[Cites 18, Cited by 0]
Calcutta High Court
Philips India Ltd vs Union Of India And Ors on 17 February, 2026
OD-6
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
WPO/716/2025
PHILIPS INDIA LTD.
VS.
UNION OF INDIA AND ORS
BEFORE:
The Hon'ble JUSTICE OM NARAYAN RAI
Date : February 17, 2026.
Appearance :
Mr. Percey Pardriwala, Sr. Adv.
Mr. A. K. Dey, Adv.
...for the petitioner
Mr. Aryak Dutta, Adv.
Ms. Aishwarya Rajyashree, Adv.
Mr. Soumen Bhattacharjee, Adv.
Mr. Ankan Das, Adv.
Ms. Shradhya Ghosh, Adv.
Mr. Raunak Seal, Adv.
...for the respondents
The Court: This writ petition has been filed against an order dated June
28, 2025, passed under Section 148A(3) of the Income Tax Act, 1961 and the
consequential notice issued on the same date under Section 148 of the said Act
of 1961 in respect of assessment year 2019-20.
Initially a notice under Section 148A (1) of the said Act of 1961 had been
issued to the petitioner thereby calling upon to petitioner to show cause why
proceedings for reassessment of the petitioner's income for the assessment year
2019-20 should not be initiated on two grounds i.e. - (i) inadmissible claim of
expenses alleging that the expenses whereof deduction was sought pertained to
capital loss and not revenue loss and (ii) inadmissible claim of deduction
alleging that the CSR expenditure could not be claimed by the petitioner as a
deduction under Section 80G of the said Act of 1961.
Upon considering the petitioner's reply to the said notice under Section
148A(1) of the said Act of 1961 the first ground pertaining to inadmissible
claim of expenses was dropped by the Revenue Authorities. However, the
Revenue Authorities persisted with the second ground and ultimately issued a
reopening notice under Section 148 of the said Act of 1961 after passing an
order under Section 148A(3) of the said Act of 1961. Assailing the same, the
assessee has approached this Court by way of the instant writ petition.
Mr. Pardriwala, learned senior advocate appearing for the petitioner,
submits that the order impugned under Section 148A(3) of the said Act of 1961
has failed to appreciate that a deduction can be claimed under Section 80G of
the said Act of 1961 even if the same is disallowable under Section 37 of the
said Act of 1961. He submitted that the parameters for allowing deduction
under the said two provisions were absolutely different and the prohibitive
Explanation 2 to Section 37(1) of the said Act 1961 only applies to CSR
expenses by way of business expenditure. It was submitted that the same
could not be extended to CSR expenses otherwise eligible for deduction. It was
further pointed out that in the assessee's own case a similar deduction had
been allowed in respect of assessment year 2020-21 by the Income Tax
Appellate Tribunal and despite such fact having been brought to the notice of
the Assessing Officer, the Assessing Officer has taken a divergent view.
Mr. Pardriwala relied on a judgment of a Co-ordinate Bench of this Court
in the case of Sunil Kr. Ganguly vs. Income-tax Officer reported at (2010) 322
ITR 297 (Calcutta) in support of his contention that orders of Tribunal as well
as Commissioner (Appeals) passed in favour of the assessee would bind the
Assessing Officer if the same had attained finality.
It was submitted that in the case at hand, the order passed by the
Tribunal in the assessee's own case for the Assessment Year 2020-21 had not
been carried in appeal by the Revenue. In order to buttress his contention that
in the hierarchical adjudicatory system, a lower authority is always supposed
to abide by the directions and decisions taken by the higher authorities, he
cited a Division Bench judgment of the Hon'ble High Court of Bombay in the
case of Bank of Baroda vs. H. C. Shrivatsava reported at (2002) 122 Taxman
330 (Bombay). For the same proposition another judgment of the Hon'ble
Bombay High Court in the case of Karanja Terminal & Logistic (P) Ltd. vs.
Principal Commissioner of Income Tax & Ors. reported at (2022) 325 CTR (Bom)
392 was also pressed into service.
Relying on a judgment of the Hon'ble High Court of Bombay in the case
of Lupin Ltd. v. Deputy Commissioner of Income-tax reported at (2025) 172
taxmann.com 158 (Bombay), it was submitted that the statement and object
accompanying the Finance Bill, 2014 by which the relevant amendments had
been introduced into the said Act of 1961 whereby deductions on CSR
expenditure were prohibited suggested that CSR expenditure of the nature
described in Sections 30 to 36 of the said Act of 1961 would also be allowed as
deductions under those Sections, subject to fulfillment of the conditions
specified therein.
Mr. Bhattacharjee, learned advocate appearing for the respondent
Revenue Authorities, vehemently contended that this Court should not
intervene in the matter at the stage of issuance of a notice under Section 148 of
the said Act of 1961 in exercise of its jurisdiction under Article 226 of the
Constitution of India.
