Law:

Section:

Section I47(a) of the Income-tax Act, 1961 - Reassessment - Non-disclosure of 'primary facts - Petitioner was a wholly-owned subsidiary of a USA company -Regarding payment of its home office expenses which were in dollars, method of accounting regularly followed by petitioner and accepted by ITO was that when any liability for payment in dollars accrued it was translated into Indian rupees at the then prevailing exchange rate and debited in account books of petitioner - It further followed practice of translating its outstanding liabilities in dollars at end of year in rupees at the then prevailing rate of exchange and if there was excess due to increase in liability in terms of Indian rupees, same was claimed as deduction as loss on exchange while amount saved due to decrease in liability was offered for taxation as profit on exchange - Consequent upon devaluation in June 1966 assessee retranslated its liability in terms of post-devaluation exchange rate and it was allowed deduction of loss due to said devaluation in assessment year 1967-68 - On this basis, assessments for subsequent years, including assessment years under consideration, namely, 1971-72 to 1973-74, were completed - Whether subsequent reopening of assessments under section 147(a) for aforesaid assessment years by ITO to disallow impugned loss due to devaluation on ground that once debit and credit items had been retranslated in rupees at one point of time during course of year they could not be retranslated again at end of year, was justified - Held, on facts, no - Whether reopening of aforesaid assessments could be justified on another ground that whereas in terms of Government's letters dated 4-5-1973 and 6-11-1974, issued under Foreign Exchange Regulations Act, 1947, ceiling on remmittances on account of home office expenses and service charges expenses had been laid down, excess deductions on these counts had been permitted in original assessments and, thus, the said excess had escaped assessment within meaning of section 147(a) - Held, on facts, yes Article 226 of the Constitution of India, read with section 147(a) of the Income-tax Act, 1961 - Writ - Maintainability of - Deduction on…

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