TaxTMI 
TaxTMI 
2026 (6) TMI 423
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Act. The AO had earlier issued draft assessment order dated 06.09.2023 u/s. 144C(1) of the Act wherein the AO proposed an addition of Rs. 9,61,64,469/- on account of ALP adjustment u/s 92C as proposed by ld. TPO in its Transfer pricing order dated 01.07.2023 passed u/s 92CA(3), and a disallowance of deduction on account of donations to the tune of Rs. 12,25,000/- u/s 80G were made by the AO, which were subjected to challenge by the assessee by filing objection before the ld. DRP which culminated into an order passed by ld. DRP dated 23.04.2024 u/s 144C(5) of the Act. TPO passed order giving effect to the directions of ld. DRP vide order dated 10.05.2024, wherein ALP adjustment to the international transactions was proposed at Rs. 4,11,54,574/-. The AO passed FINAL assessment order dated 17.05.2024 in pursuance to directions given by ld. DRP which assessment order is in challenge in appeal by the assessee before us. 2. The grounds of appeal raised by the assessee in its appeals filed with the Income-Tax Appellate Tribunal, Delhi Benches, New Delhi, reads as under:- Grounds of appeal before the Delhi Bench of the Hon'ble ITAT for AY 2020-21 1. Transfer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O, despite the specific directions issued by the Hon'ble DRP. 6. Denial of deduction u/s 80G of the Act a. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in denying the claim of deduction of INR 12,25,000 u/s 80G of the Act, being 50% of the eligible amount of donations made to certain eligible organizations during the relevant previous year, merely because the subject payments formed part of CSR expenditure b. The Ld. AO/ DRP has grossly erred in denying the deduction under section 80G of the Act without appreciating the fact that Explanation 2 to section 37 which denies deduction of CSR as business expenditure; and that no specific bar has been put under section 80G of the Act. c. The Ld. AO/ DRP failed to appreciate the Appellant's claim that in the absence of any express prohibition under the provisions of section 80G of the Act, such claim could not have been denied. d. The Ld. AO/DRP should have been consistent in their positions where they allowed donations to PM Cares Fund and National Defense Fund as a CSR activity but denied benefit for the donation paid to Odisha State Disaster Managem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee has entered into international transactions with its AE's u/s 92 of the 1961 Act. Reference to the TPO was made by the AO to determine the Arms Length Price u/s 92CA, after seeking approval from ld. PCIT. Learned TPO finally proposed adjustments vide order giving effect to the directions of ld. DRP, to the tune of Rs. 4,11,54,574/- with respect to ITES segment of the assessee. The AO accordingly made the TP additions to the tune of Rs. 4,11,54,574/- towards adjustment to ALP of the international transactions towards ITES segment of the assessee. There is no dispute between rival parties with respect to ALP determination of other segments of assessee's international transactions with AE, and hence the same is not considered by us in this order as the same is not required to be adjudicated by us. There are other grievance of the assessee wrt denial of deduction u/s 80G as well denial of credit under double taxation avoidance treaty with respect to foreign taxes paid. We will now deal with the issues/grounds raised by the assessee in this appeal. I. Ground No. 1 to 5-Computation of ALP of International Transaction in ITES segment i) The assessee has applied TNMM Method whil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cordingly. ii) The assessee has submitted that if the foreign exchange gains due to fluctuation in foreign currency arisen on account of realization of export proceeds of services rendered by it to its AE in normal course of business are treated as operating in nature, then the PLI of the assessee shall be at arms length and adjustment to ALP shall be Nil. Thus, in that scenario, the other grounds with respect to computation of ALP becomes academic in nature, as we have already held foreign exchange gains/losses to be operating in nature in the preceding para's of this order. Thus, the other grievances of the assessee have become academic in nature, the same are not adjudicated by us in the present appeal. However, liberty is granted to the assessee to make application with ITAT for rectification of this order, if so required, as the act of court should not prejudice any body. Accordingly Ground No. 1 to 5 are disposed off. We order accordingly. II. Ground No. 6 -Denial of deduction u/s 80G i) The authorities below has denied deductions to the tune of Rs. 12,25,000/- u/s 80G of the 1961 Act to the assessee with respect to donation of Rs. 24,50,000/- paid by the assessee to....