In support of his contention he relied on two Co-ordinate Bench decisions
of this Court in the case of M/s.Britannia Industries Limited vs. Union of India &
Ors. (WPA 24534 of 2024) and Debraj Dealers Private Limied vs. Union of India
and Ors. (WPO/3359/2022). For the same proposition, he also relied on a
judgment of the Hon'ble Allahabad High Court in the case of Smart Vishwas
Society vs. Assistant Commissioner of Income Tax, reported in (2023) 156
taxmann.com 188 (Allahabad).
It was submitted although the Tribunal had taken a view favourable to
the assessee in the assessee's own case in respect of a matter pertaining to
assessment year 2020-21, yet, the Assessing Officer was well within its
authority to take a contrary view in respect of a matter pertaining to a different
assessment year.
He invited the attention of this Court to the Finance Bill of 2014 and
submitted that the object behind prohibition of the benefit of deduction on
expenses in respect of corporate social responsibility was to promote sharing of
the burden of the Government in providing social services.
Relying on a judgment of the Hon'ble Supreme Court in the case of
Commissioner of Expenditure Tax, Andhra Pradesh vs. Shri P. V. G. Raju
reported at (1976) 1 SCC 241, Mr. Bhattacharjee submitted that a donation by
description would mean something for which the person donating does not
expect anything in return and something which has been done voluntarily. He
sought to demonstrate that expenditure for the purpose of sharing the burden
of Government was not voluntary and as such, the same should not be
described as "expenditure".
He next relied on a judgment in the case of Nazir Ahmad and The King-
Emperor reported at ILR LXIII 372 to contend that where a particular thing is
required to be done in a certain way, it must be done in that way only or not at
all. For the same proposition he also cited a judgment of the Hon'ble Supreme
Court in the case of Ram Deen Maurya (DR.) vs. State of Uttarpradesh and Ors.,
reported in (2009) 6 SCC 735.
In support of his contention that reopening could be done even if an
assessment had attained finality upto the stage of the Hon'ble Supreme Court,
he relied on a judgment of the Hon'ble Supreme Court in the case of Raymond
Woollen Mills Ltd. vs. Income Tax Officer, reported in (1999) 263 ITR 34 (SC).
Mr. Bhattcharjee next cited a judgment of the Income Tax Appellate
Tribunal Delhi Bench in the case of Agilent Technologies (international) (P.) Ltd.
vs. ACIT/NFAC, Delhi, reported in (2024) 160 taxmann.com 238 (Delhi -
Trib.)/(2024) 205 ITD 551 (Delhi - Trib.), and submitted that upon taking into
consideration the judgment of the Hon'ble Supreme Court in the case of Shri P.
V. G. Raju (supra) as well as the Finance Bill of 2014, the Tribunal had come to
the conclusion that deduction claimed by the assessee in respect of CSR
expenses could not be allowed under Section 80G of the said Act of 1961.
It was further submitted that the respondent Revenue Authorities are
preparing to prefer an appeal against the order passed by the Tribunal in
respect of the petititioner's own case pertaining to assessment year 2020-21.
Mr. Padriwala, learned senior advocate appearing for the petitioner
rejoined by submitting that a meaningful reading of the Finance Bill 2024,
would not indicate that CSR expenses which could otherwise be allowed as
deduction under Section 80G were excluded from the zone of deduction by the
Finance Bill of 2014 by reason of the Explanation inserted in section 37 of the
said Act of 1961. He further submitted that in the case of Agilent Technologies
(supra) itself, the Tribunal has held in favour of the assessee and allowed
deduction of expenses under Section 80G of the said Act of 1961 in two
different years notwithstanding the earlier judgment of the Tribunal against the
assessee (cited by Mr. Bhattacharjee). In support of his contention, he has
cited two orders of the Tribunal dated March 26, 2025 passed in
ITA/1171/Del/2022 in respect of assessment year 2018-19 and dated
September 17, 2025 passed in ITA/3684/Del/2024 pertaining to assessment
year 2020-2021.
He also relied on another judgment of the Mumbai Tribunal in the case of
ACIT vs. Sikka Ports and Terminals Ltd., reported in (2025) 173 taxmann.com
366 (Mumbai-Trib.) to drive home the point that deductions on account of CSR
expenses are being permitted under Section 80G of the said Act of 1961.
Heard learned advocates appearing for the respective parties and
considered materials on record.
It is not in the dispute that in the petitioner's own case the relevant
Tribunal has allowed deduction of CSR Expenses claimed by the assessee in
respect of assessment year 2020-2021 which is similar to the claim made by
the petitioner in the assessment year under consideration. It is also not in
dispute that such order passed by the tribunal has not yet been carried in
appeal by the Revenue Authorities. In such view of the matter, in the prima
facie view of the Court it was not open for the assessing officer to take a
diametrically opposite view even if the matter that had fallen for consideration
before the assessing officer pertained to a different assessment year.
