TMI Blog1989 (1) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out of the appellate order in I. T. A. No. 330 (Coch) of 1979. The question referred is : "Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 15,369.84 being the excess amount paid due to fluctuation in rate of exchange was not allowable as revenue expenditure in computing the income of the applicant for the assessment year 1975-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f exchange determined by the Government and not difference in fluctuations in exchange rates owing to fluctuations of currencies. The appellate authority was of the view that fluctuations in exchange rates due to fluctuation of currencies should be considered to be the "rate of exchange recognised" by the Government also appearing in section 43A. On second appeal, the Tribunal upheld the view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n loan by reason of variation in the exchange rate will squarely fall under section 43A as it is an expenditure of a capital nature. The decision of the Supreme Court in CIT v. Tata Locomotive and Engineering Co. Ltd. [1966] 60 ITR 405 was noted in that case which held that the surplus obtained on devaluation of the rupee on the accumulated dollars intended for purchase of capital goods is a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But the assessee has to provide funds for the purchase of foreign currency in terms of the Indian rupee and that will not remain the same as it was at the time of the agreement of purchase. Such extra amount that has to be paid by the assessee has to be considered to be capital expenditure. The Tribunal also held that the expenditure of Rs. 15,369 had been rightly treated as capital expenditure b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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