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1 - 10 of 40 (1.11 seconds)Section 33 in The Income Tax Act, 1961 [Entire Act]
Article 372 in Constitution of India [Constitution]
Article 278 in Constitution of India [Constitution]
Section 10 in Income Tax Rules, 1962 [Entire Act]
Section 43 in The Income Tax Act, 1961 [Entire Act]
The Income Tax Act, 1961
India Cements Ltd., Madras vs Commissioner Of Income-Tax, Madras on 8 December, 1965
12. Here also though, as I have said before, subsequent decisions had dealt with this case, the actual distinction is sought to be urged before us, whether the user of the assessee's own money or user of the borrowed money of the assessee was for capital or for revenue purpose made any difference does not seem to have been stressed. But this decision, as we shall indicate, has been later on followed. If this decision is understood in the light of the expression "when any cost or expenses incurred for obtaining a loan before it was used" then it could be treated as a capital, then the principle of this decision is absolutely irreconcilable with the observations of the Supreme Court in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52.
Commissioner Of Income-Tax, Bombay ... vs Tata Locomotive & Engineering Co., Ltd on 13 January, 1966
"5. We have considered the rival submissions. On the first issue whether the loss arising out of devaluation on account of loan from the Export Import Bank of Washington was an allowable deduction in computing
the business income, even though a number of case law have been cited before us by both the sides, the answer to the question is self-evident from the ruling of the hon'ble Supreme Court in the case of Commissioner of Income-tax v. Tata Locomotive and Engineering Co. Ltd. . In that case, the hon'ble Supreme Court has laid down that where profit or loss arising from change in exchange rate of foreign currency was on the balance outstanding in connection with the purchase of capital goods, the profit or loss is of the nature of capital. Viewed in this context, it was not under dispute in the present case that the loan from the Export Import Bank of Washington was taken for the purchase in the USA of capital plant and machinery in the new project of petrochemical undertaking. The loan outstanding to the Export Import Bank on the devaluation date was thus for a capital purpose, i.e., purchase of capital plant and machinery in the new project of petrochemical undertaking. It follows, therefore, that if there was any profit or loss on account of devaluation in respect of this liability it was on capital account. We, therefore, following the ruling of the hon'ble Supreme Court in the case of Tata Locomotive and Engineering Co. Ltd. , which is a binding authority for us and with which we are in respectful agreement, hold that the loss arising from devaluation attributable to the Export Import Bank was of the nature of capital loss. This could not, therefore, be allowed as a deduction in computing the business profit and was rightly disallowed by the revenue authorities. We will now deal with the alternative issue raised by the assessee-company that even if the loss on devaluation was considered to be capital loss, development rebate should have been allowed on the increased liability arising out of devaluation attributable to plant and machinery installed during the previous year amounting to Rs. 1,09,24,832. Here again, it is not under dispute that out of the loan taken from the Export Import Bank payments were made to suppliers of capital plant and machinery in the USA and the plant and machinery which were installed during the previous year were those items of plant and machinery in respect of which payments had already been made by the assessee-company before the date of devaluation. This means that the actual amount which the assessee-company had to pay for the plant and machinery which was installed during the previous year was at the pre-devaluation rates and the increased liability on account of devaluation was in respect of loan taken in the USA which was outstanding on the devaluation date, and not in respect of purchase of capital plant and machinery. In these circumstances, even according to the criterion of actual cost as submitted before us by the assessee's learned counsel, Shri Rozario, the increased liability on account of devaluation will have nothing to do with what the assessee company had to pay for acquiring capital plant and/or machinery or
for bringing them into working condition. No part of the increased liability on account of devaluation can, therefore, be included in the actual cost of plant or machinery which was installed during the previous year. The judgment of the Income-tax Appellate Tribunal in I.T. A, No. 2027 of 1971-72 will, therefore, not be applicable here. If resort is had to the provisions of Section 43A, Sub-section (2) of Section 43A clearly lays down that the variation in actual cost worked out under this section, will have no effect of development rebate admissible under Section 33 of the Income-tax Act, 1961. Thus, the alternative plea of the assessee also fails and the revenue authorities, in our view, were justified in not allowing development rebate on the increased liability arising out of devaluation which was debited by the assessee to the plant and machinery account on both the issues. Therefore, the appeal of the assessee-company fails."