POLYNOVA INDUSTRIES LIMITED,MUMBAI V. DCIT 14(1)(1), MUMBAI

ITA 2982/MUM/2025

AI Insights

The case revolves around the appeal by Polynova Industries Limited against the revision order passed by the Principal Commissioner of Income Tax, which deemed the original assessment order as erroneous and prejudicial to the interests of the Revenue concerning the deduction claimed for Corporate Social Responsibility (CSR) expenditures under section 80G of the Income Tax Act. The Principal Commissioner contended that CSR expenditures, being statutory obligations, do not qualify as voluntary donations and thus should not be eligible for deductions under section 80G. The Tribunal, however, found that the Assessing Officer had adequately examined the issue during the assessment proceedings and that the legal interpretation allowing such deductions was plausible and supported by judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 653216 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2020-2021
• Other Referred Cases: Commissioner of Expenditure Tax v. P.V.G. Raju of Vizianagaram, Agilent Technologies (International) Pvt. Ltd. v. ACIT, FNF India Private Limited v. ACIT, JMS Mining Private Limited v. PCIT, Goldman Sachs Services Pvt Ltd v. JCIT, V-Con integrated solutions Private Limited v. CIT, Malabar Industrial Co. Ltd. v. Commissioner of Income-tax, Max India Ltd. v. CIT, Escorts Skill Development v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.A. DHYANI
• Assessee Lawyers: RAJAN VORA; PALAK MEHTA
• Keywords: Set aside; Business income; Opportunity of being heard; Business expenditure; Audit objection; Assessment record; CHAPTER IV; Ineligible deduction
• Section: 143(3); 142(1); 263; 12AA; 37; 37(1); 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 2982/MUM/2025 Assessment Year: 2020-21 Polynova Industries Limited 159, CST Road, Kalina, Santacruz East, Mumbai- 400098 Vs. DCIT 14(1)(1) Aayakar Bhavan,4th Floor, Mumbai- 400001 PAN NO. AABCL 0864 D Appellant Respondent Assessee by : Mr. Rajan Vora & Ms. Palak Mehta Revenue by : Mr. R. A. Dhyani, CIT-DR Date of Hearing : 11/06/2025 Date of pronouncement : 19/06/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against the revision order dated 22.03.2025 passed by the learned Principal Commissioner of Income Tax, Mumbai-6 (hereinafter referred to as ‘the ld. PCIT’), whereby the assessment order passed by the Assessment Unit of the Income Tax Department for the assessment year 2020-21 was held to be erroneous in so far as it was Polynova Industries Limited 2 ITA No. 2982/MUM/2025 prejudicial to the interests of the Revenue. The grounds raised by the assessee are reproduced as under: “The appellant objects to the order dated 22 March 2025 passed by the Principal Commissioner of Income-tax, 6, Mumbai for the aforesaid assessment year on the following among other grounds: 1. The order passed by the learned Principal Commissioner of Income-tax under section 263 is ultra vires and contrary to the provisions of law and therefore ought to be quashed. 2. The learned Principal Commissioner of Income-tax ought to have appreciated that the learned Assessing Officer had raised queries with respect to deductibility of Corporate Social Responsibility (CSR) expenses of Rs.5,00,000 and made proper enquiries and going through the appellant submissions during the assessment proceedings had allowed deduction under section 80G of the Income Tax Act on the aforesaid amount of CSR expenditure. 3. The learned Principal Commissioner of Income-tax ought to have appreciated that the learned Assessing Officer had adopted one of the plausible views and therefore the power of revision under section 263 cannot be exercised. 4. The learned Principal Commissioner of Income-tax thus erred in assuming jurisdiction under section 263 of the Income-tax Act. 5. The learned Principal Commissioner of Income-tax erred in setting aside the assessment order dated 27 September 2022 made under section 143(3) of the Income-tax Act and in directing the Assessing Officer to reframe the assessment. 6. The learned Principal Commissioner of Income-tax erred in invoking the provisions of section 263 and holding that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. 7. The learned Principal Commissioner of Income-tax ought to have appreciated that CSR expenditure of Rs.5,00,000 represents the payments that are made to eligible entities as listed in Section 80G of the Act. 8. Each one of above grounds of appeal is without prejudice to the other. 