Law:

Section:

Section 32, read with Section 32A and 43A, of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Assessment year 1988-89 - Whether assessee would be entitled to depreciation and investment allowance on increased cost of plant and machinery resulting from increase in liability to repay foreign currency loans taken for purchase of such plant and machinery - Held, yes CASE REVIEW CIT v. Gujarat Siddhi Cement Ltd.[2008] 307 ITR 393 / 174 Taxman 598(SC) [Para 8] followed. CASES REFERRED TO CIT v. Century Enka Ltd.[1992] 196 ITR 447 (Cal.) [Para 2], CIT v.Arvind Mills Ltd.[1992] 193 ITR 255/ 60 Taxman 192 (SC) [Para 5], New India Industries Ltd. v. CIT[1993] 203 ITR 933 (Guj.) [Para 7], Padamjee Pulp & Paper Mills Ltd. v. CIT[1994] 210 ITR 97 (Bom.) [Para 7], CITv. Motor Industries Co. Ltd.[1998] 229 ITR 137 / 97 Taxman 7 (Kar.) [Para 7], Associated Bearing Co. Ltd. v. CIT[2006] 286 ITR 341 / 157 Taxman 28 (Bom.) [Para 7], CIT v. Woodward Governor India (P.) Ltd.[2007] 294 ITR 451/ 162 Taxman 60 (Delhi) [Para 7] and CIT v. Gujarat Siddhi Cement Ltd.[2008] 307 ITR 393/ 174 Taxman 598 (SC) [Para 8]. Khaitan for the Appellant. JUDGMENT Pinaki Chandra Ghose, J. - This appeal is admitted by the Court on the following substantial questions of law :- "Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the appellant was not entitled to depreciation of Rs. 43,71,472 and the investment allowance of Rs. 27,01,145 on the increased cost of the plant and machinery resulting from increase in the liability to repay the foreign currency loans increased for purchase of such plant and machinery?" 2. In this matter the assessment year involved is 1988-89. The learned Tribunal held that under section 43A of the said Act the claim of investment allowance is not allowable. Mr. Khaitan, appearing in support of this appeal drew our attention to section 43A which is quoted hereunder :- "43A. (1) Notwithstanding anything contained in any other provisions of this Act, where an assessee has acquired any asset from a country outside India for the purposes of his business or profession and, in consequence of a change in the…

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