M/S. BCH ELECTRIC LTD.,KOLKATA vs. DCIT, CIRCLE 7, KOLKATA, KOLKATA

ITA 1637/KOL/2026Status: DisposedITAT Kolkata04 August 2026AY 2012-20136 pages

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) should have deleted the disallowances as the issues were covered by settled legal principles and judicial precedents. Restoring the issues to the AO would lead to multiplication of proceedings.

What were the facts?

The Assessing Officer disallowed provision for warranty and foreign currency loss. The CIT(A) found merit in the assessee's grounds but restored the issues to the AO for verification.

What were the issues?

Whether the CIT(A) erred in restoring issues to the AO for verification when merits were found, instead of adjudicating them directly. Whether provision for warranty and foreign currency loss are deductible expenses.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI YOGESH KUMAR U.S. & SHRI RAKESH MISHRA

For Appellant: Shri Siddharth Jhajharia, FCA

For Respondent: Shri Sandip Kumar, Sr. DR

Hearing: 23.07.2026Pronounced: 04.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.1637/KOL/2026 Assessment Year: 2012-13

M/s BCH Electric Limited Vs. DCIT, Circle-7, Kolkata C/o M/s SalarpuriaJajodia& Co., 7, C.R. Avenue, 3rd Floor, Kolkata, West Bengal-700072 [PAN: AABCB2076M] APPELLANT RESPONDENT Appellant by : Shri Siddharth Jhajharia, FCA Respondent by : Shri Sandip Kumar, Sr. DR Date of hearing : 23.07.2026 Date of Pronouncement : 04.08.2026 O R D E R PER YOGESH KUMAR U.S., JUDICIAL MEMBER: This Appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal) (‘Ld. CIT(A)’ for short) dated 17.02.2026, passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2012-13 on following Grounds of Appeal:- “1. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in not adjudicating on the allowance of provision of warranty of Rs. 13,77,948/- and merely set aside the impugned ground to the AO for verification and such action of Ld. CIT(A) amounts to non- adjudication of the ground so raised and hence it may be held accordingly. 2. Without prejudice to Ground No. I above, Ld. CIT(A) erred in not appreciating the fact that the impugned provision of warranty was

ITA No.1637/Kol/2026 M/s. BCH Electric Limited; A.Y: 2012-13 deductible in the computation of income of the appellant and in view of the facts and in the circumstances, it may be held accordingly. 3. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in not adjudicating on the allowance of Foreign Currency Loss of 13,08,505/- and merely set aside the impugned ground to the AO for verification and such action of Ld. CIT(A) amounts to non-adjudication of the ground so raised and hence it may be held accordingly. 4 Without prejudice to Ground No. 3 above, Ld. CIT(A) erred in not appreciating the fact that the impugned Foreign Currency Loss was deductible in the computation of income of the appellant and in view of the facts and in the circumstances, it may be held accordingly. 5. For that your petitioner craves the right to put additional grounds and/or to alter/amend/modify the present grounds at the time of hearing.”

Brief facts of the case are that, an Assessment has been framed against the Assessee u/s 143(3) of the Act on 31.03.2015, wherein the Ld. Assessing Officer disallowed the expenses of warranty to the tune of Rs.13,77,948/- and also disallowed foreign exchange loss of Rs.13,08,505/-. Aggrieved by the Assessment Order dated 31.03.2015, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) while adjudicating both the disallowances made by the Assessing Officer, found merits in the case of the Assessee based on the Judgments of the Hon’ble Supreme Court and High Court and thereby found merits in the Grounds of Appeal of the Assessee. However, further restored those issues to the file of the Assessing Officer for verification vide order impugned dated 17.02.2026. Aggrieved by the order dated 17.02.2026 passed by the CIT(A),

ITA No.1637/Kol/2026 M/s. BCH Electric Limited; A.Y: 2012-13 Assessee preferred the captioned Appeal on the Grounds mentioned above.

