TMI Blog2021 (11) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... e context of development rebate, it was observed that the increase or decrease in liability should be taken into account to modify the figure of actual cost and secondly that such adjustment should be made in the year in which the increase or decrease in liability arises on account of the fluctuation in the rate of exchange. The above conclusion is consistent with the decision of the Calcutta High Court in Kanoria Chemicals and Industries Ltd. [ 1991 (3) TMI 4 - CALCUTTA HIGH COURT ] and in Hindustan Aluminum Corporation Ltd. [ 1993 (8) TMI 56 - BOMBAY HIGH COURT ] There is no decision to the contrary cited before this Court by the Department. The Court answers the question in the affirmative i.e. in favour of the Assessee. - IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 rejected the above claim. 4. In appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] by an order dated 31st October 1997 allowed the claim of the Assessee in respect of the additional claim for depreciation allowance on increased cost of plant and machinery due to exchange rate fluctuation. The CIT (A) referred to the decision of the Calcutta High Court in Commissioner of Income Tax v. Kanoria Chemicals and Industries Ltd [1994] 207 ITR 718 (Cal); the decision of Bombay High Court in Commissioner of Income Tax v. Hindustan Aluminum Corporation Ltd. [1994] 207 ITR (Bom.) and the decision of Supreme Court of India in Commissioner of Income Tax, Gujarat v. Arvind Mills Ltd. AIR 1992 SC 718. The CIT (A) also noted that his predeces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o account to modify the figure of actual cost and secondly that such adjustment should be made in the year in which the increase or decrease in liability arises on account of the fluctuation in the rate of exchange. 9. The Gujarat High Court in New India Industries Ltd. v. Commissioner of Income Tax [1993] 203 ITR 933 (Guj) has, after discussing the decision of the Supreme Court in Arvind Mills Ltd. (supra) concluded as under: In our opinion, when the assessee purchased assets at a price, its liability to pay the same arose simultaneously. Merely because the said that the liability was to be discharged in instalments become due and payable. It was that liability which has increased on account of fluctuation in the rate of exchange. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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