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TMI Blog2013 (12) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... , claiming following substantial question of law:- "Whether on the facts and circumstances of the case the Hon'ble Tribunal was right in law in allowing deduction under Section 32A with regard to the additional liability incurred towards the cost of the plant and machinery on account of fluctuation in foreign exchange rate subsequent to the year in which plant and machinery has been installed." 2. Briefly, the facts as narrated in the appeal necessary for adjudication of the controversy involved, may be noticed. The assessee company purchased certain machinery in the assessment year 1987-88. Due to fluctuation in the foreign exchange rates in the assessment years 1991-92 to 1993-94, liability of the assessee got enhanced. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Commissioner of Income Tax. v. Wipro Finance Limited, (2010) 325 ITR 672, it was urged that Section 43A of the Act was amended by Finance Act, 2002 w.e.f 1.4.2003 which was clarificatory in nature and, therefore, the same was applicable to assessment years prior thereto as well. 4. On the other hand, learned counsel for the assessee besides supporting the order passed by the ITAT, on the strength of decision of the Apex Court in Commissioner of Income Tax. vs. Woodward Governor India (P) Limited, (2009) 312 ITR 254, this Court in CIT v. Arihant Cotsyn Limited, (2010) 327 ITR 142, Calcutta High Court in Century Enka Ltd v. Assistant (2010) 323 ITR 86 and this Court in Commissioner of Income Tax, Ludhiana II v. M/s Oswal Spinning and We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e asset as defined in clause (1) of section 43 or the amount of expenditure of a capital nature referred to in clause (iv) of sub section (1) of section 35 or in section 35A or in clause (ix) of sub section (1) of section 36, or, in the case of a capital asset (not being a capital asset referred to in section 50), the cost of acquisition thereof for the purposes of section 48, and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset as aforesaid. Explanation 1: xx xx xx xx" 7. The scope of the aforesaid provision was succinctly analysed by the Apex Court in W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of his business or profession and, in consequence of a change in the rate of exchange during any previous year after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency (as compared to the liability existing at the time of acquisition of the asset) at the time of making payment. (a) towards the whole or a part of the cost of the asset; or (b) towards 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 along with interest, if any, the amount by which the liability as aforesaid is so increased or reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the actual cost took place on the happening of change in the rate of exchange whereas under the amended section 43A the adjustment in the actual cost is made on cash basis. This is indicated by the words 'at the time of making payment'. In other words, under the unamended section 43A, 'actual payment' was not a condition precedent for making necessary adjustment in the carrying cost of the fixed asset acquired in foreign currency, however, under amended section 43A w.e.f Ist April, 2003; such actual payment of the decreased/enhanced liability is made a condition precedent for making adjustment in the carrying amount of the fixed asset. This indicates a complete structural change brought about in Section 43A, vide the Finance act, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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