LexCOMMISSIONER OF INCOME TAX, RAJKOT versus M/S GUJARAT SIDDHI CEMENT LTD.
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[2008] 14 S.C.R. 688 A COMMISSIONER OF INCOME TAX, RAJKOT v. M/S GUJARAT SIDDHI CEMENT LTD. (Civil Appeal No. 6144 of 2008) B OCTOBER 17, 2008 [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM SHARMA, JJ.] '-}.... Income Tax Act, 1961; Ss. 32, 33, 41(1)(a) and Explana- c tion 2, S.32A as substituted by Finance Act, 2002 and S.43(A) as substituted by Finance Act, 1967 and amended by Direct_ - Tax Law Amendment Act, 1987: Deduction - Increase in cost of plant and machinery due to fluctuation- in foreign exchange rate - Claim of deduction D for the assessment year 1993-94 -Held: In case, assessee desire to claim extra benefit for the extra amount paid in lieu of increase of cost of the plant and machinery, the same has ~ to be taxed in the year in which liability was reduced - How- ever, in the instant case, appellate authority recorded a cat- E egorica/ finding that no argument was advanced and no de- tails were furnished by the -assessee - Under the circum- stances, it would be appropriate to grant opportunity to asses- see to establish factual position relating to fluctuation in for- eign exchange rate - Hence, matter remitted to Tribunal for F the limited purpose to consider the claim of the assessee in terms of s.43(A) (1) of the Act as it stood then in the light of the legal position, as stated. '"J- Respondent-assessee claimed the deduction as in- vestment allowance for the money spent due to increase G in the cost of plant and machinery because of the fluctua- tion in the foreign exchange rate. The claim was disallowed by the assessing officer on the ground that plant and +-, machinery in question were installed in the earlier years. . > The appeal filed thereagainst by the assessee was dis- H 688 COMMIN. OF INCOME TAX, RAJKOT v. M/S GUJARAT 689 SIDDHI CEMENT LTD. -...-h-' missed by the appellate authority on the ground that no A arguments were advanced and no factual details were furnished regarding the alleged fluctuation on account of foreign exchange rate. The Tribunal allowed the claim of the assessee placing reliance on a decision of the Gujarat High Court in Commissioner of Income Tax v. B Gujarat Fertilizers (2003 (259) ITR 526). Hence the present k appeal. Di.sposing of the appeal,. the Court HELD: 1.1 In terms of Section 43A(1) of the Income c Tax Act the liability decreases or increases due to flue- tuation in foreign exchange rate in the previous year. If that is not the position, there is no application of Section 43A(1 ). [Para - 6] [691-G-H] Commissioner of Income Tax v. Arvind Mills (1992 Supp D (2) sec 190 - distinguished. l 1.2 Section 43A of the Act in the present form was substituted by the Finance Act, 2002 w.e.f. 1.4.2003. Prior to its substitution Section 43A as inserted by the Finance E Act, 1967 w.e.f. 1.4.67 and amended by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1.4.1989 contained sub-sec- tion (2). The said sub-section as it stood at the relevant point of time clearly stated that,the provisions of sub-sec- tion (1) shall not be taken into account in computing the F actual cost of assets for the purpose of deduction on ac- ~, count of development rebate under Section 33 of the Act. [Para - 6] [692-B-C] 1.3 Section 43A(1) of the Act relates to the fluctua- tion in the previous year. If any extra benefit is taken the G same has to be taxed in the year when the liability is re- ,J"l duced as provided in terms of Section 41(1)(a) Explana- tion 2. Therefore, whenever there is fluctuation in any pre- vious year, Section 43A (1) comes into play. [Para - 9] [696- B] H 690 SUPREME COURT REPORTS [2008] 14 S.C.R. A 2. In the instant case, as rightly submitted for the rev- '--r\- enue, the appellate authority recorded a categorical find- I ing that no argument was advanced and no details were given by the assessee. In the aforesaid background, it would be appropriate to grant an opportunity to the as- B sessee to establish the factual position relating to flue- tuation in foreign exchange rate. For that limited purpose the matter is remitted to the Tribunal to consider whether assessee is justified in claiming deduction in the back- --:(_ ground of Section 43A(1) as it stood then, keeping in view c the legal position as stated. [Paras -11-12] [697-H; 698-A- B] CIVILAPPELLATE JURISDICTION: Civil Appeal No. 6144 of 2008 D From the Judgment and final Order dated 23.8.2006 of the High Court of Gujarat atAhmedabad in Tax Appeal
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