TMI Blog1978 (8) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. No. 65/76 and one question in each of the other three cases which is common to all the four years. Sri G. Sarangan, learned counsel for the assessee, states that the second question referred to us in respect of the assessment year 1968-69 need not be answered. It follows that only one common question arises for consideration before us in respect of all the four assessment years and that reads as follows : " Whether, on the facts and in the circumstances of the case, difference in the rupee value of machinery due to devaluation of the rupee was part of the actual cost of plant and machinery for purposes of allowance of depreciation and development rebate ? " The assessee is a limited company. Under a collaboration-agreement entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. The reason given by him in support of his order was that the assessee had not incurred any extra expenditure after the deposit was made to its credit on 10-5-1966 and the subsequent devaluation would not have any effect on the actual cost of the machinery in question to the assessee. The assessee preferred appeals before the AAC of Income-tax. The AAC allowed the appeals holding that : " The ITO erred in correlating the value of foreign exchange received towards the share capital of the company to the import of machinery subsequent to devaluation. Depreciation and development rebate is to be granted on the rupee value of plant and machinery and is not to be based on the cost of foreign currency to the appellant prior to dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assumption that the assessee would have had to pay a higher amount if it had acquired pound sterling at the time of purchase of the machinery. In other words, the figure credited to the capital reserve account is clearly a notional figure by increasing the value of the imported machinery in terms of rupees calculated at post-de-valuation rates. The assessee, did not expend this amount of Rs. 6,03,280 or part thereof since it did not pay this amount to any person, either to the Bank of India Ltd., London, or to the suppliers of the machinery. It is thus purely a notional figure." When it was brought to the notice of the Tribunal that even the customs department had levied duties on the machinery on the basis of their amended value co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason given by the Tribunal is adopted then it would lead to incongruous results. The actual cost of the machinery to an Indian purchaser who had British currency prior to devaluation would be different from the actual cost to another Indian purchaser who purchased the machinery at the same time and who had not acquired British currency prior to devaluation. While determining the actual cost to the assessee of the machinery or plant except in cases where the cost has been met directly or indirectly by any other person or authority it would not be correct to go into the question as to how the assessee got the currency, for paying the price of the machinery and plant and at what rate he got it. There may be a case, where an assessee has acq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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