CSR donations and receivables transfer pricing: section 80G relief upheld, while related claims were remitted for fresh examination.

CSR-related donations were held not to be barred from deduction under section 80G merely because the outlay arose from a statutory CSR obligation, as the deduction depends on the independent conditions of section 80G and those conditions were otherwise satisfied. The MEIS duty reward scrip receipt claim, not raised in the return, was held fit for appellate examination and remitted for fresh consideration. The enhanced deduction claim under section 80-IA based on market price of electricity and additional evidence was also restored for verification. On transfer pricing, notional interest on outstanding receivables from AEs could not be adjusted without factoring in working capital effects already relevant to comparability, so the matter was set aside for reconsideration with working capital adjustment.

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Issues: (i) whether donations made out of CSR expenditure were allowable as deduction under section 80G; (ii) whether MEIS duty reward scrip receipts could be examined as capital receipt not liable to tax; (iii) whether enhanced deduction under section 80-IA based on market price of electricity and additional evidence should be entertained; (iv) whether notional interest on outstanding receivables from AEs warranted transfer pricing adjustment and whether working capital adjustment was required.

Issue (i): whether donations made out of CSR expenditure were allowable as deduction under section 80G.

Analysis: CSR outlay, though mandated under company law, continues to form part of the assessee's income-computation framework and is distinct from the disallowance under section 37(1). The absence of reciprocity in a donation does not by itself defeat deduction under section 80G, and the statutory conditions for section 80G remain the governing test. The fact that the amount was earlier added back as CSR expenditure does not create a bar to deduction under section 80G, and no failure of the other statutory conditions was found.

Conclusion: The deduction under section 80G was rightly allowed in favour of the assessee.

Issue (ii): whether MEIS duty reward scrip receipts could be examined as capital receipt not liable to tax.

Analysis: A claim not raised in the return can still be examined in appellate proceedings, and there is no estoppel against a claim that is legally available. The claim required consideration on merits in light of the applicable law and the material already on record, but the tax authorities had not adjudicated it through a reasoned examination.

Conclusion: The issue was restored for fresh consideration, in favour of the assessee for statistical purposes.

Issue (iii): whether enhanced deduction under section 80-IA based on market price of electricity and additional evidence should be entertained.

Analysis: The enhanced claim was supported by later judicial authority and by additional evidence, but the revised computation required factual verification before it could be allowed. The matter therefore called for examination by the assessing authority rather than outright rejection.

Conclusion: The enhanced deduction claim was restored for verification, in favour of the assessee for statistical purposes.

Issue (iv): whether notional interest on outstanding receivables from AEs warranted transfer pricing adjustment and whether working capital adjustment was required.

Analysis: Where the assessee's working-capital profile and credit terms are relevant to benchmarking, separate adjustment for delayed receivables cannot be made without accounting for the impact already embedded in comparability analysis. The assessee was entitled to working capital adjustment, and the matter had to be reconsidered accordingly. The adjustment on receivables was therefore not sustained as made.

Conclusion: The transfer pricing adjustment was set aside for reconsideration after granting working capital adjustment, in favour of the assessee.

Final Conclusion: The appeal succeeded substantially with relief on the CSR donation deduction and transfer pricing issue, while the remaining disputed claims were sent back for reconsideration or verification.

Ratio Decidendi: A statutory CSR-related outlay does not bar deduction under section 80G if the donation otherwise satisfies that provision's conditions, and receivable-based transfer pricing adjustments must account for working capital effects where those effects are already relevant to comparability.

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