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2007] 292 ITR 70 [2007] 164 TAXMAN 279 (KAR.) HIGH COURT OF KARNATAKA Motor Industries Co. Ltd. v. Joint Commissioner of Income-tax, (Assessment), Special Range-3, Bangalore R. GURURAJAN AND ANAND BYPAREDDY, JJ. IT APPEAL NO. 83 OF 2001 APRIL 12, 2007 Section 4 of the Income-tax Act, 1961 - Income - Chargeable as - Assessment year 1991-92 - Assessee during course of its export business had realized a gain in foreign exchange owing to exchange rate fluctuation - Assessee claimed that said gain constituted capital receipt and same was not liable to income-tax for reason that assessee being a manufacturer of fuel injunction equipment, spark plugs, etc., and exporter of same realised sale proceeds in foreign exchange and assessee was not a dealer in foreign exchange - Assessing Officer disallowed said claim after passing an intimation under section 143(1)(a) and levied additional income-tax - Assessee's case was that in view of decision of Calcutta High Court in Indian Leaf Tobacco Development Co. v. CIT [1982] 137 ITR 827 / 10 Taxman 184, its claim was prima facie admissible - Whether in view of decisions of Mysore High Court in Hindustan Aircraft Ltd. v. CIT [1963] 49 ITR 471 and Canara Bank Ltd. v. CIT [1963] 47 ITR 529 receipt in question was nothing but a revenue receipt - Held, yes - Whether, therefore, Assessing Officer was justified - Held, yes CASES REFERRED TO Indian Leaf Tobacco Development Co. v. CIT [1982] 137 ITR 827 / 10 Taxman 184 (Cal.) [Para 2], CIT v. Canara Bank Ltd.[1967] 63 ITR 328 (SC) [Para 5], Hindustan Aircraft Ltd. v. CIT [1963] 49 ITR 471 (Mys.) [Para 5], Canara Bank Ltd. v. CIT[1963] 47 ITR 529 (Mys.) [Para 5] and Asstt. CIT v. J.K. Synthetics Ltd. [2001] 251 ITR 200 / 116 Taxman 598 (SC) [Para 5]. P.J. Pardiwala for the Appellant. M.V. Seshachala for the Respondent. JUDGMENT R. Gururajan, J. - Appellant is before us raising the following questions of law : "1.Whether the Assessing Officer is empowered to decide as to whether a receipt is on revenue or capital account while making an adjustment under clause (iii) of the first proviso to section 143(1)(a)? 2.Whether the appellant's claim that the gain in exchange on export realisations…

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