TMI Blog1991 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of exchange of the Indian rupee during the relevant accounting year ? 2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to development rebate on the aforesaid amount of Rs. 23,61,713 ?" Shortly stated the dispute relates to the assessee's claim for depreciation and development rebate on a sum of Rs. 23,61,713. Initially, the assessee does not appear to have made any claim in this behalf and the claim made was for a sum of Rs. 3,70,998 only, being the difference in the amount of money which the assessee had to pay in excess to some foreign concerns from which it purchased its machinery on account of difference in the rate of exchange of the Indian rupee as revenue expenditure. This amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) in view of the clear language used in section 43A(2) of the Income-tax Act. On appeal before the Tribunal, reliance was placed upon a decision of the Madras High Court in Addl. CIT v. Kwality Spinning Mills (P.) Ltd. [1977] 109 ITR 646, wherein such a claim was held to be allowable notwithstanding the provisions of section 43A(2). This judgment of course was not followed by the same High Court in South India Shipping Corporation Ltd. v. Addl. CIT [1979] 116 ITR 819. However, the Calcutta High Court had in Union Carbide India Ltd. v. CIT [1981] 130 ITR 351, approved the earlier decision of the Madras High Court and expressly dissented from the later decision in South India Shipping Corporation Ltd. v. Addl. CIT [1979] 116 ITR 819. It had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the increased liability arising out of the devaluation attributable to plant and machinery was accepted. Even the observation of this court in that context also does not support the contention of Mr.Bajoria. The principle which has been laid down in Union Carbide India Ltd. [1981] 130 ITR 351 (Cal), by this court is that if the contract stipulates repayment in foreign currency, the actual cost of the asset must be computed on the value of the foreign currency. Anything which went into the repayment was part of the actual cost of the capital asset. Thus in the instant case also the extra expenditure incurred by the assessee would be towards the cost of plant and machinery and accordingly it will be on capital account. In either view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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