MODI ZEROX LTD Vs. CIT MEERUT

JUDGEMENT

(1.) THIS Income Tax Appeal of M/s Modi Zerox Ltd-assessee appellant under 260-A of the Income Tax Act, 1961 (in short, the Act) arises out of order dated 23.7.1999 passed by the Income-Tax Appellate Tribunal, Delhi Bench 'C', New Delhi in ITA No. 6444/Del of 1992 for the assessment year 1989-90. The Tribunal confirmed the order passed by the Appellate Authority.

(2.) THE assessee-appellant is a Public Limited Company. It is engaged in the business of manufacturing photocopying machines and consumables. For the assessment year 1989-90 the relevant accounting period was between 1.5.1987 to 31.3.1989 (i.e. 23 months). The assessee appellant declared income of Rs. 5, 90, 95, 734/-, with brought forward losses under various heads amounting to Rs. 8, 36, 62, 936/-. The income under Section 115-J of the Act was declared at Rs. 7, 66, 47, 675/-. The assessment was made under Section 143 (3) of the Act at profits of Rs. 7, 66, 47, 675/- under Section 115-J of the Act. The Deputy Commissioner of Income Tax (Assessment), Special Range, Meerut by his order dated 20.2.1992 computed net profits as per profit and loss account at Rs. 10, 08, 78, 955/-. After allowing depreciation and misc. deferred revenue expenses the net profit was calculated at Rs. 8, 97, 55, 440/-. The inadmissible expenses were computed at Rs. 1, 32, 07, 321/- and after allowing deductions of the claim of bad debts, custom duty, excise duty, duty disallowed in the previous year, Section 35D and depreciation and taking into account the brought forward loss at Rs. 6, 90, 92, 303/-, the appellant assessee was assessed at Nil income.

(3.) SHRI Rupesh Jain, assisted by Shri R.R. Agarwal submits that the Assessing Officer did not accept the assessee's claim for investment allowance on increase in the actual cost of assets due to foreign exchange fluctuation taken place during the relevant previous year amounting to Rs. 48, 83, 326/- on the reasoning that Section 43A (2) of the Act restricts the grant of investment allowance on the increased cost of assets, due to foreign exchange fluctuation, and since the assets in respect of which fluctuation had already been taken place, were already installed and put to use in earlier years, there was no question of allowing the investment allowance on foreign exchange fluctuation taking place subsequently in the relevant previous years. The CIT (A) followed Southern Asbestos Cement Ltd vs. DCIT, 38 ITD 449 by Madras Tribunal and directed the AO to allow investment allowance on the actual cost of the assets arising out of fluctuation in the foreign exchange in the year under consideration, provided other formalities as per Act are complied with. The Tribunal reversed the order of CIT (A) and restored the order of AO on the ground that the issue was decided by Ahmedabad Special Bench of the Tribunal in the case of Lakhanpal International vs. ITO, 69 ITR 9 in which the decision of Andhra Pradesh High Court in CIT vs. Windsor Foods Ltd 99 Taxman 355 was followed.