Tribunal upholds draft assessment order, dismisses challenges on foreign exchange loss & tax credit issues.

The Tribunal upheld the validity of the draft assessment order under Section 144C dated 27/11/2015. The grounds challenging the order's validity were dismissed. The issues regarding foreign exchange loss, relief under Section 90, and short grant of credit for tax deducted at source were also dismissed. The Transfer Pricing adjustments made by the Transfer Pricing Officer were upheld. The appeal was allowed in part, with directions for the Assessing Officer to grant appropriate tax credit after verification.

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Issues Involved:
1. Validity of the assessment order under Section 144C of the Income Tax Act, 1961.
2. Disallowance of foreign exchange loss on maturity of marked to market (MTM) contracts.
3. Grant of relief under Section 90 for tax withheld in a foreign country.
4. Short grant of credit for tax deducted at source.
5. Transfer pricing adjustments, including the selection of the tested party and the most appropriate method (MAM).

Detailed Analysis:

1. Validity of the Assessment Order under Section 144C:
The main issue was whether the order passed on 27/11/2015 was a draft assessment order or a final assessment order. The Tribunal noted that the order was explicitly labeled as a "Draft Assessment Order" under Section 144C. The accompanying notice of demand and penalty notice were deemed illegal and void. The Tribunal concluded that the order was indeed a draft assessment order, as the Assessing Officer (AO) specified it under Section 144C and not under Section 143(3). Consequently, the Tribunal dismissed the grounds challenging the validity of the draft assessment order and upheld it as a draft assessment order.

2. Disallowance of Foreign Exchange Loss on MTM Contracts:
The assessee did not press the grounds related to the disallowance of foreign exchange loss on maturity of MTM contracts amounting to Rs. 3,45,06,888. Therefore, these grounds were dismissed as not pressed.

3. Grant of Relief under Section 90 for Tax Withheld in a Foreign Country:
The assessee requested relief under Section 90 for tax withheld in a foreign country amounting to Rs. 3,33,66,706. The Tribunal noted that no evidence was provided by the assessee to support this claim either before the AO, the Dispute Resolution Panel (DRP), or the Tribunal. Consequently, the Tribunal dismissed this ground, stating that the matter could not be remanded to the AO without any supporting details.

4. Short Grant of Credit for Tax Deducted at Source:
The assessee claimed a short grant of credit for tax deducted at source amounting to Rs. 63,24,635. The Tribunal observed that no reconciliation statement was filed by the assessee to demonstrate the AO's error in granting the tax deducted at source. The Tribunal suggested that the assessee could approach the AO with a suitable application for rectification. This ground was dismissed.

5. Transfer Pricing Adjustments:
The Tribunal addressed multiple aspects of transfer pricing adjustments:
- The assessee's additional grounds related to the selection of the tested party and the most appropriate method (MAM) were not pressed by the assessee. Therefore, these grounds were dismissed.
- No arguments were made regarding the adjustment, MAM, comparables, etc. The Tribunal upheld the Transfer Pricing adjustments made by the Transfer Pricing Officer (TPO) as the assessee did not dispute the adjustments on facts.

Conclusion:
The Tribunal concluded that the draft assessment order dated 27/11/2015 was valid under Section 144C. The grounds related to foreign exchange loss, relief under Section 90, and short grant of credit for tax deducted at source were dismissed. The Tribunal also upheld the Transfer Pricing adjustments made by the TPO. The appeal was allowed in part, with specific directions for the AO to grant appropriate tax credit after due verification.

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