ITAT Mumbai Quashes Section 263 Revision on CSR-Based Section 80G Deduction; Holds Assessment Not Erroneous
Court / Authority
Income Tax Tribunal
Update / Judgement Date
24 Aug 2026
Source
WCP News Bulletin
Author
Manas Yadav — WCP Legal Desk
Reading Time
2 min read
View Count
Key Facts and Tribunal Findings
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed the appeal of Apraava Wind Energy (Khandke) Pvt. Ltd. and set aside the revisionary order passed by the Principal Commissioner of Income Tax under Section 263 for Assessment Year 2020–21.
The dispute arose from the assessee’s claim of deduction under Section 80G in respect of donations forming part of Corporate Social Responsibility (CSR) expenditure. The assessee had suo motu disallowed CSR expenditure under Section 37(1) while computing business income and separately claimed deduction under Section 80G for eligible donations.
The Assessing Officer, after examining the claim during scrutiny proceedings under Section 143(3), allowed the deduction. Subsequently, the PCIT invoked revisionary jurisdiction under Section 263, holding that the allowance of deduction under Section 80G on CSR expenditure rendered the assessment order erroneous and prejudicial to the interests of the Revenue.
Before the Tribunal, it was demonstrated that the Assessing Officer had specifically raised queries regarding CSR expenditure and deduction under Section 80G, and the assessee had furnished detailed replies along with supporting documentation.
The Tribunal found that the Assessing Officer had conducted due enquiry and applied his mind to the issue. It held that the PCIT’s observation regarding lack of enquiry was factually incorrect.
On merits, the Tribunal noted that there is no statutory bar on claiming deduction under Section 80G for donations merely because they are part of CSR expenditure, provided conditions under the provision are satisfied. It observed that disallowance under Section 37(1) does not preclude independent eligibility under Chapter VI-A.
Accordingly, the Tribunal held that the twin conditions for invoking Section 263—namely, the order being erroneous and prejudicial to the interests of the Revenue—were not satisfied, and quashed the revisionary order.
Full Judgement / Attachment
Full Judgement
Frequently asked questions about Income Tax Tribunal
- What is the Income Tax Appellate Tribunal (ITAT)?
- The ITAT, set up in 1941, is the second appellate authority in direct tax matters and the final fact-finding body. It hears appeals against orders of the Commissioner (Appeals) and certain other authorities, through benches across India.
- What is the time limit to file an appeal before the ITAT?
- An appeal must be filed within two months from the end of the month in which the order is communicated. This rule has applied since 1 October 2024 and continues under the Income-tax Act, 2025. The Tribunal can condone delay for sufficient cause.
- Can the ITAT stay a tax demand?
- Yes. The Tribunal can stay recovery of a disputed demand while an appeal is pending, usually on deposit of a part of the demand or furnishing security. Stays are granted for a limited period, and the appeal is expected to be decided within it.
- Where does an appeal go after the ITAT?
- An appeal against an ITAT order lies to the High Court, but only on a substantial question of law. A further appeal lies to the Supreme Court.
- How can White Collar Professional help with a ITAT matter?
- Post your requirement on White Collar Professional to receive proposals from verified Chartered Accountants and tax Advocates, compare them, and pay securely through the platform. This page also tracks the latest ITAT ITAT orders as they are reported.