9. The appellant craves leave to add, alter or amend to the above grounds of appeal.” Polynova Industries Limited 3 ITA No. 2982/MUM/2025 2. Briefly stated, the facts of the case are that the assessee company filed its return of income for the assessment year under consideration on 20.01.2021, declaring a total income of ₹14,68,94,980/-. The said return was processed under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), and the total income was adjusted to ₹14,69,27,010/-. Thereafter, a scrutiny assessment under section 143(3) of the Act was completed on 27.09.2022, wherein the income as determined under section 143(1) of the Act was accepted. 2.1 Subsequently, an internal audit of the case was undertaken by the Audit Wing of the Income-tax Department, which raised an objection to the effect that the assessee was not eligible to claim deduction under section 80G of the Act in respect of expenditure incurred towards Corporate Social Responsibility (CSR). 2.2 In view of the audit objection, the learned Principal Commissioner of Income-tax (PCIT) called for the assessment records. Upon examination thereof, the learned PCIT formed the opinion that the assessment order was erroneous in so far as it was prejudicial to the interest of the Revenue, particularly with respect to the allowance of deduction under section 80G of the Act for CSR expenditure. The learned PCIT, invoking Explanation 2 to section 263 of the Act, which deems an order as erroneous where there is a lack of enquiry or inadequate enquiry, issued a show cause notice under section 263 of the Act. Polynova Industries Limited 4 ITA No. 2982/MUM/2025 2.3 In response, the assessee submitted that the Assessing Officer had indeed examined the allowability of the CSR expenditure under section 80G and had allowed the same after due consideration of the judicial precedents relied upon by the assessee, including certain decisions of the Income-tax Appellate Tribunal. However, the learned PCIT was not persuaded by the explanation furnished. He was of the view that CSR expenditure, being a statutory obligation under section 135 of the Companies Act, 2013, lacks the element of voluntariness that is a sine qua non for qualifying as a donation eligible for deduction under section 80G. In support of this view, the learned PCIT placed reliance on the judgment of the Hon’ble Supreme Court in Commissioner of Expenditure Tax v. P.V.G. Raju of Vizianagaram [(1967) 1 SCR 1017], wherein it was held that only voluntary contributions qualify as donations. 2.4 The learned PCIT further held that the decisions of the Tribunal cited by the assessee were distinguishable on facts and not applicable to the present case in light of the binding precedent of the Hon’ble Supreme Court. He also referred to the decision of the Delhi Bench of the Tribunal in Agilent Technologies (International) Pvt. Ltd. v. ACIT [(2024) 160 taxmann.com 238], wherein it was similarly held that CSR expenditure does not qualify for deduction under section 80G. Additionally, reliance was placed on Circular No. 1/2016 issued by the Ministry of Corporate Affairs, which clarifies that CSR expenditure does not enjoy any specific tax Polynova Industries Limited 5 ITA No. 2982/MUM/2025 exemption under the Act. The learned PCIT also drew attention to the specific exclusions contained in section 80G in respect of contributions to certain CSR-related funds such as the ‘Swachh Bharat Kosh’ and the ‘Clean Ganga Fund’, to bolster his conclusion that CSR expenses are not deductible under the said provision. Accordingly, the ld. PCIT, held the assessment order as erroneous insofar as prejudicial to the interest of the revenue observing as under: “6.6 Further, the Companies Act, 2013 mandates CSR spending as a statutory obligation, not as a voluntary donation. Therefore:  CSR expenses are not made out of free will but in compliance with statutory provisions.  Allowing deductions under Section 80G for CSR expenses would lead to double benefits-once by allowing it as a deduction and again by fulfilling a statutory obligation.  Claim of deduction by the assessee with regard to CSR expenses and allowance of such expenditure will result into wastage of entire effort of the legislature to treat CSR expenditure as appropriation of profit after tax. It will be against the spirit of law and the intention of the legislature.  The Income Tax Act, through Explanation 2 to Section 37(1), already disallows CSR expenses from business income, reinforcing the position that they do not qualify for deductions under other provisions. In view of the above, I am of the considered opinion that the assessment order passed by the Assessing Officer u/s.143(3) r.w.s 144B of the Act dated 27.09.2022, is erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, the said assessment order passed by the Assessing Officer is set-aside on the issue of claim of deduction under section 80G of the Act of CSR expense amounting to Rs.2,50,000/-. The AO is directed to make an enquiry in this matter and re-assess the income after giving an opportunity of being heard to the assessee.” Polynova Industries Limited 6 