Garden Reach Ship Builders & Engineers Ltd. Vs PCIT (ITAT Kolkata)

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘C’ KOLKATA
[BEFORE SHRI J. SUDHAKAR REDDY, HON’BLE ACCOUNTANT MEMBER &
MS. MADHUMITA ROY, HON’BLE JUDICIAL MEMBER]

[THROUGH VIRTUAL COURT]
I.T.A. Nos. 1099 & 1100/Kol/2018
Assessment Year: 2013-14 & 2014-15

M/s. Garden Reach Ship Builders & Engineers Ltd...Appellant
43/46, Garden Reach Road,
Kolkata – 700 024.
[PAN: AACG 9371 K]

VS.

Pr. Commissioner of Incomes Tax, Kolkata – 1, Kolkata …Respondent
P-7, Chowringhee Square,
Kolkata – 700 069.

Appearances by:
Shri Sanjoy Bhattacharya, Advocate appearing on behalf of the Assessee.
Shri Vijay Shankar, CIT appearing on behalf of the Revenue.

Date of concluding the hearing : November 17, 2020
Date of pronouncing the order November 20, 2020

ORDER

Per J. Sudhakar Reddy: AM

Both these appeals are filed by the assessee and are directed against separate orders of Ld. Principal Commissioner of Income Tax, Kolkata - 1, Kolkata passed u/s 263 of the Act 1961 (‘The Act’) dated 21.03.2018. As the issues arising in both the appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order.

2. The assessee is a public limited company, in the public sector, under the Ministry of Defence, Government of India. It filed its return of income for the Assessment Year 2013-14 on 02.09.2013 and for the Assessment Year 2014-15 on 28.11.2014.

3. The assessment was completed u/s 143(3) of the Act for A.Y. 2013-14 on 30th January, 2016 and A.Y. 2014-15 on 28th November, 2016. Thereafter, the Ld. Pr. CIT issued separate show cause notice for each of these assessment years proposing to revise the assessment orders u/s 263 of the Income Tax Act.

4. In the show cause notice alleging that the assessment orders passed by the A.O. for both of these assessment years 2013-14 & 2014-15, are erroneous, in so far as it is prejudicial to the interest of Revenue, the following reasons are given by the Ld. Pr. CIT:

“i. From the details of ‘Other Expenses’ (Note -2.26) in the Profit & Loss Accounts it is observed that your company had claimed ‘Corporate Social Responsibility Expenses’ of Rs. 300.54 Lakh and the same was allowed in the assessment. However, as the expenditure was not incurred wholly and exclusively for the purposes of the business of the assessee as per provisions u/s 37 of the IT Act, 1961, the same was not allowable as business expenditure resulted in under assessment of income of Rs. 300.54 Lakh involving undercharge of tax of Rs. 1,30,66,366/-.

ii. The AO has passed the impugned assessment order without making enquiries or verification which should have been made in this case.”

5. In reply, the assessee stated as follows:

“During the assessment proceedings u/s 143(2)/(3) on being requisitioned by the Assessing Officer, GRSE vide its letter dated 21/01/2016, had furnished details of CSR Expenses aggregating to Rs.3,00,54,276. A copy of the above-mentioned letter dated 21/01/2016 is enclosed for ready reference. After considering the details so submitted and due explanations offered by GRSE during the assessment proceedings, the Assessing Officer accepted GRSE’s claim for deduction of CSR Expenses aggregating to Rs.3,00,54,276. So, it may kindly be appreciated that during the assessment proceeding itself the Assessing Officer had enquired into the allowability of CSR Expenses and then decided upon allowing the same while making the assessment.

To know more in details find the attachment file