1998 (10) TMI 31

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..... rease in his cost of the machineries installed by the assessee by Rs. 19,78,050 during the asst. yr. 1983-84, on account of the variation in the rate of foreign exchange, the machineries having been imported and the payment being required to be made in foreign currency. The assessee claimed investment allowance for the same. The claim was negatived by the ITO, but was allowed by the CIT(A), in app .....

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..... the IT Act, 1961 (hereinafter referred to as 'the Act'), deals with investment allowance. It provides for allowance at the rate prescribed therein as a percentage of the 'actual cost' of the ship, aircraft, machinery or plant to the assessee. Sec. 43(1) of the Act defines 'actual cost' to mean the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as ha .....

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..... e assessee as expressed in Indian currency for making payment towards the whole or part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset) being in either case, the liability existing immediately before the date on which the change in the .....

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..... y to refer to the Explanations and the other parts of section for the purpose of this reference. 5. It is evident by reason of s. 43A(1) of the Act, the amount by which the liability of the assessee is increased or reduced during the previous year by reason of variation in the rate of exchange as between the Indian currency and the foreign currency, in cases, where the assets have been acquired, .....

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..... ich the liability of the assessee is so increased or reduced 'during the previous year'. The increase in the liability of the assessee during the previous year on account of the change in the rate of exchange is part of the actual cost of the machinery required from a foreign country and the assessee is entitled to investment allowance on the additional cost. 7. The question referred to, is ther .....

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