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1 - 10 of 20 (0.92 seconds)India Cements Ltd., Madras vs Commissioner Of Income-Tax, Madras on 8 December, 1965
34. With the distinct features thus seen, this Court holds that the decisions of the Supreme Court in the case of India Cements Ltd., vs. Commissioner of Income Tax, Madras, reported in [1966] 60 ITR 52 and this Court in the case of Sivakami Mills Ltd., vs. Commissioner of Income Tax, Madras, reported in [1979] 120 ITR 211 (Madras) are distinguishable on facts and hence are not of any assistance to the assessee.
Commissioner Of Income Tax vs Elgi Rubber Products Ltd. on 17 February, 1995
The learned counsel appearing of the assessee would contend that the only capital goods imported during 1995-96, is to a value of Rs.3,41,42,000/-, and during the current year was Rs.3,59,73,000/-, in all Rs.7,01,15,000/- and in such circumstances, the entire amount cannot be capitalized as per the provisions of Section 43A of the Act. The Assessing Officer pointed out that the assessee was trying to explain away his claim by way of an alternative arguments and it would be rather strange for the assessee to avail a foreign exchange loan and place such funds in intercorporate deposits and other investments and this stand was clearly contrary to the purpose for which the assessee applied for permission to the RBI and the purpose for which, the foreign exchange loan was approved by the RBI. After noticing the accounting policy of the assessee as spelt out in the printed balance sheet in Schedule 14 which stated that exchange difference arising from foreign currency transactions are dealt with in profit and loss account or capitalized, where they relate to fixed assets and plant and machinery acquired through foreign currency loans are capitalized at rate prevalent at the time of purchase, the Assessing Officer took note of the Director's report which pointed out that substantial modernization and expansion was made during the earlier year and the current year, construction work in respect of the export oriented unit was in progress and the trial production was expected to commence during June 1997 and full scale stabilization was expected by the end of 1996-97. Further, the assessee had commissioned its new tube plant at Shirwal, Maharashtra. As already pointed out in the notes to the accounts in paragraph 12 that capital work-in-progress includes exchange fluctuation of Rs.736.01 lakhs and interest Rs.35.50 lakhs and the increase in rupee liability on account of outstanding foreign currency loan utilized in respect of acquisition of plant and machinery based on the exchange rate applicable on the date of balance sheet is Rs.537.58 lakhs including capital work in progress. After taking into consideration, the total value of the imported machinery, the Assessing Officer held that it has to be capitalized as per Section 43A of the Act following the decision in the case of CIT vs. ELGI Rubber Products Ltd, (supra).
Sivakami Mills Ltd. vs Commissioner Of Income-Tax on 27 February, 1979
34. With the distinct features thus seen, this Court holds that the decisions of the Supreme Court in the case of India Cements Ltd., vs. Commissioner of Income Tax, Madras, reported in [1966] 60 ITR 52 and this Court in the case of Sivakami Mills Ltd., vs. Commissioner of Income Tax, Madras, reported in [1979] 120 ITR 211 (Madras) are distinguishable on facts and hence are not of any assistance to the assessee.
Commissioner Of Income-Tax, Bombay ... vs Tata Locomotive & Engineering Co., Ltd on 13 January, 1966
It was further pointed out that if any part of the loan is not used for the purpose of purchase of assets, the corresponding loss has to be allowed as capital and not Revenue as the gains are not treated as Revenue income following the principles laid down by the Hon'ble Apex Court in CIT vs. Tata Locomotive and Engineering co Ltd., (Supra).
Lakshmiratan Cotton Mills Co. Ltd. vs Commissioner Of Income-Tax, Uttar ... on 3 September, 1968
17. Therefore, we would be required to examine the facts of the case on hand minutely to ascertain the aim, object, purpose and true nature of the expenditure from the documents and surrounding circumstances. The burden of proving that the expenditure was Revenue in nature is on the assessee [Lakshmiratan Cotton Mills Co. Ltd. v. Commissioner of Income-tax reported in [1969] 73 ITR 634 (SC)].
