Law:

Section:

Section 43A (as it stood at relevant point of time) read with section 32A of the Income-tax Act, 1961 - Foreign currency, rate of exchange, change in - Assessment year 1993-94 - Whether whenever there is fluctuation in foreign exchange rate in any previous year, section 43A(1) comes into play - Held, yes - Assessee-company claimed increased amount as investment allowance on account of increase in cost of plant and machinery due to exchange rate fluctuation - Assessing Officer disallowed claim, but on appeal, Tribunal allowed assessee's claim and said order was upheld by High Court in appeal - Whether since no factual details were furnished by assessee regarding alleged fluctuation in foreign exchange rate, matter was to be remitted back to Tribunal to grant an opportunity to assessee to establish factual position relating to fluctuation in foreign exchange rate and thereafter, to consider whether assessee was justified in claiming deduction in background of section 43A(1), as it stood then - Held, yes FACTS For the assessment year 1993-94, the assessee-company claimed increased amount as investment allowance on account of increase in the cost of plant and machinery due to exchange rate fluctuation. The Assessing Officer disallowed the claim on the ground that plant and machinery, in respect of which there had been increase, were installed in the earlier years and, therefore, there was no scope for provision for investment allowance in the year under assessment. On appeal, the Commissioner (Appeals) upheld the disallowance made by the Assessing Officer on the ground that no arguments were advanced and no factual details were furnished regarding the alleged fluctuation on account of foreign exchange rate. On further appeal, the Tribunal, placing reliance on a decision of the Gujarat High Court in the case ofCIT v. Gujarat Fertilizers [2003] 259 ITR 526/[2002] 125 Taxman 593 , allowed the claim of the assessee. On the revenue's appeal, the High Court upheld the view of the Tribunal. On revenue's appeal to the Supreme Court : HELD In terms of section 43A(1), as it stood at the relevant point of time, the liability decreases or increases due to foreign exchange rate…

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