Village Bangalore Krishnarajapuram Hobli Bangalore 560 066 PAN NO : AABCG5658E APPELLANT RESPONDENT Appellant by : Shri T. Suryanarayana, Sr. A.R. Respondent by : Shri Sreenivas T. Bidari, D.R. Date of Hearing : 04.01.2023 Date of Pronouncement : 12.01.2023 ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: All these appeals by assessee are directed against different orders dated 9.4.2018, 10.4.2018 & 10.4.2018 passed u/s 143(3) of the Incometax Act,1961 ['the Act' for short] by the CIT(A), Bangalore for the assessment years 200910, 201011 & 201213. ITA Nos.1980 to 1982/Bang/2018 M/s. Harman Connected Services Corporation India Pvt. Ltd., Bangalore Page 2 of 38 2. The first common ground in all these appeals in ITA Nos.1980 to 1982/Bang/2018 is with regard to disallowance of MTM losses on forex derivatives (unrealised) and hedging losses (realised) and with regard to nonadjudicating of the ground relating to the hedging losses amounting to Rs.50,49,94,175/ of Bangalore unit and Rs.74,74,205/ of Pune Unit. We consider the facts on this issue as narrated in ITA No.1980/Bang/2018 for the AY 200910. 3. This ground of appeal relates to adjustment of marked to market losses. In brief, during the assessment proceedings, the AO observed that the assessee has debited the profit and loss account by an amount of Rs.78,69,47,279/ on account of unrealised marked to market losses. Of this an amount of Rs.77,78,98,324/ was debited under the head 'unrealised marked to market losses' and the balance amount of Rs.90,48,955/ was included in foreign exchange loss of Rs.12,85,52,937/. After taking into consideration the replies of the assessee on the issue, the AO concluded that the marked market losses (MTM) claimed by the assessee on account of restatement of forex derivatives at the end of the financial year are not allowable as revenue expenditure. Accordingly, an amount of Rs.78,69,47,279/ was disallowed and added back to the income of the respective undertakings/units of the assessee company. 4. The ld. A.R. submitted that during the assessment year 2009 10, the assessee incurred an aggregate loss of Rs. 129,94,15,659/ (comprising of loss of Rs. 78,69,47,279/ arising on restatement of forward contracts, and realised loss of Rs. 51,24,68,380/), in respect of the forward contracts entered into by it, on account of fluctuation of foreign currency. The assessee claimed the loss as a deduction. ITA Nos.1980 to 1982/Bang/2018 M/s. Harman Connected Services Corporation India Pvt. Ltd., Bangalore Page 3 of 38 5. The ld. CIT(A) has observed that a perusal of the details filed by the assessee shows that during the year under consideration, the assessee company had made certain exports and raised invoices from time to time. To safeguard any losses in sales, invoices raised on account of exchange fluctuation in foreign currency, the assessee used to enter into Forward Contracts with Banks in relation to some of these sales. Some of these forward contracts matured during the year and some of them had the maturity date beyond 31.03.2009. The contracted rate of currency exchange varied depending upon the time of entering into such contract and the rate offered by the bank at that time. According to the assessee, it remeasured its forward contract pending as on 31/03/2009 at prev