ITA No. 2982/MUM/2025 3. Before us, the learned counsel for the assessee placed reliance on a paper book comprising pages 1 to 58. Drawing our attention to the computation of business income placed at page 2 of the said compilation, it was submitted that the assessee had already disallowed the expenditure of ₹5,00,000 incurred on Corporate Social Responsibility (CSR) activities while computing its business income and had thereafter claimed 50% of the said amount as a deduction under section 80G of the Act. 3.1 The learned counsel further referred to pages 10 and 11 of the paper book, being the tax audit report furnished in Form No. 3CD, and pointed out that both the CSR expenditure and the corresponding claim under section 80G were clearly disclosed therein. It was thus contended that there was full and true disclosure of all relevant particulars before the Assessing Officer during the course of the assessment proceedings. 3.2 Our attention was next drawn to pages 39 to 42 of the paper book, containing the questionnaire issued under section 142(1) of the Act dated 06.12.2021, wherein a specific query was raised by the Assessing Officer calling upon the assessee to justify the claim of deduction under section 80G in respect of CSR expenditure. It was submitted that in response to the said query, the assessee furnished a detailed reply, which is on record at pages 43 to 50 of the paper book. In the said submission, the assessee not only placed on record the donation receipts and the certificate issued Polynova Industries Limited 7 ITA No. 2982/MUM/2025 under section 80G by the donee organization, but also cited in support the decisions of the Bangalore Bench of the Income-tax Appellate Tribunal in FNF India Private Limited v. ACIT [(2021) 85 ITR (T) 18 (Bang.)] and the Kolkata Bench in JMS Mining Private Limited v. PCIT [(2021) 136 taxmann.com 118 (Kol-Trib.)], wherein it was held that CSR expenditure, except contributions made to the 'Swachh Bharat Kosh' and the 'Clean Ganga Fund', may be eligible for deduction under section 80G of the Act. 3.3 In light of the above, the learned counsel contended that a full-fledged enquiry was conducted by the Assessing Officer on the very issue now sought to be revised, and hence, the invocation of Explanation 2 to section 263 of the Act—on the ground of lack of enquiry or inadequate enquiry—was unwarranted. It was further submitted that the issue under consideration is one on which two views are reasonably possible, and the Assessing Officer had taken a view which is legally tenable. In such circumstances, it was urged that the assessment order cannot be termed as erroneous insofar as it is prejudicial to the interest of the Revenue.\" 4. The learned DR on the other hand submitted that the Assessing Officer has passed a cryptic assessment order without discussing the issue arising from the return of income including the issue of eligibility of claim of CSR under section 80G of the Act. He accordingly relied on the order of the learned PCIT. Polynova Industries Limited 8 ITA No. 2982/MUM/2025 5. In rejoinder the learned counsel for the assessee relied on the decision of the Hon’ble Supreme Court in the case of V-Con integrated solutions Private Limited reported in (2025) 173 taxmann.com 774(SC) wherein it is held that a superficial and random investigation by the Assessing Officer may justify a remit, albeit, the Commissioner of Income-tax must record the abject failure and lapse on the part of the Assessing Officer to establish both error and the prejudice caused to the Revenue. 6. We have heard the rival submissions advanced by the parties and have perused the material available on record. The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. v. Commissioner of Income-tax [(2000) 243 ITR 83 (SC)] has categorically laid down that for the invocation of revisional jurisdiction under section 263 of the Act, the order of the Assessing Officer must be both ‘erroneous’ and ‘prejudicial to the interests of the Revenue’. Unless both these conditions are satisfied cumulatively, the provisions of section 263 cannot be validly invoked. 