JCIT Vs Dozco India Private Limited (ITAT Kolkata)
The Income Tax Appellate Tribunal, Kolkata, considered the Revenue’s appeal and the assessee’s cross objection against the order dated 22.01.2026 passed by the National Faceless Appeal Centre (NFAC) under Section 250 of the Income-tax Act, 1961 for Assessment Year 2012-13. The Tribunal first took up the assessee’s cross objection, as it challenged the validity of the appellate proceedings.
The assessee had filed its return of income on 22.09.2012 declaring income of ₹7,06,02,924. An assessment under Section 143(3) was completed on 29.03.2015 determining income at ₹15,22,28,100 under the normal provisions. Subsequently, the Principal Commissioner of Income Tax passed an order under Section 263 on 13.02.2017 directing the Assessing Officer to frame a fresh assessment. Pursuant to those directions, the Assessing Officer passed an order under Sections 263/143(3) on 03.08.2017 making an addition of ₹2,32,00,812 on account of contingent liability.
The assessee appealed against the fresh assessment. Before the CIT(A), it contended that the foreign exchange liability was an ascertained liability and not a contingent liability. It furnished the computation of the foreign exchange loss, submitted that the loss had been accounted for in accordance with Accounting Standard (AS)-11 prescribed by the ICAI by marking foreign exchange fluctuations to market, and relied upon the decisions in CIT v. Woodward Governor India Pvt. Ltd., Oil and Natural Gas Corpn. Ltd. v. DCIT, and DCIT v. Bank of Bahrain and Kuwait. The CIT(A) observed that the assessee had consistently claimed foreign exchange losses based on the exchange rate prevailing at the end of each financial year and that the same accounting principle had been followed in other years without any similar addition. On that basis, the CIT(A) directed deletion of the addition of ₹2,32,00,812 and allowed the appeal.