The Learned Counsel for the Assessee submitted that once the CIT(A) finds merits in the Grounds of Appeal of the Assessee, which are covered in Assessee’s own case and also due to the ratio laid down by the Hon’ble Supreme Court, the Ld. CIT(A) ought to have deleted the disallowance made by the Assessing Officer, instead the Ld. CIT(A) restored the issue to the file of the Assessing Officer, which will cause hardship to the taxpayer due to multiplication of the proceedings. Thus, sought for allowing the present Appeal.

Per contra, the Ld. DR submitted that the Ld. CIT(A) has only remitted the matter to the file of the Assessing Officer after finding merits in the Grounds of Appeal of the Assessee, therefore, the Assessee cannot have any grievance. Thus, sought for dismissal of the present Appeal.

We have heard the parties and perused the material on record. Assessee claimed the expenses of Rs.13,77,948/- as provision for warranty. During the assessment proceedings, the Assessing Officer disallowed the said expenses treating the same as contingent liability. Assessee in Ground No.2 before the Ld. CIT(A), challenged the

ITA No.1637/Kol/2026 M/s. BCH Electric Limited; A.Y: 2012-13 disallowance of provisions for warranty of Rs.13,77,948/-. It is the case of the Assessee that the said provision is based on scientific basis and consistent method has been followed and relied on the Judgments of the Hon’ble Supreme Court in the case of Rotork Control Private Limited (314 ITR 62) and Bharat Earth Movers (245 ITR 428) and also relied on the Assessee’s own case for earlier year decided by the Co-ordinate Bench of the Tribunal, wherein the very same expenses have been allowed following the Hon’ble Supreme Court’s Judgment.

The Ld. CIT(A) in the first Appeal, found that due to settled legal provisions and judicial principles, the claim of the Appellant appears to be in accordance with law. However, without any reason, restored the issue to file of the Assessing Officer for verification. In our considered view, once the Ld. CIT(A) finds that the issue is squarely covered by the order of the Tribunal in earlier year, it is not warranted to restore the issue to the file of the Assessing Officer, which will only results in multiplication of the proceedings. The Ld. CIT(A) ought to have deleted the disallowance made by the Assessing Officer and should have allowed the claim of the Assessee. Thus, we direct the Assessing Officer to allow the claim of provision for warranty of Rs.13,77,948/-. Accordingly, we allow Grounds No.1 & 2 of the Assessee.

ITA No.1637/Kol/2026 M/s. BCH Electric Limited; A.Y: 2012-13 7. Further, Assessee claimed foreign currency loss of Rs.13,08,505/-. However, the Assessing Officer disallowed the foreign currency loss treating it as notional or mark-to-market loss. In the first Appeal, the Assessee contended that the loss relates to normal business transactions and not speculative derivative transactions. The Assessee has also relied on the Judgments of the Hon’ble High Court in the case of CIT Vs. Woodward Governor India Private Limited (312 ITR 254) and also the case of Sutlej Cotton Mills Limited (116 ITR 1) wherein it is held that loss arising from Foreign Exchange fluctuation in the course of business is Revenue in nature. After considering the contentions of the Assessee, in view of the binding precedents and the material placed below before the Ld. CIT(A), the Ld. CIT(A) found that the ‘claim of the Assessee appears prima facie allowable’. However, restored the issue to the file of the Assessing Officer. In our opinion, once the Ld. CIT(A) is of the opinion that the claim of the Assessee is allowable based on the material placed on record and also in view of the binding precedents, the Ld. CIT(A) should have deleted the disallowance. Restoring the issue to the file of the Assessing Officer will only amounts to multiplication of proceedings, therefore, we direct the Assessing Officer to allow the foreign currency loss claimed by the Assessee of Rs.13,08,505/-. Accordingly, Grounds No.3 & 4 raised by the Assessee in this Appeal is allowed

ITA No.1637/Kol/2026 M/s. BCH Electric Limited; A.Y: 2012-13 8. In the result, Appeal of the Assessee is allowed.

Order pronounced on 04.08.2026. Sd/- Sd/- (RAKESH MISHRA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 04.08.2026 DP, PS Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //TRUE COPY//

ASSISTANT REGISTRAR KOLKATA BENCHES, KOLKATA

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