Assessee Appeals Partially Allowed, Revenue Appeals Dismissed: Tribunal Decisions on Tax Disallowance, Depreciation, Transfer Pricing

The Tribunal partially allowed the appeals by the assessee and dismissed the appeals by the Revenue. The decisions were based on judicial precedents and coordinate bench rulings in the assessee's previous cases. Various issues such as disallowance under section 14A, depreciation, transfer pricing adjustments, deductions under different sections, and determination of arm's length prices were addressed, with the Tribunal upholding or modifying decisions based on earlier rulings and legal interpretations.

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Issues Involved:
1. Disallowance under section 14A of the Income Tax Act.
2. Disallowance of depreciation.
3. Addition of interest on income tax refund while computing book profits under section 115JB.
4. Reference to the Transfer Pricing Office (TPO) under section 92CA.
5. Interest chargeable on share application money refunded by the Associated Enterprise (AE).
6. Reduction of depreciation by reworking the claim of depreciation on the basis of earlier years.
7. Computation of disallowance under section 14A read with Rule 8D(2)(iii).
8. Deletion of disallowance of expenditure incurred on aborted blocks of contract areas other than eligible unit.
9. Grant of deduction under section 80IB(9)(ii) in respect of 'natural gas' and 'condensate'.
10. Computation of deduction under section 10AA.
11. Deduction under section 35(2AB) in respect of R&D expenditure.
12. Deletion of disallowance of long-term and short-term capital loss on sale of non-cumulative compulsory convertible preference shares.
13. Transfer pricing adjustment on account of interest on delayed receipts of sale proceeds.
14. Transfer pricing adjustment on account of preference shares subscribed by assessee of its associated enterprise.
15. Transfer pricing adjustment for drilling support services provided by the assessee to its AE.
16. Determination of arm's length price for corporate guarantee given to its AE.
17. Selection of comparables for benchmarking the international transaction pertaining to determination of arm's length price of business support services availed from the AE.
18. Determination of arm's length price for inter-unit transfer of power.

Detailed Analysis:

1. Disallowance under Section 14A of the Income Tax Act:
The Tribunal upheld the disallowance under section 14A read with Rule 8D, following its earlier decision in the assessee's case, confirming that the Assessing Officer (AO) had recorded satisfaction for rejecting the assessee's computation of disallowance. The computation was directed to be at 0.5% of the average value of investments yielding exempt income or the expenses disallowed by the assessee, whichever is higher.

2. Disallowance of Depreciation:
The Tribunal upheld the disallowance of depreciation on the opening WDV of capitalized value of goods purchased from P.K. Agarwal Group concerns. This decision followed the coordinate bench's ruling in the assessee's own case for previous assessment years.

3. Addition of Interest on Income Tax Refund while Computing Book Profits u/s 115JB:
The Tribunal directed the AO to delete the adjustment for interest on income tax refund while computing book profits under section 115JB, following the precedent set in the assessee's own case and the Bombay High Court ruling in the case of Commissioner of Income Tax vs. Bengal Finance and Investment Private Limited.

4. Reference to the Transfer Pricing Office (TPO) under Section 92CA:
The Tribunal dismissed the grounds related to the reference to the TPO without recording satisfaction and without demonstrating the motive to shift profits outside India, as these grounds were not pressed by the learned AR.

5. Interest Chargeable on Share Application Money Refunded by the AE:
The Tribunal directed the AO/TPO to delete the adjustment on account of levy of interest on excess share application money refunded, as the transaction of subscribing to preference shares was not found to be bogus or sham.

6. Reduction of Depreciation by Reworking the Claim of Depreciation on the Basis of Earlier Years:
The Tribunal upheld the CIT(A)'s direction to adopt the WDV of the assets as on 01/04/2015 based on orders giving effect to the orders of CIT(A) of preceding years, following the coordinate bench's decision in the assessee's own case.

