Tribunal partially allows assessee's appeals, remits issues back to Assessing Officer for reconsideration.

The Tribunal partly allowed the assessee's appeals for statistical purposes, dismissing the Revenue's appeals. Various issues such as disallowance of unrealized exchange loss, exchange fluctuation loss on PCFC borrowings, expenses under section 40(a)(i), additional depreciation, and weighted deduction were remitted back to the Assessing Officer for reconsideration. Specific directions were given for fresh assessments, with the Tribunal upholding certain decisions based on previous rulings.

---

---

Issues Involved:
1. Disallowance of unrealised exchange loss.
2. Disallowance of exchange fluctuation loss on PCFC borrowings.
3. Disallowance of expenses under section 40(a)(i) for leased telephone lines.
4. Disallowance of additional depreciation under section 32(1)(iia).
5. Disallowance under section 14A read with rule 8D.
6. Allocation of research and development expenditure between eligible and non-eligible units under section 10B.
7. Disallowance of weighted deduction under section 35(2AB).
8. Non-giving of TDS credit.
9. Levy of interest under sections 234C and 234D.
10. Deletion of addition towards corporate guarantee.
11. Reduction in claim under section 10B by way of apportionment of exempt income.
12. Disallowance under section 40(a)(i) for various expenses.
13. Depreciation on printers and UPS.

Detailed Analysis:

1. Disallowance of Unrealised Exchange Loss:
The assessee's claim of unrealised exchange loss on derivative transactions was disallowed as speculation loss by the Assessing Officer, relying on CBDT Instruction No. 3 of 2010. The Dispute Resolution Panel (DRP) upheld this view, stating that hedging/forwarding contracts are speculative in nature. The Tribunal, however, remitted the issue back to the Assessing Officer to reconsider in light of the Tribunal's previous decisions, allowing the appeal for statistical purposes.

2. Disallowance of Exchange Fluctuation Loss on PCFC Borrowings:
The assessee's claim of exchange fluctuation loss on PCFC borrowings was disallowed as capital expenditure. The Tribunal, referencing the RBI Master Circular, held that such borrowings are working capital in nature and the loss should be considered revenue expenditure. The appeal was allowed.

3. Disallowance of Expenses Under Section 40(a)(i) for Leased Telephone Lines:
The assessee's expenses on leased telephone lines were disallowed due to non-deduction of TDS. The Tribunal remitted the issue back to the Assessing Officer to verify if the payments were purely reimbursements without profit elements, allowing the appeal for statistical purposes.

4. Disallowance of Additional Depreciation Under Section 32(1)(iia):
The assessee's claim for balance additional depreciation was disallowed by the Assessing Officer and upheld by the DRP. The Tribunal, following its earlier decisions, dismissed the appeal, holding that additional depreciation cannot be carried forward to subsequent years.

5. Disallowance Under Section 14A Read with Rule 8D:
The Assessing Officer disallowed expenses under section 14A read with rule 8D. The Tribunal directed the Assessing Officer to disallow expenses only to the extent of exempt income, partly allowing the appeal.

6. Allocation of Research and Development Expenditure Between Eligible and Non-Eligible Units Under Section 10B:
The Assessing Officer allocated research and development expenses to 100% export-oriented units, reducing their eligible profits. The Tribunal remitted the issue back to the Assessing Officer to verify if the research benefits were utilized by the units, following its previous decisions.

7. Disallowance of Weighted Deduction Under Section 35(2AB):
The Assessing Officer restricted the weighted deduction to the amount approved by DSIR. The Tribunal remitted the issue back to the Assessing Officer to reconsider in light of the Tribunal's previous decisions, allowing the appeal for statistical purposes.

8. Non-Giving of TDS Credit:
The Tribunal directed the Assessing Officer to give due TDS credit if the assessee had remitted the TDS, allowing the appeal for statistical purposes.

9. Levy of Interest Under Sections 234C and 234D:
The Tribunal noted that the levy of interest under sections 234C and 234D is consequential and mandatory, to be decided accordingly.

10. Deletion of Addition Towards Corporate Guarantee:
The DRP deleted the addition made by the Transfer Pricing Officer for corporate guarantee fees. The Tribunal upheld the DRP's decision, following its previous rulings that corporate guarantees do not involve any cost to the assessee and are outside the ambit of international transactions for arm's length price adjustments.

11. Reduction in Claim Under Section 10B by Way of Apportionment of Exempt Income:
The DRP deleted the reduction in claim under section 10B by apportioning exempt income. The Tribunal upheld the DRP's decision, following its previous rulings that exempt income should not be proportionately reduced from business income of 100% export-oriented units.

12. Disallowance Under Section 40(a)(i) for Various Expenses:
The Assessing Officer disallowed various expenses due to non-deduction of TDS. The Tribunal upheld the DRP's decision deleting the disallowances, following its previous rulings that payments to non-residents for services rendered outside India are not liable for TDS.

13. Depreciation on Printers and UPS:
The Assessing Officer disallowed higher depreciation on printers and UPS, treating them as office equipment. The Tribunal upheld the DRP's decision allowing higher depreciation at 60%, following its previous rulings that these items form part of data processing equipment.

Conclusion:
The assessee's appeals were partly allowed for statistical purposes, and the Revenue's appeals were dismissed. The Tribunal remitted several issues back to the Assessing Officer for reconsideration in light of its previous decisions and provided specific directions for fresh assessments.

---