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TMI Blog2000 (4) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter. referred to as LKM). The Reserve Bank of India granted the company permission to open Foreign Currency Account (FCA) in Denmark subject to certain conditions mentioned below : (a) Credits to the accounts shall be subscriptions received from the above-mentioned shareholders and interest, if any, paid by the Bank on the balance held in the account. (b) Debits to the account shall be payments for import of capital goods subject to compliance of import regulations. 3. In accordance with the RBI approval, the assessee received equity contribution from LKM Denmark out of which payments to the suppliers were made for machinery purchased and because of the foreign exchange fluctuation, ultimately, the assessee received a gain of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. Accordingly the fluctuation gain was also on capital account as per the decisions cited above. The learned CIT (Appeals) has also accepted the above contention. This view is also upheld by the Delhi High Court in the case of Triveni Engg. Works Ltd v. CIT[1985] 156 ITR 202, but he submitted that the CIT (Appeals) was not justified in holding that the assessee had earned casual and non-recurring income taxable under section 10(3) of the Act. He relied upon the decision of the Delhi Bench in the case of J.C. Chandiok v.Dy. CIT[1999] 69 ITD 75 (Delhi) (SB) in which reference has been made to the decision in Cadell Weaving Mill Co. (P.) Ltd.'s case. He submitted that from the above decision, it is clear that the Special Bench has endors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Triveni Engg. Works Ltd. 8. Now, the next issue is as to whether in view of the Special Bench decision in the case of Cadell Weaving Mill Co. (P.) Ltd, this was a casual income or not. The above Special Bench decision was referred to in the case of J.C Chandiok wherein it was observed as under : "Now the question is that whether the amount received on surrender of tenancy right can be made exigible to tax under section 10(3) of the Act as casual income. Section 10 does not tax an item which is capital per se. Income is an ordinary word in the English language and, unless the context otherwise requires, it should be given its ordinary and natural meaning. Income-tax is tax on income but the word income is a dark cat i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular receipt is not constituting income, it cannot be brought to tax under this section. In the case of the assessee, as the receipt is a capital receipt, it does not form an income in the hands of the assessee and, therefore, it cannot be brought to tax under section 10(3). The learned CIT (Appeals) has proceeded on the footing that the above receipt is not chargeable to tax as capital gains under section 45 and hence, it can be taxed under section 10(3) as casual income. In holding, this view, in my opinion, he has committed two mistakes. First of all, as already discussed above, relying upon the decision in the case of J.C. Chandiok section 10(3) is not a charging section, but an exemption provision and, accordingly, if some receipt i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained by the assessee on account of devaluation of the Indian rupee was not a capital gain within the meaning of section 45." 9. Coming to the argument of the learned D.R. that the assessee had deliberately kept the funds abroad and had it brought the funds immediately to India there would not have been any such gain, I find that first of all, the assessee did not keep these funds deliberately abroad. It was permitted to use these funds for purchasing machinery abroad and hence till such time the purchase deal was completed, the funds were required to be kept in foreign bank. Further, this aspect has no material effect on the issue at all. Further, the Supreme Court decision in the case of CIT v. G.R. Karthikeyan [1993] 201. ITR 866 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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