Provisions relating to asset purchased from foreign country. - Income Tax - 374/CBDT

INSTRUCTION NO. 374/CBDT Dated: January 24, 1972 Section(s) Referred: 43A ,115 Statute: Income - Tax Act, 1961 According to Section 43A of the Income-tax Act, where an assessee has acquired any asset from a country outside India for the purposes of his business or profession and, due to a change in the rate of exchange after the acquisition of such asset, there is an increase or reduction in the liability of the assessee in rupees for making payment towards the whole or a part of the cost of the asset or for repayment of the loan borrowed by him in any foreign currency specifically for the purpose of acquiring the asset, the amount by which such liability is increased or reduced during the previous year has to be added or deducted form the actual cost of the asset. Similarly, in computing the income of an assessee, the provisions of Rule 115 have to be resorted to in order to take into consideration the variation in exchange rates. In this connection attention is invited to the Department of Economic Affairs' Notification No. S.O. 5539 dated 19th December 1971 (printed below) whereby the revised rates of exchange for the sale and purchase of pound sterling have been notified. The officers working in the charge may kindly be informed to take the revised rates of exchange into account while making the assessments to bring to tax the correct income and for the purpose of section 43A of the Income-tax Act, 1961. Copy of Min. Of. Fin. (Dept. of Economic Affairs) Notification F.No. 1/22/BP/71 dated 19-12-1971. S.O 5539- In exercise of the powers conferred by section 40 of the Reserve bank of India Act, 1934 (2 of 1934), and in supersession of the previous directions given in this behalf the Central Government hereby directs that the Reserve bank of India shall buy from any authorised person who makes a demand in that behalf, at its office in Bombay, Calcutta, New Delhi or Madras or at its branch in Kanpur, Nagpur or Bangalore, the currency specified in column 2 of the Schedule hereto annexed for delivery at the place specified in column 3 of the said Schedule at the rate not above that specified in column 4 thereof : Provided that no person shall be entitled to receive payment unless that Bank is satisfied that payment of the currency specified in column 2 of the Schedule at the place specified in column 3 thereof has been made. SCHEDULE Serial No Currency Place Rate 1 2 3 4 1 Pound Sterling London 5.2721 per Rs. 100 with a margin not exceeding 2.25 per cent above this rate.