Law:

Section:

I - Section 43A of the Income-tax Act, 1961 - Foreign currency, rate of Exchange, Charge in - Assessing Officer disallowed assessee's claim for deduction of exchange rate fluctuation on outstanding loan on ground that loan remained outstanding and exchange rate fluctuation was not actual liability but was only a provision which could not be allowed - On appeal, first appellate authority as well as Tribunal allowed assessee's claim by following Accounting Standard (AS) II issued by Institute of Chartered Accountants of India - Whether since there was nothing to indicate in orders of any of authorities below as to when assessee availed loan and whether assessee was claiming deduction for every year whenever exchange rate fluctuation was adverse to it, matter required reconsideration and if it was found that assessee-company had followed uniform practice of debiting and crediting profit and loss account with variation in exchange rate fluctuation, then deduction should be allowed in assessment year in question also if exchange rate fluctuation had caused increase in rupee liability of loan account - Held, yes II - Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment year 2003-04 - Whether though keeping machinery ready for use is sufficient for claiming depreciation, assessee has to establish that machinery had been brought to its site and installation and commissioning had been done which is possible only after trial run - Held, yes III - Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Whether amount paid by assessee to consultants for advice given by them for purpose of business would be allowed as revenue expenditure - Held, yes IV - Section 37(1), read with section 41(2), of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessing Officer disallowed certain expenses incurred by assessee on behalf of HLL on ground that said expenditure was to be reimbursed by HLL and, so much so, it was not a real expenditure for assessee - Whether there was no justification for disallowing expenditure in question because if amount incurred by assessee was reimbursed, same was assessable…

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