Assessment order nullified for limitation breach; issues on interest, expenses not decided.

The Tribunal allowed the assessee's appeal, declaring the assessment order null and void due to being barred by limitation. Consequently, all other issues raised by both the assessee and the revenue, including disallowances of interest on ECBs, inter-group charges, circuit accruals, and other expenses, were not adjudicated upon as the assessment order was invalidated.

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Issues Involved:
1. Legality of the special audit order and whether the assessment order is barred by limitation.
2. Disallowance of interest incurred on External Commercial Borrowings (ECBs).
3. Disallowance of inter-group charges under section 40(a)(i) of the Act.
4. Disallowance of circuit accruals.
5. Disallowance of circuit charges under section 40(a)(ia) of the Act.
6. Disallowance of prior period expenses.
7. Disallowance of expenses of capital nature.
8. Disallowance of interest incurred on short-term loans.
9. Deduction in respect of foreign exchange fluctuation gain offered to tax.
10. Deduction of prior period expenses proposed for disallowance in AY 2009-10.
11. Addition under section 92CA of the Act.
12. Initiation of penalty proceedings under section 271(1)(c) of the Act.
13. Short grant of credit in respect of taxes deducted at source (TDS).
14. Levy of interest under section 234B of the Act.
15. Revenue's appeal against the deletion of certain additions by the Dispute Resolution Panel (DRP).

Detailed Analysis:

1. Legality of the Special Audit Order and Limitation of Assessment Order:
- The assessee argued that the special audit proceedings were invalid and the assessment order was barred by limitation. The sequence of events showed that the special audit report was received after the statutory deadline for completing the assessment.
- The Tribunal noted that the provisions of Section 153, which prescribe the time limit for completing assessments, are sacrosanct. The proviso to Explanation 1 to Section 153(1) extends the period of limitation by 60 days only if less than 60 days are remaining after excluding the time taken for special audit.
- The Tribunal held that since the special audit report was received after the deadline, the assessment order was barred by limitation. The assessment order was declared null and void.

2. Disallowance of Interest on ECBs:
- The assessee contested the disallowance of interest on ECBs used for acquiring fixed assets, arguing that the disallowance was excessive and that depreciation should be allowed on the disallowed interest amount.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

3. Disallowance of Inter-Group Charges:
- The assessee challenged the disallowance of inter-group charges paid to AT&T Communication Services International Inc. under Section 40(a)(i).
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

4. Disallowance of Circuit Accruals:
- The assessee contested the disallowance of year-end accruals for bandwidth and last-mile services.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

5. Disallowance of Circuit Charges:
- The assessee challenged the disallowance of circuit charges under Section 40(a)(ia) and argued for the application of the second proviso to Section 40(a)(ia).
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

6. Disallowance of Prior Period Expenses:
- The assessee contested the disallowance of prior period expenses.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

7. Disallowance of Capital Nature Expenses:
- The assessee challenged the disallowance of certain expenses as capital in nature.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

8. Disallowance of Interest on Short-Term Loans:
- The assessee contested the disallowance of interest on short-term loans used for working capital and acquisition of fixed assets.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

9. Deduction for Foreign Exchange Fluctuation Gain:
- The assessee argued for the deduction of unrealized foreign exchange fluctuation gain on capital account.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

10. Deduction of Prior Period Expenses for AY 2009-10:
- The assessee contested the non-allowance of deduction for prior period expenses proposed for disallowance in the succeeding year.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

11. Addition under Section 92CA:
- The assessee challenged the addition made under Section 92CA on account of transfer pricing adjustments.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

12. Initiation of Penalty Proceedings:
- The assessee contested the initiation of penalty proceedings under Section 271(1)(c).
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

13. Short Grant of TDS Credit:
- The assessee argued for the correct grant of TDS credit.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

14. Levy of Interest under Section 234B:
- The assessee contested the levy of interest under Section 234B.
- The Tribunal did not adjudicate this issue as the assessment order was already declared null and void.

15. Revenue's Appeal:
- The revenue appealed against the deletion of certain additions by the DRP.
- The Tribunal dismissed the revenue's appeal as the assessment order was already declared null and void.

Conclusion:
The Tribunal allowed the assessee's appeal on the ground that the assessment order was barred by limitation and declared the assessment order null and void. Consequently, all other grounds of appeal by both the assessee and the revenue were dismissed as there was no need to adjudicate them.

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