Revised rates of exchange. - Income Tax - 1154/CBDT

INSTRUCTION NO. 1154/CBDT Dated : March 10, 1978 Section(s) Referred: 43A , Rule 115 of IT Rule Statute: Income - Tax Act, 1961 Attention is invited to Board's Instruction No.374, (F.No.201/43/71-ITA.II), dated the 28th January, 1972 by which revised rates of exchange were brought to the notice of all the Income-tax Officers for the purposes of rule 115 of the Income-tax Rules, 1962 and section 43A of the Income-tax Act, 1961. Vide its letter F.No.225/93/74-ITA.II, dated 10th September, 1972, the Board communicated the rates of exchange of foreign currencies as on 1st March, 1974. 2. The Board has examined the correctness of Instruction No.374 in so far as it relates to rule 115. On further consideration, the Board is of the view that Instruction No.374 referred to above in so far as it is referable to matters dealt with in rule 115 as not in conformity with the provisions of the said rule. The instruction may be treated as modified to this extent and it is hereby clarified that for the purpose of matters dealt in rule 115 the rates of exchange laid down in the said rule have to be followed. 3. Rule 115 has been amended with effect from 1st November, 1977 by the Income-tax (Eighth Amendment) Rules, 1977 prescribing the conversion rate of all foreign currencies instead of only pound and U.S. dollar to be the 'telegraphic transfer buying rate' of such currency. 'Telegraphic transfer buying rate' in relation to a foreign currency is the rate of exchange adopted by the State Bank of India for buying such currency through a telegraphic transfer. The amended rule 115 provides that the rate of exchange to be adopted for calculation of the value in rupees of any incomes shall be such rate as prevalent on a specified date. The rule lays down what is the specified date for various types of income. The amended rule 115 would apply to the income which has accrued, arisen or received or deemed to have accrued, arisen or received on or after 1st November, 1977. For the purposes of conversion of the income prior to 1st November, 1977 the rates of exchange provided in the rule 115 before its amendment are to be applied. 4. Some assessments might have been made on the basis of the Instruction No.374 which stands now modified as per para 2 above. While it may not be possible to have recourse to section 154 in these cases in view of the decision of the Supreme Court in the case of T.S.Balaram, I.T.O. Vs Valkart Brothers (82 ITR 50), action under section 147(b) may be taken to reopen such assessments, wherever feasible. 5. It is clarified that Instruction No.374 holds the field in so far as it relates to section 43A.