Tribunal grants partial appeal on various tax issues, remits some for reconsideration.

The Assessee's appeal was partly allowed by the Tribunal. The Tribunal directed the Assessing Officer to follow directions from earlier years regarding Transfer Pricing Adjustment on Interest-Free Loans, Disallowance under Section 14A, Set-Off of Losses of STP Units, Deferred Compensation Plan Deduction, Depreciation on Imported Software, Allocation of Corporate Expenses to Units, and Exclusion of Income Items from Export Turnover under Section 10A. The Tribunal remitted issues regarding Deduction under Section 10A for Overseas Software Development and Credit for Foreign Taxes Paid back to the CIT(A) for reconsideration. The Assessee's alternative claim under Section 80JJ was dismissed, and the levy of interest under Sections 234B and 234D was adjusted by the AO in compliance with the Tribunal's order.

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Issues Involved:
1. Transfer Pricing Adjustment on Interest-Free Loans
2. Disallowance under Section 14A
3. Set-Off of Losses of STP Units
4. Deferred Compensation Plan Deduction
5. Depreciation on Imported Software
6. Allocation of Corporate Expenses to Units
7. Deduction under Section 10A for Overseas Software Development
8. Exclusion of Income Items from Export Turnover under Section 10A
9. Credit for Foreign Taxes Paid
10. Alternative Claim under Section 80JJ
11. Levy of Interest under Sections 234B and 234D

Detailed Analysis:

1. Transfer Pricing Adjustment on Interest-Free Loans:
The Assessee challenged the addition of Rs.4,75,86,539/- as a Transfer Pricing adjustment for interest on advances given to Associated Enterprises (AEs). The Tribunal noted that the same issue was decided in favor of the Assessee in earlier years, where it was held that TP adjustments require comparable uncontrolled transactions. The Tribunal directed the AO to follow the directions given in earlier years, thus deciding Grounds 5 to 8 accordingly.

2. Disallowance under Section 14A:
The Assessee contested the disallowance of Rs.4,33,78,765 under Section 14A, arguing that only Rs.82,80,707 was the actual expenditure incurred in earning exempt income. The Tribunal found the AO's estimate of 5% on the higher side and deemed 2.5% as just and reasonable. Thus, Grounds 10 & 11 were partly allowed.

3. Set-Off of Losses of STP Units:
The Assessee argued for the set-off of losses from seven STP units against other business income. The Tribunal, following its earlier decision, directed the AO to allow the set-off as claimed by the Assessee. Grounds 12 to 16 were thus allowed.

4. Deferred Compensation Plan Deduction:
The Assessee claimed a deduction for deferred compensation paid to an employee, Mr. Vivek Paul, through a trust. The AO disallowed it, citing Section 40A(9). The Tribunal upheld the disallowance but directed the AO to recompute the enhanced profits eligible for deduction under Section 10A. Grounds 17 to 19 were allowed to this extent.

5. Depreciation on Imported Software:
The AO disallowed depreciation on imported software, citing Section 40(a)(ia). The Tribunal, following its earlier decisions, allowed the Assessee's claim. Grounds 20 to 23 were thus allowed.

6. Allocation of Corporate Expenses to Units:
The AO allocated corporate expenses to units eligible for deduction under Section 10A, reducing the profits. The Tribunal, following its earlier decisions, directed the AO to delete such allocations. Grounds 24 to 27 were allowed.

7. Deduction under Section 10A for Overseas Software Development:
The AO excluded profits from overseas software development centers from Section 10A deduction. The Tribunal remitted the issue back to the AO for reconsideration following earlier Tribunal decisions. Grounds 28 & 29 were remitted back.

8. Exclusion of Income Items from Export Turnover under Section 10A:
The AO excluded interest income, scrap sales, and exchange fluctuation from export turnover. The Tribunal, following earlier decisions, included these items in the export turnover. Grounds 30 to 37 were allowed.

9. Credit for Foreign Taxes Paid:
The Assessee claimed credit for foreign taxes paid. The Tribunal restored the matter to the CIT(A) for reconsideration following earlier Tribunal directions. Ground No.83 was remitted back.

10. Alternative Claim under Section 80JJ:
The Assessee raised an alternative claim under Section 80JJ if Section 10A deduction was not granted. Since Section 10A deduction was allowed, this ground became infructuous. Ground No.84 was dismissed.

11. Levy of Interest under Sections 234B and 234D:
The Assessee contested the levy of interest under Sections 234B and 234D. The Tribunal held that the charging of interest is consequential and directed the AO to recompute it while giving effect to the order. Grounds 85 to 88 were decided accordingly.

Conclusion:
The appeal of the Assessee is partly allowed, with directions given on various grounds based on earlier Tribunal decisions and specific findings.

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