6.1 In the present case, the learned Principal Commissioner of Income-tax (PCIT) has held the assessment order to be erroneous and prejudicial to the interests of the Revenue on two grounds. First, reliance has been placed on Explanation 2 to section 263 of the Act, which provides that an order shall be deemed to be erroneous and prejudicial to the interests of the Revenue if the Assessing Officer has failed to conduct enquiries or verification Polynova Industries Limited 9 ITA No. 2982/MUM/2025 which ought to have been made in the facts and circumstances of the case. Second, the learned PCIT has taken the view that the decision of the Assessing Officer in allowing the claim of deduction under section 80G in respect of CSR expenditure was legally unsustainable, and therefore constituted an error of law. 6.2 With respect to the first ground, we find merit in the contention advanced on behalf of the assessee. The learned counsel has brought on record the disclosures made in the return of income and the tax audit report, which clearly reflected the treatment of CSR expenditure and the corresponding claim under section 80G. Furthermore, reference was made to the questionnaire issued under section 142(1) of the Act, wherein the Assessing Officer had specifically raised a query on this very issue. The assessee, in response, furnished a detailed explanation along with supporting documents including donation receipts and certificates issued under section 80G, as well as judicial precedents in support of its claim. These facts demonstrate that the Assessing Officer had indeed examined the matter during the assessment proceedings. The relevant part of the query raised by way of notice dated 06/12/2021 under section 142(1) of the Act, which is available on paper book page 41, is reproduced for ready reference “III. With Reference to the Corporate Social Responsibility (CSR) expenses, please provide the details with respect to Expenses incurred under CSR in the below format for further clarity: a) Polynova Industries Limited 10 ITA No. 2982/MUM/2025 Sr. No. Name of the entity Amount Paid Whether 80G claimed Copy of 80G certificate of the entity to the annexed if 80G has been claimed b) In case you have claimed 80G deduction out of the CSR expenditure please explain why the same should not be disallowed. It is pertinent to mention that the expenditure on CSR activities is not allowed as deduction from the profit of the company. The expenditure on CSR is considered as appropriation of profit. c) Furnish complete details regarding CSR policy of the company as mandated by section 135 of the Companies Act, 1956. Also furnish minutes of the meeting of CSR committee, details of decision taken by the CSR committee. Also furnish details of director's report attributable to CSR activities.” 6.3 Further, in response to the queries of the Assessing Officer, the assessee made submission before the Assessing Officer vide letter dated 28/12/2021 justifying the claim under the provisions of the law relying on the various decisions of the Tribunal. Relevant part of his reply, available on paper book pages 45 to 50 is reproduced as under: “Assessment order of Asst Year 2018- 19 is enclosed as Annexure E III) (a) Details of CSR expenditure- Sr. No. Name of the entity Amount Paid Whether 80G claimed Copy of 80G certificate of the entity to the Polynova Industries Limited 11 ITA No. 2982/MUM/2025 annexed if 80G has been claimed 1 Desh Bandhu and Manju Gupta Family Trust 5,00,000 Yes Attached, as Annexure F The above CSR expenses have been disallowed under Explanation 2 to sec.37(1) of the Act but claimed as deduction in accordance with the provisions of section 80G. The Central Board of Direct Taxes (\"CBDT\"), in one of its circulars, was of the opinion that \"CSR expenditure is not incurred for the purposes of carrying on business\" and therefore, CSR expenditure cannot be brought under the ambit of tax deduction. However, it was also mentioned that if the CSR expenditure falls under the realm of expenditures declared under section 30 to 36 of the Income Tax Act; it can be claimed as a tax deduction, provided that the conditions specified under section 30 to 36 are met. Similarly, at para 13.3 (pg 26) of Explanatory Notes to the Provision of Finance Act 2014 issued by CBDT vide Circular No 1/2015 (F. No. 142/13/2014-TPL) dated 21 January 2015 has clarified that the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfilment of conditions, if any, specified therein. Relevant Extract of the said CBDT Circular is attached at Annexure L. Provisions of sec 80G of the Act also do not contain any restriction for deduction for any donation related to CSR expenses except Clauses (iiihk) & (iiihl) of sub-section 2 of Section 80G of the Act which read as under: (iiihk) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013 (18 of 2013); Polynova Industries Limited 12 ITA No. 2982/MUM/2025 Or (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013) (18 of 2013).