Commissioner Of Income Tax, Delhi vs M/S Woodward Governor India P. Ltd on 8 April, 2009
In the decision reported in [2009] 312 ITR 0254 (Commissioner of Income-tax v. Woodward Governor India P. Ltd.) the Supreme Court considered the allowability of expenditure arising out of fluctuation in rate of exchange. Referring to Accounting Standards 11, the Supreme Court pointed out that paragraph 9 of AS-11 recognises exchange differences as income or expenses in the period in which they arise. Paragraphs 10 and 11 deal with exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which topic falls under section 43A of the 1961 Act. Referring to Section 43A (1) opening with the non-obstante clause, the Supreme Court pointed out that Section 43A(1) applies where, as a result of change in rate of exchange, there is an increase or reduction in the liability of the assessee in terms of Indian Rupee to pay the price or any asset payable in foreign exchange or to repay the money in foreign currency taken specifically for the purpose of acquiring an asset. Section 43A, as it stood originally, would have application in a case where an asset is acquired and the liability existed before the change in the exchange rate takes place. Adjustments in the cost are thus made depending on the fluctuation in the currency rate. Thus the cost of the equipment assumes significance in the matter of working out the depreciation allowance. Referring to the amendment to Section 43A by the Finance Act of 2002, the Supreme Court pointed out that Under the unamended section 43A, adjustment to the actual cost took place on the happening of change in the rate of exchange and the Section did not require as a condition that there should be actual payment of the increased/decreased liability as a consequence of the exchange variation, whereas, under the amended section 43A, the adjustment in the actual cost is made on actual payment. Thus the Section applies where as a result of change in the exchange rate there is a reduction or increase in the liability, that the adjustment of increase or decrease in the liability relating to acquisition of asset on account of the exchange rate fluctuation is reflected as part of the actual cost of the asset acquired in foreign currency and the depreciation is to be allowed accordingly.
Periyar Chemicals Ltd. vs Commissioner Of Income-Tax on 8 October, 1996
22. Learned counsel appearing for the assessee placed reliance on the decision of the Karnataka High Court reported in (1986) 162 ITR 163 (Periyar Chemicals Ltd. V. Commissioner of Income-tax). The said decision refers to the issue of exchange fluctuation. The company therein imported machinery from Germany, for which, it availed foreign currency loan from a German company through Industrial Credit and Investment Corporation of India Ltd. At the time when the loan was taken, the exchange rate was Rs.2,258 for one Deutsche Mark. The assessee paid an instalment of 1,13,700 Deutsche Marks during the accounting year ending on June 30, 1975. On account of the fluctuation in the exchange rate, the assessee had to pay Rs.2,40,574/- as against the instalment payable at Rs.1,68,737/-. The assessee debited the excess amount of Rs.81,837/- as revenue deduction. The Tribunal rejected the assessee's contention and held that the secured and unsecured loans and the work-in-progress formed part of the capital employed for determining the deduction allowable under Section 80J. On a reference, the Kerala High Court held that the extra expenses incurred for repayment of the loan raised for the purpose of payment of price of the capital goods purchased from Germany was not of the nature of revenue expenditure and could only be treated as capital expenditure.
Union Carbide India Ltd. vs Commissioner Of Income-Tax on 28 April, 1980
In this, the High Court referred to the decision of the Calcutta High Court reported in (1981) 130 ITR 351 (cal) (Union Carbide India Ltd. V. CIT) and held that extra expenses incurred was liable to be treated as capital expenditure.
Nagpur Electric Light And Power Co. Ltd. vs Commissioner Of Income-Tax on 23 January, 1987
In the accounting year the purpose was to borrow and buy raw-material, but in the assessment year the company found it unnecessary to buy raw-material and spent it on capital asset, in such an event, the Supreme Court agreed with the decision in the case of Nagpur Electric Light and Power Co. vs. Commissioner of Income-Tax reported in (1931) 6 ITC 28 that the purpose for which the new loan was required was irrelevant to the consideration of the question whether the expenditure for obtaining the loan was revenue expenditure or capital expenditure. Thus, the Supreme Court held that the loan obtained was not an asset or advantage of an enduring nature; that the expenditure was made for securing the use of money for a certain period and that it was irrelevant to consider the object with which the loan was taken.