Foreign Exchange Losses Treated as Operating Items; Product Development Expenses Adjustment Remanded

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....The ITAT upheld the DRP/TPO's characterization of foreign exchange losses as operating items, affirming that such gains or losses arise from normal business activities, particularly in export operations, and are not extraordinary in nature; thus, no transfer pricing adjustment was warranted. Conversely, the Tribunal found merit in the assessee's contention regarding product development expenses, distinguishing them from operating expenses due to their non-incurrence during the year and lack of linkage to revenue. The ITAT directed the TPO to reassess the product development expense adjustment consistent with prior years' rulings, subject to the assessee furnishing appropriate substantiation. The order of the lower authorities on foreign exchange losses was affirmed, while the product development expenses adjustment was remanded for reconsideration.....