\" In the following judicial precedents, it was held that 80G deduction is eligible on expenditure which is disallowed as CSR:  The Bangalore Tribunal, in the case of FNF India (P.) Ltd v ACIT (2021) 85 ITR (T) 18 (BANGALORE) (TRIB)) believed that under section 80G of the Income Tax Act, 1961, the benefit of deduction can be given regardless of the contrasting explanations provided under section 37. Section 37 disallows tax deduction when calculated on \"income under business head and profession,\" whereas tax deduction under section 80G is sanctioned from the \"Total income of the assessee\", which includes both the business income as well as the income incurred other than business income. For claiming benefit under section 80G, deductions are considered at the stage of computing \"Total Taxable income\". Even if any payments under section 80G forms part of CSR payments (keeping in mind ineligible deduction expressly provided u/s. 80G), the same would already stand excluded while computing, income under the held \"income from Business and Profession\". The effect of such disallowance would lead to increase in Business income. Thereafter benefit accruing to assessee under Chapter VIA for computing \"Total Taxable income\" cannot be denied to assessee, subject to fulfilment of necessary conditions therein... Held: \"In our view, assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing Total Taxable Income\". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature.  JMS Mining Pvt Ltd v. PCIT [2021] 130 taxmann.com 118/190 ITD 702/91 ITR(T) 80 (Kol - Trib.) Polynova Industries Limited 13 ITA No. 2982/MUM/2025 \"Explanation 2 to section 37(1) which denies deduction for CSR expenses by way of business expenditure is applicable only to extent of computing business income' under Chapter IV-D and; it could not be extended or imported to CSR contributions which was otherwise eligible for deduction under Chapter VI; donation made by assessee company on account of corporate social responsibility to two funds/trusts which were duly registered under section 80G(5)(vi) was to be allowed as deduction under section 80G. 22. From a bare reading of the section 80G it is noted that deduction under this section has to be made in accordance with and subject to the provisions of this section i.e. section 80G. As per this section i.e. section 80G, an amount equal to fifty per cent (50 per cent) of the aggregate of the sums specified in sub-section (2) [refer sub-clause (iv) of clause (a) of Cub-section (2) of section 80G read with section 80G(1)(ii)] which allows the donation given to any other Fund or any institution to which this section applies and if it satisfies the requirement of sub- section (5) of section 80G, then 50 per cent of the donation is allowable expenditure [refer section 80G(1)(6)] even if the assessee has included the expenditure as CSR expenditure because there is no prohibition or restriction placed by the Parliament on such a donation even if shown as CSR expenditure. The reason for saying so is that in section 80G certain restrictions in respect of deduction in respect of two (2) donations are expressly seen in this section. So, the Parliament has expressed its intention clearly by bringing in restriction in respect of expenditure classified by an assessee company while claiming deduction under section 80G i.e. CSR expenditure related to Swachh Bharat Kosh and Clean Ganga Fund. So if an assessee makes some donation to these projects and include/classify it as CSR expenditure while claiming deduction under section 80G then it will be allowed only the amount that is other than the sums spent by the assessee in pursuance of CSR under section 135 of the Companies Act. In other words, if an assessee company spends only the mandatory expenditure of 2 per cent of net profit for CSR activity, which includes the amount of donation to Swachh Bharat Kosh & Clean Ganga Fund (iiihk) and (iiihi) of clause (a) of sub-section (2) of section 80G, then deduction under section 80G is not allowable, which can be illustrated by giving certain examples (infra). Polynova Industries Limited 14 ITA No. 2982/MUM/2025 However, in a cases scenario, wherein the assessee expends the mandatory expenditure and gives donation to these two projects i.e. over and above the mandatory CSR expenditure under section 135 of Companies Act, that sum donated to Swachh Bharat Kosh & Clean Ganga Fund will be eligible for 100 per cent deduction under section 80G [refer section 80G (1)(1) and subject to section 80G(4)]. However, such a restriction in respect of expenditure made by an assessee to any other fund or institution as referred to in sub-clause (iv), of clause (a) of sub-section (2) of section 80G had not been placed by the Legislature. And if the Parliament desired, it could have been made such kind of restriction or any restriction like in the case of donation to Swachh Bharat Kosh & Clean Ganga Fund. So the assertion of Pr. Commissioner that Assessing Officer could not have allowed deduction under section 80G to an assessee on the CSR expenditure/donation to an institution under section 80G(2)(a)(iv) which is enjoying certificate under section 80G(5) (vi), is erroneous and therefore cannot be accepted. For this, the interpretation maxim \"Expressio Unius Est Exclusio Alterius\" which is a Latin phrase that means \"express