1995 (11) TMI 59 - HC - Income Tax

Summary

Issues involved:
The judgment involves issues related to depreciation on increased repayment liability due to fluctuations in foreign exchange rates, entitlement to depreciation on revaluation of currencies, interpretation of the term "paid" in relation to contribution to an approved superannuation fund, and deduction of a provision to the superannuation fund scheme.

Depreciation on Increased Repayment Liability:
The court referred to a previous decision in favor of the assessee regarding depreciation on increased repayment liability, citing the case of CIT v. Tata Hydro Electric Power Supply Co. Ltd. The questions related to this issue were answered in favor of the assessee.

Interpretation of "Paid" for Superannuation Fund Contribution:
The case involved a dispute over the interpretation of the term "paid" in section 36(1)(iv) of the Income-tax Act regarding contribution to an approved superannuation fund. The Revenue argued that "paid" should mean only "actually paid," while the assessee contended that it should also include liabilities incurred under the mercantile system of accounting. The court relied on section 43(2) of the Act, which defines "paid" to include both actual payments and incurred liabilities. The court upheld the assessee's interpretation, allowing the deduction for the provision made to the superannuation fund.

Conclusion:
The court held that the term "paid" in section 36(1)(iv) should be interpreted as per the definition in section 43(2), encompassing both actual payments and incurred liabilities. As the assessee followed the mercantile system of accounting and had incurred the liability for contribution to the superannuation fund, the deduction was allowed. Consequently, both questions related to this issue were answered in favor of the assessee. The Revenue was directed to pay costs to the assessee.