TaxTMI 
TaxTMI 
2026 (9) TMI 587
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....2, pursuant to the directions issued by the Dispute Resolution Panel ('DRP'). 2. At the time of hearing, the assessee pressed only two grounds. The first ground concerns non-grant of working capital adjustment while determining the arm's length price of the international transactions under the trading segment. The second ground concerns the additional claim for deduction under section 80G in respect of CSR expenditure of Rs. 27,00,000 incurred by way of contribution to the PM CARES Fund for COVID-19. The remaining grounds were not pressed and are accordingly dismissed as not pressed. 3. We shall first take up the ground relating to working capital adjustment. The assessee had sought adjustment on account of the differences....
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....tative (DR), on the other hand, relied upon the final assessment order and the directions of the DRP. It was submitted that working capital adjustment cannot be allowed as a matter of course and that the assessee must first establish the material differences and furnish reliable data from which a reasonably accurate adjustment can be computed. 6. We have heard the rival submissions and perused the material available on record. Working capital adjustment is intended to neutralise the effect of differences in the levels of inventory, trade receivables and trade payables of the tested party vis-a-vis the comparable companies. Such differences may affect the operating margins because the period for which funds remain blocked in inventory or ....
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....ound relates to the assessee's additional claim for deduction under section 80G in respect of the contribution of Rs. 27,00,000 made to the PM CARES Fund. In the computation accompanying the return of income, the assessee had treated the payment as CSR expenditure. The said expenditure was disallowed while computing the business income. Thereafter, the assessee raised an alternative claim before the DRP that the contribution should be allowed as deduction under section 80G. The DRP noted that the deduction had not been claimed in the return of income and that the Assessing Officer had not discussed the claim in the draft assessment order. It, therefore, held that, having regard to section 144C(2) of the Act, the claim was not amenable f....
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....rm the subject matter of examination by the Assessing Officer and would require verification of the payment as well as the conditions prescribed under section 80G. 12. We have considered the rival submissions. The contribution of Rs. 27,00,000 and its character as CSR expenditure formed part of the assessment proceedings, and the alternative claim under section 80G arose only because the expenditure was not allowed while computing business income. The claim, therefore, arises from the subject matter and the facts already before the authorities below. The Hon'ble jurisdictional High Court in Pruthvi Brokers & Shareholders (P.) Ltd. (supra) has held that an appellate authority has jurisdiction to entertain a claim not made in the retur....