Transfer pricing and deduction claims: recurring issues restored, royalty recomputed, CSR donation allowed, and leased-asset taxes treated as revenue expense.

Transfer pricing disputes concerning intra-group services were restored for fresh adjudication, while royalty computation was directed to be redone under the applicable percentile method. Support service expenditure was deleted following earlier tribunal findings on a recurring issue. Annual revenue share-based licence fee was held amortisable under section 35ABB, with consequential computation left open. CSR-related donation was held eligible for deduction under section 80G. Road tax and VAT on leased assets were allowed as revenue expenditure, and the appellate claim was entertained even though it was not raised in the return. The jurisdictional challenge to the final assessment order failed.

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Issues: (i) Whether the final assessment order was void ab initio for want of jurisdiction; (ii) whether the transfer pricing adjustment relating to intra-group services, royalty, support service expenditure, annual revenue share-based licence fee, CSR donation under section 80G, and road tax/VAT on leased assets was sustainable.

Issue (i): Whether the final assessment order was void ab initio for want of jurisdiction.

Analysis: The jurisdictional challenge was raised as a general ground. No substantive finding was recorded in the assessee's favour on this objection, and it was rejected in limine.

Conclusion: The jurisdictional challenge failed.

Issue (ii): Whether the transfer pricing adjustment relating to intra-group services, royalty, support service expenditure, annual revenue share-based licence fee, CSR donation under section 80G, and road tax/VAT on leased assets was sustainable.

Analysis: The intra-group services issue was treated as a recurring matter and restored for fresh adjudication, with the adjustment kept open for statistical purposes. On royalty, the computation was directed to be redone by applying the percentile method under the transfer pricing rules. The disallowance of support service expenditure was deleted by following earlier tribunal findings on the recurring issue. The annual revenue share-based licence fee was held to be amortisable under section 35ABB of the Income-tax Act, 1961, with consequential computation left to be worked out. The CSR-related donation was held eligible for deduction under section 80G. The road tax and VAT paid on leased assets were held allowable as revenue expenditure, and the appellate claim was entertained notwithstanding absence from the return.

Conclusion: The assessee succeeded on the support service expenditure, CSR deduction, and road tax/VAT issues, while the intra-group services and royalty issues were restored for fresh computation and the licence fee issue was directed to be amortised.

Final Conclusion: The appeal was allowed in part with several additions and disallowances deleted or restored for fresh determination, and the stay application became infructuous.

Ratio Decidendi: A recurring transfer pricing issue may be restored for fresh adjudication, appellate authorities can entertain a fresh legal claim without a revised return, and CSR-related donations may qualify for deduction under section 80G where the statute so permits.

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