mention of one thing excludes all others\" is to be relied. This is one of the rules used in interpretation of statutes. The phrase indicates that items not on the list are assumed not to be covered by the statute. When something is mentioned expressly in a statute, it leads to the presumption that the things not mentioned are excluded. This is an aid to the construction of statutes. Applying the legal maxim 'expressio unius est exclusio alterius', it can be safely inferred that when the Legislature in particular has provided for only the above referred two specific exceptions in section 80G, then it is the implied intent of the Legislature to permit deduction under section 80G in respect of CSR contributions made to funds/organizations referred to in all other sub- clauses of section 80G [other than (iiihk) and (iiihl)] of the Act. 23. Since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund) has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under section 80G. In this context, it is found that the assessee has made donation Polynova Industries Limited 15 ITA No. 2982/MUM/2025 by RTGS through bank which is received by Shree Charity Trust which was approved under section 80G(5) (vi). The assessee has also made payment to Pt. Jashraj Music Academy Trust which is also approved under section 80G(5)(vi) and certificate given by Director (Exemption) is found placed. Therefore, since the assessee satisfies the condition under section 80G of the donees, the assessee's claim for deduction of CSR expenses/contribution under section 80G was allowed after enquiry by the Assessing Officer. Thus, the action of the Assessing Officer allowing the claim under section 80G is a plausible view. Therefore, the Pr. Commissioner has not been able to make out a case that on this issue raised by him, the Assessing Officer's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. Therefore, the usurpation of jurisdiction by the Pr. Commissioner under section 263 is bad in law and, therefore, need to be quashed.  Goldman Sachs Services Pvt Ltd v. JCIT [2020] 117 taxmann.com 535 (Bangalore-Trib.) 16. ............We are of the opinion that the A.O. has not made his observations clear that no CSR expenses are eligible for deduction under section 80G of the Act. We consider it appropriate to refer to the Clauses (iiihk) & (iiihl) of sub- section 2 of Section 80G of the Act which are read as under: \"(iiihk) the Swachh Bharat Kosh, set up by the Central Government, ether than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013 (18 of 2013), or (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013) (18 of 2013).\" Where these two exceptions are provided in section 80G of the Act, it can be inferred that the other contributions made under Polynova Industries Limited 16 ITA No. 2982/MUM/2025 section 135(5) of the Companies Act are also eligible for deduction under section 80G of Income-tax Act subject to assessee satisfying the requisite conditions prescribed for deduction under section 80G of the Act. In the present case the A.O. has not dealt on these aspects, prima facie, considered the contributions as not voluntary but a legal obligation and has accepted the genuineness of the contributions. We are of the opinion, that the matter has to be considered for examination and verification of facts subject to the assessee satisfying the requirements of claim under section 80G of the Act. Accordingly, we restore the entire disputed issues to the file of A.O. for fresh examination and verification as discussed above ………………. we allow the ground of appeal of the assessee for statistical purposes\"  First American (India) Pvt Ltd. v. ACIT (2020) 80 ITR (1) 538 (BANG)(TRIB)  Chapter VI-A benefits on expenses disallowed as they are forming part of CSR cannot be denied as that would lead to double disallowance - ITAT holds in favour of assessee, if the assessee is denied benefit of deduction u/s 80G, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature; Rejects revenue submission that, expenditure incurred by an assessee on activities relating to CSR referred to in section 135 of Companies Act, 2013 shall not be deemed to be an expenditure incurred by assessee for purpose of business or profession.  Allegis Services (India) v. ACIT (TS-5678-ITAT-2020 (BANGALORE)-0)] [Followed in FNF India Pvt. Ltd. p. ACIT [(2021) 85 ITR (7) 18 (BANGALORE)(TRIB))] 7. He submitted that out of total CSR expenses, sum amounting to Rs. 16,80,000/-was eligible for deduction under section 80G of the Act. It has been submitted that, donations made u/s 80G are eligible expenditure under section 80G of the Act and cannot be denied to assessee for purpose of computing taxable income in the hands of assessee. 