Law:

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JUDGMENT Akil Kureshi, J.- The petitioner has challenged a notice dated 11.10.2002 issued by the respondent Assessing Officer seeking to reopen the petitioner's completed assessment for the assessment year 1998-99. 2. Brief facts are as under : 2.1 The petitioner is a company registered under the Companies Act and is assessed to tax regularly. For the assessment year 1998-1999, the petitioner filed its return of income on 27.11.1998. Such return was taken in scrutiny. The Assessing Officer framed scrutiny assessment on 14.9.2000. The assessee had declared loss of Rs.1.44 crores(rounded off) after availing various deductions, depreciations and exemptions. The Assessing Officer computed the petitioner's total income at Rs.2.89 crores(rounded off) under section 115JA of the Act and taxed the petitioner accordingly. 2.2 It is this scrutiny assessment, which the returning officer seeks to reopen in which the impugned notice within a period of four years from the end of relevant assessment year came to be issued. The petitioner was supplied the reasons recorded by the Assessing Officer for issuing such notice which read as under : "As per Schedule 19 of notes annexed and forming part of the accounts for the year ended 31st March 1998-5(B) of Annual Report of 1997-98, India Gelatine and Chemicals Ltd. the term liability incurred in foreign currency for acquisition of fixed assets has been translated at the year and exchange rate and the resultant deficit amounting to Rs. 116.86 lakh was charged to Revenue Account. The allowance of this expenditure under Revenue account is not to be allowed in view of clarification made by the Ministry of Law. The Ministry of Law clarified in October 1984 that exchange loss arrived at on the basis of fluctuation in the rate of exchange and not backed by actual remittance cannot be allowed as deduction in computing the total income under the Income Tax Act. As the expenditure of Rs.116.86 lakh debited to Revenue Account was not backed by the actual remittance and loss arisen due to fluctuation on the first and the last day of accounting year the allowance of exchange loss as deduction in the computation of the business income has…

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