ASOK TEXTILES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee to income-tax, the Appellate Tribunal has referred the following question of law for the decision of this court :

(2.) THE respondent is the Revenue. We are concerned with the assessment year 1976-77. THE assessee is a limited company. It had purchased certain machinery from a Japanese concern on deferred payment scheme. THE instalments had to be paid in foreign currency. At the time of purchase, the assessee entered in the books of account the value of the machinery and the amount payable in terms of Indian rupees. It was based on the exchange rate prevailing then. When instalments had to be paid, the assessee had to remit more money in terms of Indian currency. This so happened because of the depreciation in the value of the Indian rupee compared to the Japanese yen. In this process, the assessee had to pay Rs. 12,112 more in paying the instalments. This was claimed as a permissible deduction in computing the income. THE Income-tax Officer disallowed the claim. He stated that the claim related to purchase of capital items and so was not allowable. THE said order was confirmed in appeal by the Commissioner of Income-tax (Appeals). THE Tribunal, following its earlier decision in the assessee's own case, held that the extra expenditure which the assessee had to incur is a capital expenditure and so not allowable as a deduction. It is thereafter at the instance of the assessee that the Income-tax Appellate Tribunal has referred the above question of law for the decision of this court.