Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 766 - BOMBAY HIGH COURTIncrease in loan liability due to fluctuation in foreign exchange rates - Investment allowance additionally claimed with regard to the additional cost which arose on account of fluctuation in the foreign currency exchange rate - investment allowance on the additional cost in the year of acquisition - actual cost of the ship from the foreign country and the assessee was entitled to invest allowance on the additional cost in the year of acquisition - HELD THAT:- As per section 43A of the Act as it stood during the relevant assessment year up to the assessment year 2003-03, the adjustment on account of foreign currency rate fluctuation was to be made in the year in which the foreign exchange fluctuation took place. By virtue of Finance Act, 2002, with effect from assessment year 2003-04, such adjustment is to be made in the year in which the liability in foreign exchange is discharged. In view of GUJARAT STATE FERTILIZERS CO. LTD. [2002 (10) TMI 79 - GUJARAT HIGH COURT] it is well-settled that when the asset was purchased at a price, liability was to be discharged in instalments, it cannot be stated that the liability did not exist or accrue till the instalments became due and payable. It is this liability which changes on account of fluctuation in the rate of exchange. In the Backdrop of the provisions of section 32A read with section 43A, and in view of the judgments referred hereinabove, we answer the questions of law in favour of the appellant and against the revenue. We hold that in terms of section 43A, the increase or reduction in the liability has to take place only in the year of fluctuation and it does not relate back to the year of acquisition of the asset.
|