1981 (7) TMI 99 - AT - Income Tax

Summary

Issues:
- Appeal against the order of CIT (A) allowing appeal against ITO's order for the assessment year 1976-77.
- Interpretation of provisions of r. 115 of the IT Rules, 1962 for conversion of freight earnings.
- Disagreement on the value of the dollar for conversion of freight earnings.
- Applicability of the original r. 115 of the Rules versus the amended rule.

Detailed Analysis:

1. The appeal before the Appellate Tribunal ITAT BOMBAY-C was made by the revenue against the order of the CIT (A) for the assessment year 1976-77. The dispute arose from the calculation of profits by a non-resident shipping company based on the provisions of r. 115 of the IT Rules, 1962. The company had earned freight on export cargo, and the disagreement centered around the conversion rate of the dollar for freight earnings.

2. The assessee contended that r. 115 of the Rules applied to their case, warranting the conversion of the dollar at Rs. 7.50 per dollar. The CIT (A) accepted this argument, leading to the revenue's appeal. The revenue argued that the CIT (A) erred in using the rate of Rs. 7.50 per dollar for conversion, despite a higher prevailing exchange rate. The Tribunal examined the relevant facts and legal provisions.

3. The Tribunal noted that the previous year ended on 31st March 1976, and r. 115 of the Rules had been amended from 1st Nov 1977. As the original rule was in force during the relevant assessment year, the Tribunal upheld the CIT (A)'s decision to use the flat rate of Rs. 7.50 per dollar for conversion. The Tribunal referenced a previous case where a similar issue was decided in favor of using the original r. 115.

4. The Tribunal found that there was no distinguishing feature in the present case that would warrant a different decision from the precedent set by the previous case. Consequently, the Tribunal held that the CIT (A) was justified in converting the freight earnings at the rate of Rs. 7.50 per dollar, despite the higher prevailing exchange rate. The Tribunal, therefore, dismissed the revenue's appeal and confirmed the order of the CIT (A).

5. In conclusion, the Tribunal's decision was based on the applicability of the original r. 115 of the Rules and the consistency with a previous judgment on a similar issue. The judgment reaffirmed the use of Rs. 7.50 per dollar for the conversion of freight earnings, supporting the CIT (A)'s decision and dismissing the revenue's appeal.