Although this Court is cognizant of the fact that principle of res judicata is
not applicable to proceedings under the said Act of 1961 if the same pertain to
two different years, yet the rule of consistency would certainly apply. In the
impugned order passed under Section 148A(3) of the said Act of 1961, there is
precious little to decipher as to how has the assessing officer held that the facts
of the petitioner's case in the assessment year presently under consideration
differ from those in assessment year 2020-21 for the rule of consistency to not
apply.
Insofar as the Assessing Officer's reasoning as regards not allowing the
CSR expenses to be claimed as deduction under Section 80G is concerned, the
same also, again prima facie, appears to be a product of misreading and
misinterpretation of the statement and object as well as the text of the Finance
Bill of 2014. In such context, the judgment of the Hon'ble Bombay High Court
in the case of Lupin Limited (supra) clearly supports the petitioner.
This Court is also of the prima facie view that merely because an expense
cannot be allowed to be deducted under Section 37 of the said Act of 1961, the
same ipso facto would not lead to disallowance under Section 80G also if the
same is otherwise allowable.
As regards the contention of Mr. Bhattacharjee that a writ Court should
not intervene at the stage of reopening it must be noted that firstly, the
proceeding that has been impugned in the present writ petition is one against
which there is no other statutory remedy available to the petitioner and
secondly, the issue raised by the petitioner is jurisdictional in nature. It has
been well settled by the Hon'ble Supreme Court in the case of Jeans Knit
Private Limited vs. DCIT reported at (2017) 39 ITR 10 (SC) that a writ petition
can be maintained even against reopening of assessment proceedings if the
same is done arbitrarily. The case at hand prima facie betrays arbitrariness.
In so far as the judgment in the case of Shri P. V. G. Raju (supra) is
concerned, the same in the prima facie view of this Court cannot assist the
Revenue inasmuch as there is nothing on record at least at present to presume
that the assessee i.e. the petitioner did not donate voluntarily and there is
certainly nothing on record to show that there was a quid pro quo for the
donation given by the petitioner. This Court is of the prima facie view that an
act which could otherwise be voluntary may not lose its character as voluntary
and be labelled as discharge of statutory duty merely because the same
overlaps with a statutory obligation. In such context, the reasoning given by
the Mumbai Tribunal in the case of Sikka Ports & Terminal (supra) appears to
be apt.
In so far as the judgments in the cases of Nazir Ahmed (supra) and Ram
Deen Maurya (supra) are concerned, the legal proposition laid down by the said
judgments is salutary but, the same hardly applies to the petitioner excepting
that the assessing officer ought to have followed it. It was for the assessing
officer to either act do either challenge the order passed by its higher authority
(being the Tribunal) which had held that CSR expenses would be permitted as
deductions under Section 80G of the said Act of 1961 and then reopen the
petitioner's case for reassessment or not to reopen at all. It could not have
taken a diametrically opposite view without challenging the Tribunal's order in
appeal.
The orders of the Coordinate Benches in the cases of M/s. Britannia
Industries Limited (supra) and Debraj Dealers (supra) were rendered in the
peculiar facts of the case where arbitrariness was not apparent. The same do
not aid the revenue. Similarly, Smart Vishwas Society (supra) also turned on its
own facts.
In Raymond Woollen Mills (supra), the Hon'ble Supreme Court was
convinced that there was prima facie some material on the basis of which
department could reopen the case. In the case at hand, the prima facie view of
this Court is just the opposite.
As regards the object behind the amendment introduced via the Finance
Bill of 2014, it is evident from the Bill itself that the same all CSR expenses
ipso facto have not been made disallowable. The Bill clearly provides that CSR
expenditure of the nature described in Section 30 to 36 of the said Act of 1961
would be allowed subject to fulfilment of conditions specified therein. In such
view of the matter there is prima facie no reason why the same logic should not
be extended to Section 80G and why deductions of CSR expenses allowable
under Section 80G of the said Act of 1961 should not be permitted.
For all the reasons aforesaid, this Court is of the view, again prima facie
that the petitioner has a strong arguable case and as such the balance of
convenience and inconvenience leans in favour of granting an interim order.
Accordingly, there shall be an interim order in terms of prayer (e) of the writ
petition. The respondents shall stand restrained from proceeding further in
terms of the reopening notice dated June 28, 2025 issued under Section 148 of
the said Act of 1961, until further orders.
As requested by Mr. Bhattacharjee, affidavit-in-opposition to the writ
petition may be filed within eight weeks from date. Affidavit-in-reply thereto, if
any, be filed within four weeks thereafter.
List this matter for hearing immediately after the expiry of the time fixed
for exchange of affidavits.
(OM NARAYAN RAI, J.)
kc./R.D Barua
