Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business loss/deduction - Assessee, a non-resident foreign company, with head office in London, carried on business in India - It maintained its account in India in rupee currency but main accounts in head office were maintained in sterling on the basis of which assessment was made in India - Assessee claimed loss on account of devaluation of rupee on the ground that as a result of devaluation of Indian rupee sterling value of assessee's trading assets and liabilities in India as reflected in its London accounts suffered a reduction - Whether since assessee was carrying on business in India and was assessed in India, it could not be said to have suffered any loss on account of such devaluation - Held, on facts, yes FACTS The assessee, a non-resident foreign company, carried on business in India and was assessed to income-tax in India. The assessee maintained its accounts in India in rupee currency, while the main accounts in the head office at London were recorded in sterling and on the basis of these accounts in the head office, which were closed on December 31 of every year, the assessment of income-tax was made in India. Again, a current account was maintained between the London head office and the Indian division in respect of the assessee's trading transactions. On 6-6-1966, the Government of India devalued the rupee in terms of pound sterling. For the assessment year 1967-68, accounting period being 1-1-1966 to 31-12-1966, the assessee contended that as a result of the devaluation of the rupee, the sterling value of its trading assets and liabilities in India, as reflected in its London accounts, suffered a reduction of £ 54,897 which represented loss on its net current assets, and that this loss should be allowed in the computation of its income. The ITO disallowed the claim. On appeal, the AAC upheld the ITO's order on the ground that the assessment in India was concerned with the assessee's income or loss in terms of rupee and that the loss arising on account of devaluation of the rupee was not a real loss. The assessee's application for revision was also rejected by the Commissioner. The Single Judge upheld…

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