DHADDA AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ON an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for the opinion of the court :

(2.) THE relevant assessment year is 1982-83. THE assessee claimed a loss of Rs. 1,05,329 on account of difference in the exchange rate in trade in rough emerald account. THE Income-tax Officer disallowed the claim of the assessee on the ground that the assessee is following the mercantile system of accounting and actually the payment has been made on December 22, 1981, which did not fall in the relevant accounting year and that the loss suffered on account of difference in the exchange rate also comes after the close of the accounting year. In appeal before the Appellate Assistant Commissioner, the Appellate Assistant Commissioner has also confirmed the view taken by the Income-tax Officer. THE Tribunal has also confirmed by the view taken by both the authorities below. While confirming the view taken by both the authorities below, the Tribunal has specifically found that the devaluation of the rupee took place on December 22, 1981, whereas the assessee's accounting year closed on Diwali, i.e., two months before that devaluation.