Tribunal partially allows appeal, instructs AO & TPO to reassess issues, ensuring fair hearing for appellant.

The appeal was partly allowed by the Tribunal, directing the Assessing Officer (AO) and Transfer Pricing Officer (TPO) to reassess certain issues in compliance with the law and relevant precedents, granting the appellant a fair chance to present their case.

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Issues Involved:
1. Assessment and Reference to Transfer Pricing Officer (TPO)
2. Time-Barred Assessment Proceedings
3. Treatment of Foreign Exchange Loss on Foreign Currency Convertible Bonds (FCCBs)
4. Determination of Arm's Length Price
5. Adjustment Value on Software Development Income
6. Transfer Pricing Adjustments on Interest on Trade Receivables
7. Levy of Interest under Sections 234A and 234B
8. Set-off of Brought Forward Business Losses and Unabsorbed Depreciation
9. Set-off of MAT Credit Entitlement
10. Grant of Foreign Tax Credit
11. Initiation of Penalty Proceedings under Section 271(1)(c)

Detailed Analysis:

1. Assessment and Reference to Transfer Pricing Officer (TPO):
The appellant contended that the reference to the TPO was without jurisdiction as the Income Tax Officer (ITO) did not record an opinion that any conditions in Section 92C(3) of the Income-tax Act, 1961, were satisfied. The Dispute Resolution Panel (DRP) upheld the actions of the ITO and TPO.

2. Time-Barred Assessment Proceedings:
The appellant argued that the assessment was not completed within the prescribed time limit as per Section 144C(13) of the Act. The assessment order was served on November 29, 2018, whereas the due date was October 31, 2018.

3. Treatment of Foreign Exchange Loss on FCCBs:
The appellant claimed that the TPO erred in considering foreign exchange loss on FCCBs as operating in nature for computing margins. The DRP upheld the TPO's actions, disregarding the appellant's case for AY 2010-11. The Tribunal directed the AO to verify the claim that the gain has not been claimed in the computation of income and forms part of computing the margin as per transfer pricing provisions.

4. Determination of Arm's Length Price:
The appellant argued that the TPO deviated from the uncontrolled party transaction definition and applied a 25% related-party criteria arbitrarily. The TPO also inconsistently applied the functional comparability parameter and selected inappropriate comparables. The DRP upheld the TPO's actions. The Tribunal noted that certain grounds related to this issue were not pressed by the appellant.

5. Adjustment Value on Software Development Income:
The appellant contended that the TPO erred in not restricting the adjustment value on software development income to the extent of international transactions with Associated Enterprises. The DRP upheld the TPO's actions. This ground was not pressed by the appellant.

6. Transfer Pricing Adjustments on Interest on Trade Receivables:
The appellant argued that the TPO erred in considering outstanding receivables from AEs as a separate international transaction and computing interest on the same. The DRP upheld the TPO's actions. The Tribunal directed the AO/TPO to reconsider the issue in light of the Delhi High Court's judgment in Kusum Healthcare Pvt. Ltd. and other relevant cases, allowing the appellant a reasonable opportunity of being heard.

7. Levy of Interest under Sections 234A and 234B:
The appellant contended that the AO erred in levying interest under Sections 234A and 234B. The DRP did not adjudicate this ground. The Tribunal noted that these grounds are consequential in nature and do not require adjudication.

8. Set-off of Brought Forward Business Losses and Unabsorbed Depreciation:
The appellant argued that the AO erred in not setting off brought forward business losses and unabsorbed depreciation. The Tribunal directed the AO to consider the claim in accordance with law, allowing the appellant to furnish relevant information.

9. Set-off of MAT Credit Entitlement:
The appellant contended that the AO erred in not setting off MAT credit entitlement from earlier years. The Tribunal directed the AO to consider the claim in accordance with law, allowing the appellant to furnish relevant information.

10. Grant of Foreign Tax Credit:
The appellant argued that the AO erred in not granting Foreign Tax Credit. The Tribunal directed the AO to consider the claim in accordance with law, allowing the appellant to furnish relevant information.

11. Initiation of Penalty Proceedings under Section 271(1)(c):
The appellant contended that the AO erred in initiating penalty proceedings under Section 271(1)(c). The DRP dismissed the appellant's objection. The Tribunal noted that this ground is consequential in nature and does not require adjudication.

Conclusion:
The appeal filed by the appellant was partly allowed. The Tribunal directed the AO/TPO to reconsider certain issues in accordance with law and relevant judgments, allowing the appellant a reasonable opportunity of being heard.

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