Assessee's Appeal Allowed, Disallowances Deleted, Assessment Order Validity Left Open

The appeal by the assessee was allowed by the Tribunal. The Assessing Officer was directed to delete the disallowances and adjustments made regarding mark to market losses, disallowance under section 14A, and transfer pricing adjustment. The issue of the validity of the assessment order was left open for future consideration. Verification of the short credit of TDS was also directed to be carried out by the AO.

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Issues Involved:
1. Disallowance of mark to market losses
2. Disallowance made under section 14A of the Act
3. Transfer pricing adjustment in respect of specified domestic transactions
4. Validity of the assessment order on the ground that it is time-barred
5. Short credit of TDS

Detailed Analysis:

Disallowance of Mark to Market Losses:
The assessee claimed a deduction for provisions made for loss of currency and commodities futures amounting to Rs. 16.26 crore. The Assessing Officer (AO) disallowed this, treating it as contingent in nature, both for computing total income under normal provisions and for book profit under section 115JB. The Dispute Resolution Panel (DRP) confirmed the disallowance under normal provisions but did not adjudicate under section 115JB, considering it academic. The assessee argued that the commodities, currency futures, and stock options were held as stock-in-trade and valued at cost or market value, whichever was lower, as per accounting standards. The Tribunal referred to previous decisions, including M/s. Edel Commodities Limited Vs. DCIT, which allowed similar claims. Consequently, the Tribunal directed the AO to delete the disallowance, both under normal provisions and section 115JB.

Disallowance under Section 14A:
The AO noticed substantial investments by the assessee but no disallowance under section 14A. The AO computed a disallowance of Rs. 4.71 crore under Rule 8D and added it to the total income and book profit under section 115JB. The DRP confirmed the disallowance under normal provisions but did not adjudicate under section 115JB. The assessee contended that no exempt income was earned during the year, citing the Delhi High Court's decision in PCIT vs. IL & FS Energy Development Company Ltd, which held no disallowance is required in the absence of exempt income. The Tribunal directed the AO to delete the disallowance under both normal provisions and section 115JB, following the Delhi Special Bench's decision in Vireet Investments P Ltd.

Transfer Pricing Adjustment:
The Transfer Pricing Officer (TPO) proposed an adjustment of Rs. 15.43 crore, reduced to Rs. 9.18 crore by the DRP. The assessee argued that clause (i) of section 92BA, which covered specified domestic transactions, was omitted by the Finance Act, 2017, effective from July 1, 2017, without a saving clause, making the adjustment invalid. The Tribunal referred to the Bangalore ITAT's decision in Neogenetics Foods P Ltd vs. DCIT and the Karnataka High Court's decision in PCIT vs. Texport Overseas P Ltd, which supported the assessee's view. The Tribunal directed the AO to delete the transfer pricing adjustment but restored the issue to the AO for examination under section 40A(2)(a).

Validity of the Assessment Order:
The assessee challenged the validity of the assessment order on the grounds of being time-barred. Since all other issues were decided in favor of the assessee, the Tribunal left this issue open for the assessee to raise before an appropriate forum if needed.

Short Credit of TDS:
The issue of short credit of TDS required verification by the AO. The Tribunal restored this issue to the AO for verification.

Conclusion:
The appeal filed by the assessee was treated as allowed, with directions to the AO to delete the disallowances and adjustments and to verify the short credit of TDS. The issue of the validity of the assessment order was left open for future adjudication if required.

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