7. Computation of Disallowance under Section 14A Read with Rule 8D(2)(iii):
The Tribunal upheld the CIT(A)'s direction to recompute the disallowance at 0.5% by taking the average value of those investments which have yielded exempt income during the year under consideration or the expenses disallowed by the assessee, whichever is higher.

8. Deletion of Disallowance of Expenditure Incurred on Aborted Blocks of Contract Areas Other than Eligible Unit:
The Tribunal upheld the CIT(A)'s direction that the cost in respect of abortive/unsuccessful blocks should not be reduced while computing the profits of the undertaking eligible for deduction under section 80IB(9), following the coordinate bench's decision in the assessee's own case.

9. Grant of Deduction under Section 80IB(9)(ii) in Respect of 'Natural Gas' and 'Condensate':
The Tribunal upheld the CIT(A)'s finding that the term 'mineral oil' for the purpose of claiming deduction under section 80IB(9) includes 'natural gas' and 'condensate', following the coordinate bench's decision in the assessee's own case and the Gujarat High Court ruling in NIKO Resources Limited vs. DCIT.

10. Computation of Deduction under Section 10AA:
The Tribunal upheld the CIT(A)'s direction to grant deduction under section 10AA with respect to profit and gains as determined by the Supreme Court in Vijaya Industries, following the coordinate bench's decision in the assessee's own case.

11. Deduction under Section 35(2AB) in Respect of R&D Expenditure:
The Tribunal upheld the CIT(A)'s direction to allow weighted deduction in respect of R&D expenditure under section 35(2AB) as claimed by the assessee, following the coordinate bench's decision in M/s. Glenmark Pharmaceuticals Ltd. vs. ACIT.

12. Deletion of Disallowance of Long-Term and Short-Term Capital Loss on Sale of Non-Cumulative Compulsory Convertible Preference Shares:
The Tribunal upheld the CIT(A)'s decision to allow the entire capital loss incurred by the assessee, following the coordinate bench's decision in the assessee's own case where the recharacterization of NCCPs as loans was quashed.

13. Transfer Pricing Adjustment on Account of Interest on Delayed Receipts of Sale Proceeds:
The Tribunal upheld the CIT(A)'s acceptance of the benchmarking done by the assessee and deletion of the adjustment made by the TPO, following the coordinate bench's decision in the assessee's own case.

14. Transfer Pricing Adjustment on Account of Preference Shares Subscribed by Assessee of its Associated Enterprise:
The Tribunal upheld the CIT(A)'s decision to delete the adjustment on account of preference shares subscribed by the assessee, following the coordinate bench's decision in the assessee's own case.

15. Transfer Pricing Adjustment for Drilling Support Services Provided by the Assessee to its AE:
The Tribunal upheld the CIT(A)'s decision to delete the adjustment made by the TPO for drilling support services provided by the assessee to its AE, following the coordinate bench's decision in the assessee's own case.

16. Determination of Arm's Length Price for Corporate Guarantee Given to its AE:
The Tribunal upheld the CIT(A)'s acceptance of the benchmarking done by the assessee and deletion of the adjustment made by the TPO, following the coordinate bench's decision in the assessee's own case.

17. Selection of Comparables for Benchmarking the International Transaction Pertaining to Determination of Arm's Length Price of Business Support Services Availed from the AE:
The Tribunal upheld the CIT(A)'s direction to include Empire Industries Ltd, ICRA Management Consulting Services Ltd, and Spectrum Business Solutions Limited as comparables and exclude BVG India Ltd, following the coordinate bench's decision in the assessee's own case.

18. Determination of Arm's Length Price for Inter-Unit Transfer of Power:
The Tribunal upheld the CIT(A)'s decision to allow the appeal filed by the assessee on this issue, following the coordinate bench's decision in the assessee's own case.

Conclusion:
The appeals by the assessee were partly allowed, while the appeals by the Revenue were dismissed. The Tribunal's decisions were primarily based on judicial precedents and coordinate bench decisions in the assessee's own case for previous assessment years.

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