My view as below
The option(yes/No) is for deferral of income . Yes means deferral of income with tax to be paid in withdrawal year, No means no deferral and tax to be paid every year. Issue here is that its not clear how annual capital losses would be handled if the No option is chosen as there is no carry forward mechanism.
Historically, you have chosen the option as No effectively for the past 15 yrs but for income you used only distributions and not the capital value changes.
I am assuming that the distributions was not a withdrawal to a Bank account but rather like a like a dividend which is locked in the retirement account. If one is able to withdraw cash to bank accounts, makes sense to pay tax every year on the withdrawals as one can also take benefit of foreign taxes paid via DTAA.
Assuming that withdrawal is not to Bank accounts, I feel that going forward You should have the 10-EE option as 'Yes' and don't pay tax going forward on annual distributions/fund dividends till the final withdrawal is done. Take full benefit of deferral until one has the ability to close the retirement account and withdraw. When you do final withdrawal/close account at say age of 60 for 401k style plans , pay tax on the entire increment in retirement account from the time you became ROR taking credit for taxes already paid. Once you withdraw, use 35-50% of the money to pay accumulated tax .
The form 10-EE/ITR 2 anyway allows you to get the benefit of tax paid when you make the final withdrawal so nothing lost on historical payments. Make sure your CA fills in the reconciliation form in form 10-EE. There is no significant tax saving in either yes or no options. Its just enabling payment of tax at future date and also enabling credit for foreign tax payments.
There is so much tax headache in maintaining these foreign retirement accounts that the moment one is able to withdraw, better to close these .
B) Regarding "Changes in market value cannot be considered accrued value"
Income tax department has a seperate definition of accrual for retirement accounts per CBDT circular 15 of 2015 (It is income, dividend, capital gain or any other sum) . Keyword 'Any' and I feel also including even unrealised capital gain. Unfortunately no guidance on how capital losses taken into account here.
C)Having amount in foreign currency doesnt work as the CSV form which is to be upload/ed doesn't have any placeholder for currency code. It would have to be Foreign currency amount converted to Rs . (format of the CSV field for the amounts is Numeric, 16 characters maximum, 2 Decimal point) per instructions hence no way to mention currency and amount as text either.
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