COMMISSIONER OF INCOME TAX Vs. FRICK INDIA LIMITED

JUDGEMENT

(1.) HEARD At the instance of Revenue, following question has been referred for opinion of this Court by the Appellate Tribunal, Delhi Bench 'E' (in short 'the Tribunal'), under S. 256(1) of the IT Act, 1961 (in short 'the Act') :

(2.) FACTUAL position in nutshell is as follows: Assessee, a private limited company, was originally assessed by order dt. 29th March, 1972, in which development rebate was allowed. Subsequently, notice was given to the assessee intimating that it was not entitled to development rebate on the enhanced value due to devaluation. The assessee objected to the action for rectification. Notwithstanding the objection, the AO passed an order denying the benefit of development rebate. Matter was carried in appeal before the Commissioner of Income tax (Appeals) [in short 'the CIT(A)'], who held that the withdrawal of development rebate was not proper. Matter was carried in appeal before the Tribunal. It was observed by the Tribunal that the withdrawal was not proper and, therefore, the CIT(A)'s order was not to be interfered with. On being moved for reference, question as set out above, has been referred for opinion of this Court.

(3.) AS has been rightly submitted by the learned counsel for the Revenue, the language of S. 43A of the Act is clear. There is a clear requirement of the statute that for the purpose of development rebate any increase or decrease in the actual cost consequent upon fluctuation in exchange rate should not be taken into account. That being the position, the Tribunal was not right in holding that the assessee was entitled to development rebate on the increase in the cost of asset as a result of devaluation of rupee. As the matter is concluded by a decision of the apex Court, the rectification done was in order. The question, therefore, has to be answered in the negative, in favour of the Revenue and against the assessee. The reference stands disposed of.