Working capital adjustment in transfer pricing may neutralise...

Working capital adjustment in transfer pricing may neutralise margin differences arising from inventory, trade receivables and trade payables through the time value of funds. Rule 10B(3) permits adjustment where a difference materially affects price, cost or profit and can be eliminated by a reasonably accurate computation. Verification of the taxpayer's computation and supporting material is required before granting the adjustment. A CSR contribution disallowed as business expenditure may nevertheless qualify for a separate section 80G deduction. An appellate authority may entertain an additional claim arising from facts already on record, subject to verification of the donee's eligibility, payment, prescribed receipt, payment mode and deductible extent.