8. Referring to section 80G(2)(iiihk) and (iiihl), Ld.AR submitted that, these are specific exclusion of certain payments which are categorised by legislature as part of Polynova Industries Limited 17 ITA No. 2982/MUM/2025 CSR responsibility, not eligible for exemption u/s 80G of the Act. He submitted that except for contribution under section 80G towards such Bharat Kosh and clean Ganga fund (being 80G(2)(iiihk) & (iiihl), all other payments are eligible for 80 G deductions. 13. From the Explanatory Memorandum to The Finance (No.2) Bill, 2014 it is clear that under Income tax Act, certain provisions explicitly state that deductions for expenditure would be allowed while computing income under the head, 'Income from Business and Profession to those, who pursue corporate social responsibility projects under sections 30, 31, 32, 33, 34, 35, 35AC, 35CCD, 36. 19. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act\" In Escorts Skill Development v. CIT [2019] 108 taxmann.com 53/178 ITD 32, the Delhi Tribunal allowed section 12AA and section 80G registration to a captive section 8 company, which was created to redeem CSR obligation of the parent. Thus, the Tribunal indirectly upheld that contribution of parent company to such a company will be eligible for section 80G and CSR obligation provided the conditions therein are met. In view of the above submission and judicial precedents, the assessee submits that claim of deduction under section 80G should allowed in respect of CSR expenses. (c) Following details are submitted, as requested: - i) CSR policy of the company, is attached as Annexure I ii) Minutes of meeting of CSR committee is attached as Annexure J iii) Details of directors report attributable to CSR activities, is attached as Annexure K. Thanking you, Yours faithfully, Polynova Industries Limited 18 ITA No. 2982/MUM/2025 For Polynova Industries Ltd Ramesh Kumar Khaitan (Ramesh Khaitan) Authorized signatory Senior VP-Taxation, Lupin Group Encl: Annexures A-L” 6.4 In light of the foregoing discussion, it is evident that the Assessing Officer had undertaken the requisite enquiries and verification warranted in the facts and circumstances of the case. Therefore, the invocation of Explanation 2 to section 263 of the Income-tax Act, 1961, by the learned Principal Commissioner of Income-tax (PCIT) cannot be sustained. 6.5 With regard to the second aspect, namely, the eligibility of CSR expenditure for deduction under section 80G of the Act, we find that divergent views have been expressed by various Benches of the Income-tax Appellate Tribunal. The Bangalore Bench, in FNF India Private Limited v. ACIT (supra), and the Kolkata Bench, in JMS Mining Private Limited v. PCIT (supra), have upheld the claim of deduction under section 80G in respect of CSR expenditure. Conversely, the Delhi Bench in Agilent Technologies (International) Pvt. Ltd. v. ACIT (supra) has taken a contrary view and disallowed such claim. 6.6 The decision of the Kolkata Bench of the Tribunal in JMS Mining Private Limited (supra) assumes particular significance, as Polynova Industries Limited 19 ITA No. 2982/MUM/2025 it arose in an identical factual context involving the exercise of revisionary jurisdiction under section 263 of the Act. In that case, the Tribunal unequivocally held that the Assessing Officer’s view allowing the deduction under section 80G in respect of CSR expenditure was both plausible and legally sustainable. Consequently, the revisionary order passed under section 263 was quashed. 6.7 In view of the existence of two divergent yet plausible interpretations of law, and the fact that the Assessing Officer has adopted one such view, which finds support in judicial precedents, it cannot be held that the assessment order is erroneous or prejudicial to the interests of the Revenue. In this context, reference may be made to the decision of this Court in CIT v. Max India Ltd. [(2007) 295 ITR 282 (SC)], wherein it was authoritatively laid down that where two views are reasonably possible on a particular issue, and the Assessing Officer has taken one such view, the mere preference of the Commissioner for an alternative interpretation does not justify the invocation of revisionary jurisdiction under section 263 of the Act. 6.8 Accordingly, in view of the above discussion, we hold that the assessment order passed by the Assessing Officer does not fall within the scope of section 263 of the Act. The impugned order passed by the learned PCIT is therefore liable to be set aside, and is hereby quashed. Polynova Industries Limited 20 ITA No. 2982/MUM/2025 6.9 The relevant grounds of the appeal of the assessee are accordingly allowed. 7. In the result, the appeal of the assessee stands allowed. Order pronounced in the open Court on 19/06/2025. Sd/- Sd/- (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 19/06/2025 Disha Raut/Dragon, Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai "