 Val Organics Pvt.Ltd. Vs. DCIT, C-4(3)(1) wind mill at 322/P10, village Machharda, Takuka Kalavad, District Jamnagar on 25.03.2010 and the office address of the assessee company is mentioned as plat no. 2201, GIDC Sarigam, Umbergaon Dist. Valsad, Gujarat, which is also mentioned in the Form 10CCB and assessee claimed deduction u/s 80IA(4)(iv) and it has filed the copy of form 10CCB along with copy of certificate of commissioning of wind mill issued by Gujarat Energy Development Agency and profit and loss account on wind mill at Jamnagar for which assessee has claimed deduction u/s 80IA(4)(vi) of the Act. After considering the aforesaid submission of the assessee the ld. Pr.CIT has accepted the claim of deduction u/s 80IA(4)(iv) allowed to the assessee. 3. With regard to the donation of Rs. 39,02,100/- debited to the P.S.L A/c the assessee submitted copy of computation and copy of ITR showing that total amount of Rs.39,02,100/- has been added back in computation of income under the head donation of Rs.132,100/- and CSR expenses of Rs.37,70,000/-. The ld. Pr.CIT has also accepted the aforesaid submission of the assessee. 4. However, with regard to the claim of deduction u/s 80G of Rs.18,83,000/- the ld. Pr. CIT has not agreed with the submission of the assessee. The ld. Pr. CIT was of the view that CSR expenses (Corporate Social Responsibility) does not qualify for deduction u/s 80G of the Act. Therefore, the ld. Pr. CIT held that order passed u/s 143(3) dated 26.02.2021 is erroneous insofar it is prejudicial to the interest of revenue. 5. Heard both the sides and perused the material on record. On perusal of the computation of total income filed by the assessee in the paper book it is noticed that assessee has claimed deduction u/s 80G in respect of donations given as per the detail mentioned in the note to P a g e | 4 ITA No.1603/Mum/2023 Val Organics Pvt.Ltd. Vs. DCIT, C-4(3)(1) the computation income to the amount of Rs.18,83,000/-. We could not find any material on record to demonstrate that during the course of assessment proceedings the AO has examined the claim of deduction made as per provision of section 80G of the Act. Therefore, we restore this issue to the limited extent of verification of conditions for allowability of deduction in accordance with the provision of Section 80G of the Act to the file of the assessing officer. Therefore, the appeal of the assessee is partly allowed for statistical purposes. 6. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 24.07.2023 Sd/- Sd/- (Amit Shukla) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 24.07.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.